Obamacare could provide California big financial safety net

March 9, 2013

By Katy Grimes


SACRAMENTO — Californa’s desire to be the first state to do everything has never been more evident now that Obamacare has been signed into law.

And California lawmakers haven’t let any grass grow under their feet since passage of the Affordable Care Act in 2010. In January, Gov. Jerry Brown issued a proclamation to convene an extraordinary session of the Legislature to continue the work of implementing the federal Patient Protection and Affordable Care Act.

Obamacare cheat sheet

Under the Patient Protection and Affordable Care Act, also known as federal health care reform, or Obamacare, the state has the option to expand its Medi-Cal Program to cover over one million low–income adults who are currently ineligible.

Unlike some states, which have refused to implement the Obamacare health exchanges, California has embraced the federal health care plan and already began the process of implementation.

This means beginning January 1, 2014, the federal government will pay all of the costs associated with the Medi-Cal expansion, and do this for three years. Beginning January 1, 2017, the federal government will begin to decrease its portion, over a three–year period, until California pays for 10 percent of the expansion and the federal government pays the remaining 90 percent.

That 10 percent portion of the cost could run as much as $1.4 billion annually, according to the Legislative Analyst’s Office.

Currently the counties have the fiscal and programmatic responsibility for the care for the low–income adult population that would be covered by the expansion. The LAO says a statewide program could greatly alleviate the cost to the counties, although the Department of Finance would likely make downward adjustments to counties’ overall realignment payments.

Latest bill

In January, Sen. Ed Hernandez, D–West Covina, Chairman of the Senate Health Committee, introduced two pieces of legislation to comply with the federal Affordable Care Act, which requires the expansion of Medi-Cal coverage. In California this means 1.6 million previously ineligible Californians will be covered. Thursday, the Senate passed SB X1 1, the first of the two pieces of legislation. “This will expand services for the vulnerable population,” Hernandez explained to colleagues in the Senate during debate.

However, Senate Republicans are far more concerned about the economic impacts to the state should the federal government fail to make good on funding.

“This is an attempt to implement Obamacare in California,” said Sen. Jim Nielsen, R-Gerber. “It is not worthy of support today. It is a work in progress, and not ready yet,” Nielsen said of SB X1 1. “It takes California beyond what the federal government requires.”

Nielsen warned that California needs to be very careful with the controls of who is covered under the expanded Medi-Cal coverage. “There needs to be some very hard means testing,” said Nielsen.

Nielsen is concerned for very good reason.

SB X1 1 would usher in the expansion of the state’s Medi-Cal coverage allowed under the Affordable Care Act to low-income adults currently ineligible. This includes those with incomes at or below 133 percent of the federal poverty level, or $14,856 in 2012. This will result in more than 1.6 million new Medi-Cal eligible Californians.

“I have concern for the fiscal impact on the State of California and our treasury,” Sen. Ted Gaines, R-Roseville, also said during Senate debate.

While Obamacare requires mandatory expansion of Medicaid in every state, California is going beyond federal law and implementing Medi-Cal, California’s version of federal Medicaid, to a previously ineligible group – childless, able-bodied adults under 65.

While the Affordable Care Act also required this when it was passed, the U.S. Supreme Court, in its ruling on Obamacare, ruled that this is an option for states.

But California is going to enact this option by changing the income calculation of these childless, able-bodied adults, allowing them to become eligible. The Medi-Cal income calculation used to include an asset test. The California Legislature passed a bill last year removing any asset test.

Eligibility changes

SB X1 1 would also establish a defined health benefits package for enrollees, including the essential health benefits contained in the Affordable Care Act, and enacted into law in California as part of a bill authored by Senator Hernandez last year.  SB X1 1 also includes provisions simplifying the eligibility, enrollment and renewal process for Medi-Cal.

Be wary of the word “simplification.”

This “simplification” of eligibility is complex and wrought with issues. Currently, self-attestation is not allowed. Federal law prohibits citizenship status, and states have flexibility to utilize self-attestation information. Hernandez’s bills require the use of self-attestation – meaning Medi-Cal applicants and renewals won’t have to prove income or even residency, at least on the front end.

Some in the state say this will instead be verified on the back end, but benefits may already be used and paid by the state before verification is even started. There is no doubt this is a program integrity issue.


California is clearly using a design-as-you-go process for adding the 1.6 million additional recipients to Medi-Cal.

Currently, Medi–Cal provides health care services to over eight million qualified low–income persons—including families with children, pregnant women, seniors, and persons with disabilities.

The LAO estimates this expansion “would likely reduce the total amount of uncompensated health care provided in California. In addition to the significant fiscal effects on counties, many health care providers — including private hospitals, clinics and physicians — often provide care for which they receive no direct reimbursement.”

Gov. Jerry Brown

The Governor supports the Medi-Cal expansion in California. However, and to his credit, Brown has offered amendments to the current legislation allowing for “tie-back” language. In case the federal government is unable to pay its portion of Medi-Cal, Brown wants to make sure California is not tied to the mandatory programs. This has some Democrats bristling, but it appears the governor is adamant about having this option available for future administrations.

