California will face "minimal" new costs from federal health care expansion, and most of the initial burden will occur regardless of whether the state expands Medi-Cal eligibility to new categories of low-income residents, according to a new University of California study.
In 2014, California would pay between $188 million and $453 million more because of widespread changes in the federal law intended to reduce the number of uninsured Americans, according to the UC Berkeley Center for Labor Research and Education and the UCLA Center for Health Policy Research. The state is expected to spend $14.6 billion this fiscal year on Medi-Cal, which funds health care for certain low-income residents.
The state would spend more than three-quarters of that additional money on serving people already eligible for Medi-Cal, such as low-income children, parents and disabled residents. The federal act would spur them to sign up because of increased awareness, lower enrollment hurdles and potential penalties for lacking health insurance - changes that are due to occur regardless of any state decisions.
One of the biggest health care decisions facing Gov. Jerry Brown and lawmakers this spring is whether to extend Medi-Cal to additional low-income groups now excluded from the program - principally childless adults and parents between 100 percent and 138 percent of the federal poverty level.
Brown's administration has been coy about whether it will agree to the expansion, and Brown suggested last month that a bad "fiscal cliff" deal could result in $4 billion in additional costs each year related to Medi-Cal.
But the UC study found that expanding Medi-Cal eligibility won't have significant cost impacts initially because the federal government will pay for nearly all of it.
Expanding Medi-Cal to those groups will cost between $46 million and $75 million in 2014 for administrative costs. In 2019, when the federal government asks states to pick up more of the tab, California would pay between $309 million and $381 million.
"Most of the increase in costs will be for the already eligible, and they will happen regardless of whether the state expands Medi-Cal," said Laurel Lucia, policy analyst with the UC Berkeley Center for Labor Research and Education.
The UC report asserted that new state costs could be offset by additional state tax revenues tied to federal spending in California, as well as potential health care savings in other state budget programs.