California and the ACA’s Medicaid expansion

Medi-Cal is largest Medicaid program in nation; covers more than 13 million people

california Medicaid guide

Medicaid expansion in California

California’s Medicaid program is called Medi-Cal. It covered nearly 13 million people as of November 2018. Of that total, nearly 3.5 million were eligible due to the ACA’s expansion of Medicaid, which took effect in 2014. Medi-Cal enrollment grew significantly in 2014 and 2015. Since then, it’s hovered roughly between 13 million and 13.5 million enrollees.

Rules implemented to limit Medi-Cal estate recovery

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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 (this is the case in every state that has expanded Medicaid). 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 began receiving bills from Medi-Cal after their loved ones passed away, including bills to cover the cost of payments that the state made to managed care plans, even if the deceased didn’t use any medical services.

California S.B.826, the Budget Act of 2016, included 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 has played a key role in reducing the uninsured rate

California adopted Medicaid expansion through the Affordable Care Act (ACA). Enrollment began in October 2013, with coverage effective in January 2014.

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. According to US Census data, the state’s uninsured rate stood at 17.2 percent in 2013, and had dropped to 7.2 percent by 2017.

Medicaid expansion has played a key role in reducing the state’s uninsured rate. Medi-Cal enrollment grew by about 5.6 million people between 2014 and 2017, and has hovered around 13 million people since then. Much of that growth is due to the expansion of Medicaid eligibility to cover adults with income up to 138 percent of the poverty level.

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 more 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 — 90 percent as of 2020 and beyond — 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; this will extend to young adults as of 2020

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.”

In 2019, however, California enacted SB104, which extends Medi-Cal to young adults (ages 19-25) who are eligible based on their income, regardless of their immigration status. The new law takes effect in January 2020, and the state expects roughly 138,000 people to gain coverage as a result of SB104.

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 more than four million people from 2013 to 2018.

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.

As of 2018, about 10.8 million Medi-Cal enrollees (out of about 13.2 total enrollees) were covered under Medicaid managed care plans.

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

Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written dozens of opinions and educational pieces about the Affordable Care Act for Her state health exchange updates are regularly cited by media who cover health reform and by other health insurance experts.

How to apply in CA

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.

Eligibility: 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.

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