Medi-Cal lands $6 billion waiver

Just as the Golden State’s Medi-Cal waiver ran out, federal regulators rescued California yet again.

Regulators “agreed in principle to a five-year, $6.2 billion waiver for California’s Medicaid program,” California Healthline reported. “That was good news for California health officials, who plan to use the money mainly for Medi-Cal delivery system and payment reforms — the next big steps in implementing the Affordable Care Act.”

As state and federal officials work out the details of the new scheme, the current waiver, set to expire at the end of October, was pushed ahead to a new finishing date of December 31.

Ill health, rising costs

Medicaid has emerged as a centerpiece of the expansion of health coverage contained in the ACA. “Obamacare expanded eligibility for Medicaid, the government health insurance program for the poor, to people up to 138 percent of the poverty line — or about $33,000 for a family of four,” as The Hill reported. “The federal government picks up the entire cost of expansion in the early years.”

While Democrats have touted its growth, Republicans in Washington have questioned its budgetary sustainability. “A report from a federal government actuary in July found that enrollees who are newly eligible under Obamacare’s expansion of Medicaid cost $5,517 per person on average, 19 percent higher than standard enrollees,” noted The Hill.

In California, Medi-Cal cost projections have also raised concerns. “Medi-Cal serves about 12.5 million people — roughly a third of Californians,” Kaiser Health News noted. “Santa Clara County’s Valley Medical Center takes in $150 million a year from the federal government to help fund its safety-net care; Contra Costa County takes in $80 million annually.”

Meanwhile, in a report issued by the Alzheimer’s Association, expenses for state residents afflicted with the disease were seen “to rise nearly 59 percent to close to $4.9 billion annually,” according to the San Francisco Chronicle, with medical advances prolonging the lives of baby boomers identified as a driving factor of the spike. “The state-federal Medicaid program for the poor will take on a growing share of the burden of paying for the care of people with Alzheimer’s and other forms of dementia because average households will not be able to pay the high costs of having in-home caregivers, long-term nursing care and other forms of help[.]”

Another recent study indicated that California obesity rates would also hit Medi-Cal with additional burdens. Published in Health Affairs, it “found that medical care associated with severe obesity cost state-run health programs $8 billion in 2013,” the Los Angeles Times reported. “California’s program for the poor, known as Medi-Cal, took the biggest hit, spending $1.3 billion that year on severe obesity-related care.”

Shifting burdens

Adding to the challenge facing policymakers, the new waiver fell far short of what California had requested. “The original proposal was whittled down from $17 billion to $7.25 billion and finally to $6.2 billion during the negotiations,” KQED News observed. Although state health officials expressed relief and satisfaction once the deal was reached, state negotiators had hoped to settle on the $7.25 billion figure. “Instead of funding five years of care for the uninsured […], the plan only specifies $236 million for the first year. Funding for the next four will depend on an outside assessment of how much hospitals need.”

Unresolved budgetary issues surrounding Medi-Cal have hung heavily over Sacramento this fall. As CalWatchdog reported previously, Gov. Jerry Brown vented his frustration toward lawmakers last month, slamming their inability to restructure a key tax that affects participating health plans:

“Without the extension of the managed care organization tax that I called for in special session,” Brown said in his message explaining his veto of the nine bills, “next year’s budget faces the prospect of over $1 billion in cuts.”