California and the ACA’s Medicaid expansion

Medi-Cal is largest Medicaid program in nation; covers more than 12 million

Where in your state to call or visit for Medicaid.How to apply

Online on the Covered California website. Fill out an application and mail it to P.O. Box 989725 West Sacramento, CA 95798-9725. Apply in person at a county social service office.

Who is eligible in your state to get Medicaid?Who is eligible

Children from birth through age 18 with family income levels up to 266% of FPL; pregnant women with incomes up to 213% of FPL; and nonelderly adults — with or without dependent children — with incomes up to 138% of FPL. Pregnant women with incomes up to 322% of FPL are eligible for MCAP.

  • By
  • healthinsurance.org contributor
  • January 21, 2017

California’s Medicaid program is called Medi-Cal. It covered about 12.2 million people as of November 2016, which is by far the largest total enrollment of any state in the US. A year earlier, in August 2015, there were about 12.65 million people with Medi-Cal coverage, but the decline occurred because California changed their reporting process in September 2015, removing some limited benefit groups from the official Medi-Cal count.

Overall, since the end of 2013, enrollment in Medi-Cal has grown by 57 percent, and over three million current enrollees became newly eligible when Medicaid was expanded in 2014. The state expects enrollment of newly eligible individuals to stabilize in 2017, following significant enrollment growth in 2014-2016.

But there are significant concerns that Medi-Cal’s budget could be slashed under the Trump Administration. Medicaid is currently an open-ended commitment from the federal government; as state costs increase, federal matching dollars also increase. But Republican lawmakers and President Trump have called for a switch to block grants or per-capita allocation in an effort to cut federal Medicaid costs. With less federal funding flowing into Medi-Cal’s coffers, the state would almost certainly have to reduce eligibility thresholds or trim benefits for current enrollees.

California voters passed two propositions in 2016 that protect and increase state funding for Medi-Cal (described below), but the loss of a portion of the current federal funding would be a significant blow to the program.

Rules implemented to limit Medi-Cal estate recovery

Longstanding federal regulations, which predate the ACA, require states to “seek recovery of payments from the individual’s estate for nursing facility services, home and community-based services, and related hospital and prescription drug services” for any Medicaid enrollee over the age of 55. But states can choose to go further, using estate recovery to recoup any Medicaid costs.

This has become more of a problem since the ACA’s Medicaid expansion took effect in 2014, as people are now funneled into the Medi-Cal system in much greater numbers than they used to be. Covered California enrollees with income up to 138 percent of the poverty level are directed to Medi-Cal, regardless of the value of their assets (there’s no asset test for subsidy eligibility or Medicaid coverage under the ACA). As a result, some families have been receiving bills from Medi-Cal after their loved ones pass away, including bills to cover the cost of payments that the state makes to managed care plans, even if the deceased didn’t use any medical services.

California S.B.826, the Budget Act of 2016, including a provision to bring Medi-Cal estate recovery into line with federal rules. For people who pass away January 1, 2017 or later, the state will only use estate recovery to recoup long-term care costs that were incurred by Medi-Cal. But that includes In-Home Supportive Services, which the state did not previously recoup through estate recovery.

In addition, estate recovery is now limited to assets that were owned by the deceased at the time of death and are subject to probate. For people who passed away prior to 2017, the state could seek to recoup costs from any assets owned by the deceased at the time of death.

Minnesota implemented similar legislation in 2016, but unlike California, they made their limits on estate recovery retroactive back to January 2014.

Who qualifies for Medi-Cal?

Medicaid is a joint federal-state program. The federal government establishes broad guidelines, and each state develops specific rules and policies that shape how the program is administered for its residents.

In terms of who is eligible for coverage, the federal government requires states to cover certain populations. States must cover mandatory populations to receive federal funding. States can also cover optional populations and receive federal funding.

The federal government establishes baseline levels for eligibility within each covered population. States can set higher levels if they wish, and the income limits vary significantly from state to state.

California has generous standards for covering various Medicaid populations. Children from birth through age 18 are covered with family income levels up to 266 percent of FPL. Pregnant women qualify with incomes up to 213 percent of FPL, and nonelderly adults — both those with and without dependent children — are covered up to 138 percent of FPL.

MCAP (Medi-Cal Access Program) is also available to pregnant women with household incomes between 213 percent and 322 percent of FPL (for Medi-Cal and MCAP eligibility, a pregnant woman counts as two people when determining household income relative to the poverty level). MCAP enrollment was integrated with Covered California in October 2015.

