Uncertainty Over Federal Health Care Policy Creates Major Heartburn for California Budget-Makers

Timm Herdt
Timm Herdt writes on California policy and politics. He formerly covered the Capitol for the Ventura County Star

When C. Duane Dauner, the crackerjack CEO who has headed the California Hospital Association for 31 years, announced last month his intent to retire at the end of 2018, the timing must surely have been bittersweet.

On the one hand, he had just completed one of his most productive years in the big leagues of California health care politics by spearheading a successful ballot initiative to protect hospital revenues from being raided by the Legislature. On the other hand, the results of the presidential election made the motivation behind the initiative instantly outdated. It already seems quaint to have been worried about protecting one small stream of existing federal health care funding when a disastrous flood of change could be forthcoming.

The key component of Proposition 52, from the perspective of Dauner and hospital executives across the state, is that it prohibits the Legislature from diverting any of the revenues from the Medi-Cal hospital fee for other purposes. That would have been a nice piece of financial insurance for the hospital industry to have in place going forward had the popular vote been determinative in the presidential election.

As it turns out, having Proposition 52 in place provides not much protection against the uncertain times ahead in the wake of an all-but-certain repeal of the Affordable Care Act. For hospitals, the biggest threat now is that the rate of uninsured will start rising again – and with it, a corresponding rise in bills that will be never be collected.

For all of Gov. Jerry Brown’s tough talk about protecting California climate and immigration policies from known and unknown threats posed by the Republican-controlled Congress and the coming Trump Administration, it is the uncertainty over health care policy that is giving Brown and his Department of Finance number-crunchers the biggest heartburn as they prepare to release their 2017-18 budget.

The future of Medi-Cal is a monstrous budgetary unknown. More than 12 million Californians – about 1 out of 3 people in the state – are enrolled in Medi-Cal, including about 3 million (mostly childless adults) who had not previously been eligible but were added under the Affordable Care Act’s expansion of the program.

As it is, Medi-Cal is $23 billion expense out of the state general fund – and that’s with the federal government paying the great majority of the $95 billion total cost for insuring these low-income Californians.

What would be the financial consequences if a repeal of the Affordable Care Act knocks those new enrollees from the Medi-Cal expansion off the rolls – transforming 3 million Medi-Cal-insured Californians from having coverage that is 95 percent paid for by the feds into uninsured, medically indigent adults whose health care would then be at the mercy of the state and counties?

What will happen to the 1.4 million Californians who are covered by federally subsidized individual health plans purchased through the Covered California insurance exchange? Will they again become uninsured, placing a strain on county-run health clinics and resume burdening hospitals with mountains of unpaid bills for urgent care?

These are mega-billion-dollar questions on the horizon.

They can’t be answered with a state ballot initiative.

Timm Herdt has written extensively on California politics and public policy for more than two decades. He is the former Capitol Bureau chief for the Ventura County Star. His email address is timothy.herdt@gmail.com.

Share this article: Share on FacebookTweet about this on TwitterShare on LinkedInPin on PinterestEmail this to someone

Comment on this article


Please note, statements and opinions expressed on the Fox&Hounds Blog are solely those of their respective authors and may not represent the views of Fox&Hounds Daily or its employees thereof. Fox&Hounds Daily is not responsible for the accuracy of any of the information supplied by the site's bloggers.