Riggs Report: California’s health care hit

​March 24, 2017

Gov. Brown gets heated over cost of GOP’s new health care bill

During his trip to Washington this week, Gov. Jerry Brown initially didn’t engage in the fiery rhetoric of resistance that’s become a favorite theme of Democratic leaders at the state Capitol.

Instead, he met with House Republicans, including Majority Leader Kevin McCarthy, as well as House Democrats and President Trump’s transportation secretary.

As Brown noted to reporters, he was in D.C. not to throw bombs but to “make friends and advance the cause of California”—at least until Wednesday.

Appearing at a rally with House Minority Leader Nancy Pelosi, D-California, and former Vice President Joe Biden on the east steps of the Capitol, Brown got into the moment, shouting that Trump should “come down from Trump Tower” and denouncing the House GOP’s plan to replace the Affordable Care Act as written by “people who don’t know what the hell they’re talking about.”

So much for making friends.

Brown’s ire coincided with the release of a new analysis from Jennifer Kent, director of the state Department of Health Care Services, that shows California faces an alarming financial hit from the American Health Care Act, Speaker Paul Ryan’s replacement for the Affordable Care Act that was signed by President Obama seven years ago.

The report concludes that the new bill “represents a significant shift of costs from the federal government to states, resulting in nearly $6 billion in costs to California, growing to $24.3 billion by 2027.”

States like California, which quickly embraced the expansion of coverage by Medicaid—known in California as Medi-Cal—are especially hard-hit by the new plan. Under the Affordable Care Act, an estimated 3.7 million Californians who couldn’t afford private insurance gained coverage for the first time.

All told, more than 13.5 million Californians are now enrolled in Medi-Cal—a figure that covers 1 in every 3 state residents.

According to the Health Care Services analysis, the Ryan bill has particular impact on California because it strictly enforces a spending cap for the Medi-Cal program. It requires that if states exceed that limit, based on a complex formula, they must repay the federal share of the excess spending in the next fiscal year.

The report projects that repayment burden to reach $5.3 billion by 2027.

The American Health Care Act would reduce federal funding for the expansion of those covered by Medi-Cal and would impose new rules that would result in large-scale numbers of people losing their coverage, the state report said.

That, in turn, would shift a new burden of cost to California, reaching more than $18 billion by 2027.

Brown will be long out of office by then, of course, but the prospects for more short-term impacts on the state budget will color his thinking as his Finance Department prepares to issue a revised budget plan in May.

That’s why Brown and California’s ruling party are holding their breath as the health care showdown continues to unfold in Washington.