It’s a “heads I win, tails you lose” case.


Write a comment
  1. barb
    barb 9 March, 2013, 14:03

    Not to mention a flurry of doctors either leaving their practice altogether or moving from the state causing a shortage. This is just bad policy!

    Reply this comment
  2. Paul
    Paul 9 March, 2013, 14:30

    Obamacare could provide California more pure garbage as always….

    Reply this comment
  3. Bill - San Jose
    Bill - San Jose 9 March, 2013, 16:00

    “Not to mention a flurry of doctors either leaving their practice altogether or moving from the state causing a shortage. This is just bad policy!”

    What Barb said X2!

    Reply this comment
  4. us citizen
    us citizen 9 March, 2013, 18:01

    All of the above………and how many of them are ILLEGALS?

    Reply this comment
    NTHEOC 9 March, 2013, 18:27

    I have good insurance with a PPO. But I still know the insurance industry is one of the the biggest scams around! Profit,Profit,Profit before peoples health. Adolf Hitler used propaganda techniques (brain washing) to deceive the world. Let’s not let insurance companies get away with the same bs in the united states. Our health care system doesn’t work and what I do not understand is how anyone can say they have a good health care system when only 20% of the population can afford to see a doctor for serious medical problems. The closer we get to a nationalized healthcare system like Canada then the better off for everyone!!

    Reply this comment
  6. jimmydeeoc
    jimmydeeoc 9 March, 2013, 20:23


    I can almost agree with you……but first let’s identify what is causing healthcare costs to skyrocket…….

    And we all know it’s rampant litigation, or fear of same. So you can’t control costs until you enact tort reform.

    And the chances of THAT happening with Fearless Leader in office are the same as me growing to 6’8″ overnight.

    FAIL! (Again) Back to your cubicle!

    Next time come up with some REAL solutions.

    Reply this comment
  7. BobA
    BobA 10 March, 2013, 12:06


    Like Canada? Then why do Canadians who can afford it come across the border for surgeries that you have to get on a waiting list for in Canada? The quality of health care in Canada is inferior to what we currently have here in the US. Or is it you will settle for inferior health care as oppose to no care?

    The primary reason why our health care system is so expensive is threefold: government collusion & interference, insurance companies and lawyers. Government never addresses the fundamental causes of rising health care costs and it never will.

    Government throws money at the health care industry and year over year, the amount of money they throw at it grows unabated and unchallenged. Being as such, insurance companies can always (and do) come up with the justification to raise their prices so as to maintain their share of an ever growing health care money pie. The government even colludes with the health care industry, insurance companies and lawyers via laws and regulations to raise prices in order to justify the increased spending.

    There’s no incentives whatsoever to control or reduce health care costs in this country. There’s every incentive to keep raising them (e.g., Medicare, Medicaid, Obamacare, etc.) until the entire system collapses under its own weight. When it does, we the people will be blamed for not paying our “fair share” of the inflated costs.

    Besides, someone has to pay for the ever present salary “arms race” which has manifested in every aspect of America society. The needs of corporate CEOs and their board of directors outweighs the need of the common people. It’s the American way.

    Reply this comment
  8. RT
    RT 10 March, 2013, 13:19

    Expand the Medi-Cal Program to cover over one million low–income adults who are currently ineligible ? WOW

    The Medi-Cal Program is an ineffective mess that is provided at the County level. Now it will be bigger ?

    Maybe it’s time to take the Medi-Cal Program and all the other programs ran by Counties and audit them.

    The fact is that noboby cares how inneffective these programs are and how much money they waste. Now the Medi-Cal Program can waste even more of the taxpayer’s money.

    Reply this comment
  9. Douglas
    Douglas 10 March, 2013, 16:02

    “……but first let’s identify what is causing healthcare costs to skyrocket……. And we all know it’s rampant litigation, or fear of same. ”

    We may all “know” that, but that don’t make it so.

    The Congressional Budget Office determined that if all states adopted tort reform, malpractice premiums would go down by 10%, resulting in a direct cost savings of 0.2%.

    That’s a savings of $5.4 billion yearly, but in a “broken health care system” that costs $2.6 trillion a year, the savings are miniscule.

    For ‘indirect costs’, The National Bureau of Economic Research found a minimal relationship between the rising cost of malpractice insurance and increased defensive medical practice.

    Despite all the huge lawsuits that get media attention, there are actually relatively few lawsuits. The Institute of Medicine reported that of every 100 people hospitalized, one patient suffers a serious, preventable injury. Yet only 1.5% of those injured patients filed a malpractice lawsuit.

    Dr. Glenn Braunstein, M.D.: “I believe the issue (medical malpractice) is a distraction, but that doesn’t mean it shouldn’t be addressed. The topic obstructs discussion of the higher impact reforms we need to tackle.”

    Reply this comment
  10. Douglas
    Douglas 10 March, 2013, 16:23

    Medical insurance was a lot cheaper when I was a kid.

    There was NO SUCH THING as a heart transplant. (now over $700,000)

    According to a 2012 Kaiser Foundation report : “Many policy experts believe new technologies and the spread of existing ones account for a large portion of medical spending and its growth.”