How to apply for Medi-Cal

The application process for Medi-Cal is integrated with Covered California, the health insurance marketplace. You can apply:

  • Online on the Covered California website.
  • By mail: complete an application, which is available in 12 languages, and mail it to Covered California at P.O. Box 989725 West Sacramento, CA 95798-9725.
  • In person at a county social service office. The directory includes phone numbers for each county office if you need more information or assistance.

Medicaid expansion

California adopted Medicaid expansion through the Affordable Care Act (ACA).

In a January 2014 report, the Kaiser Family Foundation estimated that about 7 million Californians were uninsured. By October 2015, that number had dropped to about 3.85 million; Medi-Cal enrollment has grown by about 4.45 million people since the end of 2013, and 1.4 million people have private coverage through Covered California. With Medicaid eligibility extended to cover nonelderly adults with incomes up to 138 percent of FPL, about 37 percent of the people who were still uninsured as of late 2015 were eligible for Medicaid.

Funding for Medi-Cal

Medicaid expansion has raised concerns about overburdening the health care system with a flood of new patients and challenging the financial viability of the program. An Oregon study released in early 2014 reinforced those fears. The study showed more use of primary care and about a 40 percent increase in emergency room visits among the newly insured. However, a recent study by the UCLA Center for Health Policy Research found that the spike in emergency room use was temporary — dropping by two-thirds after two years. The study also found that primary care use did not climb in response to the drop off of emergency room use — meaning overall utilization tapered off. Lead author Jerry Kominski summarized the study this way: “What our findings say to the country is (that) concerns about Medicaid expansion being financially unsustainable into the future are unfounded.”

That said, the expansion of Medi-Cal hasn’t been cheap. 38 percent of California taxes are used to fund Medi-Cal, and Medicaid spending in California accounts for 27 percent of the state’s spending, as opposed to an average of 17 percent nationwide.

Because California is an affluent state, they don’t get as much in federal matching funds for Medicaid (this is referring to the traditional Medicaid program, which is funded jointly by the states and the federal government; for the ACA expansion population, the federal government will always pay the lion’s share of the tab, and there’s no difference from one state to another).

California and the federal government split traditional Medi-Cal costs roughly equally, with the federal government paying about one dollar for every dollar the state spends. In poorer states, the federal government matches at a rate of double or even triple that amount.

To make funds permanently available for the state’s portion of Medi-Cal costs (via a hospital fee that had already been implemented temporarily), Proposition 52 was on the November 2016 ballot in the state, and passed with 70 percent of the vote. Another ballot measure, Proposition 56, which passed with 64 percent of the vote, raises the tax on cigarettes, with a portion of the revenue being directed to various aspects of Medi-Cal.

Undocumented immigrant children eligible for Medi-Cal

170,000 undocumented immigrant children in California gained access to Medi-Cal starting in May 2016. Governor Jerry Brown signed SB4 into law in October 2015, and it eliminated the immigration status requirement for Medi-Cal eligibility for California residents 18 and under. As long as they qualify based on household income, they’re eligible for coverage.

For undocumented immigrant adults, SB10 was also introduced in 2015, and passed during the 2016 legislative session. SB10 initially called for allowing adults age 19 and over to enroll in Medi-Cal without regard for immigration status.

But the final version of the bill instead called for the state to request a 1332 waiver from HHS to allow undocumented immigrants to enroll in unsubsidized QHPs through Covered California, the state-run exchange (without a waiver from HHS, this isn’t possible, as the ACA requires all exchange enrollees to be legally present US residents, regardless of whether they receive any subsidies).

The state did submit a waiver to HHS, but on January 18, 2017, two days before Trump’s inauguration, the state withdrew the waiver, noting that they didn’t trust the Trump Administration to ensure “people’s privacy and health” in implementing the waiver. They were concerned that the Trump Administration would use Covered California data to deport people and separate families. State Senator Ricardo Lara, who had championed SB10, asked for the waiver withdrawal, calling it “the first California casualty of the Trump presidency.”

History of Medicaid in California

Medi-Cal was established in 1966, and is now the nation’s largest Medicaid program in terms of enrollment. Medi-Cal enrollment expanded significantly during the first three years of Medicaid expansion through the ACA, growing by 57 percent from late 2013 to November 2016.

Medi-Cal has expanded coverage and implemented new policies over the years, including introducing Medicaid managed care plans in 1973, implementing selective contracting strategies with hospitals in 1982, expanding access to family planning services in 1997, extending coverage to families at 100 percent of FPL in 2000, and expanding coverage to uninsured adults in 2010.

More information about the history, current status, and future outlook for the Medi-Cal is available in this California Healthcare Foundation publication.

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