As the U.S. Supreme Court considers the constitutionality of the federal health legislation known as Obamacare, the “individual mandate” – requiring Americans to have health insurance – is getting all the attention. Will it survive?
But a different part of the bill – a part that has also been challenged in court – may be just as important to the state of California.
That part is the expansion of Medicaid – known as Medi-Cal here in California. Obamacare expands Medi-Cal, and Medicaid, as a way of extending coverage to people too poor to purchase insurance by themselves. In short, Obamacare expands eligibility for Medi-Cal program to nearly two million Californians who currently are ineligible. This would increase the number of people covered by Medi-Cal from roughly 7.5 million to more than 9 million, in a state of some 38 million. California has already begun to enroll some of these newly eligible people through county programs
This would have a huge impact on people in California. And the Medi-Cal changes will occur in conjunction with a host of otherchanges, including the establishment of a health benefit exchange for purchasing insurance. Already, the state has done more work than most in preparing for these changes.
But the change also could have an impact on the already-stretched budget – bringing in more revenues but also creating new costs. Since Medi-Cal is a program in which the state shares costs with the federal government, the Obamacare expansion of Medi-Cal would bring in billions more from the federal government, while also requiring the state government to dole out more for its share of the new Medi-Cal program participants.
Estimates have put the additional cost to the state general fund at more than $2 billion – not huge, in an overall state budget of $140 billion, but still significant, given the constant cuts necessitated by the broken budget process. Advocates argue that the net costs will be less, based on savings from more people being insured, but the exact amount of any such savings is speculative.
Some states had challenged Obamacare in the courts precisely because it would increase state spending. That challenge is seen by legal scholars as one of the weakest pieces of the constitutional challenge to the law.
If the Medicaid provisions of Obama are struck down, California would see more uninsured people and less money from the federal government – albeit with less of a direct hit on the state budget.