    You can’t expect to pay for a Pinto and get Cadillac treatment. If you pay into medical insurance your whole life, the premiums plus interest would not be enough to cover treatment for a major heart condition or kidney transplant.

    Reply this comment
  11. us citizen
    us citizen 10 March, 2013, 18:12

    NTHEOC..what you want is socialism in medical care. Please tell me what the last country was, that socialism worked out for them. Canadian healthcare sucks big time. They come here to get healthcare because the wait is wayyyyyyy tooooooo longggggggggg. This is what will happen here. No thanks.

    Reply this comment
  12. Douglas
    Douglas 10 March, 2013, 18:45

    Not everyone agrees:

    “Debunking Canadian health care myths”


    Reply this comment
  13. Mike H
    Mike H 10 March, 2013, 20:31

    RT is correct, the Medi-Cal Program is an ineffective mess that is provided at the County level. But noby cares how badly it’s ran. So more $$$ for the State to waste.

    Reply this comment
  14. 2nd class citizen
    2nd class citizen 10 March, 2013, 20:35

    but did you know this about canada’s system?

    Reply this comment
  15. 2nd class citizen
    2nd class citizen 10 March, 2013, 20:37

    so this is sounding pretty good, if I get laid off which is a good probability the way the local economy is… I will qualify for free healthcare with no asset check, get unemployment, my kids will get college funded because I don’t make money. seems I might be better off unemployed.

    Reply this comment
  16. doug
    doug 11 March, 2013, 09:59

    gee, 2nd class, you’d also be eligible for the free cell phones too!
    better off unemployed or illegal.

    that MediCal program will kill businesses again.

    i could see my current employer leaving the state for that issue.

    and the scarcity of doctors will increase now too for sure.

    Reply this comment
  17. BobA
    BobA 11 March, 2013, 10:08

    2nd class citizen says:

    That’s the general idea. And if you vote democrat, you can vote yourself a pay raise every 2 years. After all, wasn’t it Stretch Pelosi who said an unemployment check is economic stimulus? By her logic a 100% unemployment rate would lead to an economic miracle.

    Of course, we’ll have to impose a 100% tax rate on the rich to pay for it all. Of course, they’ll eventually become poor themselves but who cares? That’s their problem.

    Why get off you ass and and work for a living when you can vote yourself other people’s money?

    Reply this comment
  18. NTHEOC
    NTHEOC 11 March, 2013, 11:14

    us citizen says:
    NTHEOC..what you want is socialism in medical care. Please tell me what the last country was, that socialism worked out for them.
    There are no countries practicing real socialism. Socialism is government by the working class which promotes the interests of society over those of capital. So, how is our capitalist healthcare system working out for us? Good if you can afford health inurance or have a job that provides it.I am very fortunate to have good insurance but I still know they are corporate profit driven corps that put your health 2nd to feeding their wallets!!Countries like Swedan, Denmark, Norway, and the Netherlands all have better healthcare systems than us!!

    Reply this comment
  19. Katy Grimes
    Katy Grimes 11 March, 2013, 12:21

    NTHEOC, you can dress it up and claim socialism is about the working class, but there is no denying that it is really about redistributing wealth and other people’s money.


    Reply this comment
  20. BobA
    BobA 11 March, 2013, 14:13


    Socialism is just another name for communism. What you are suggesting is that America forgo free market capitalism for communism. When and where has communism ever worked? All you’ll wind up with is a country full of poor and deprived people who will exit the country post haste if allowed to leave.

    The Scandinavian countries can afford socialism because they are sparsely populated countries. You may praise their socialist system but like all socialist countries, there’s still a waiting list for certain medical procedures that those who can afford it come here to get.

    Perhaps you should peruse the British press to read about how “wonderful” their socialized health care system. You would be shocked and disgusted.

    The problem with socialism is that you eventually run out of other people’s money. Capitalism has lifted more people out of poverty than any other system the would has known. A fact that you seem to have chosen to ignore.

    Our health care system would work a lot better if the government, lawyers and corporate lobbyists kept their fat beaks out of it. Health insurance would also be a lot cheaper if it were allowed to be sold across state lines.

    It would also be better and cheaper if the government didn’t collude with lawyers, insurance companies and pharmaceutical companies to fix prices via laws & regulations.

    I must admit though that asking for the politicians to take a hands off approach is asking for the impossible. When it comes to politicians, it’s not a matter of what’s good for the country: it’s a matter of what’s good for their bank accounts and getting them reelected.

    Our health system is what it is because the health care industry and insurance company lobbyists literally write the legislation that affects them. Their bottom line is profit; period.

    Sorry if I went of on a tangent but I had to go there to round out my argument.

    Reply this comment
  21. Douglas
    Douglas 11 March, 2013, 17:18

    Not everyone agrees:

    2nd class citizen posted a link which told a conservatives view of the Canadian health care system. 

    If you go through the comments on that link, you will find that many Canadians are very happy with the system. 

    The same is true of British healthcare and that of other countries. It’s not all bad news. 

    Reply this comment

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