California's Coverage Expansion: Fiscal and Political Risks

Guidehouse Advisor Jeff Goldsmith via Health Affairs Blog

On May 4, 2017, with the passage of the Republicans’ American Health Care Act (AHCA) in the U.S. House of Representatives, a sharp tremor was felt by California’s vast health system. The AHCA threatens withdrawal of at least $150 billion from the state’s health system over the next 10 years, with the sharpest reductions felt from 2020 through 2022. However, even if the House bill fails to become law, if history is any guide, California’s notoriously cyclical economy may not ultimately sustain the weight of the state’s expanded Medi-Cal program, posing future economic risks to its care system.

Beginning in 2020, the AHCA would liquidate the $18 billion in enhanced federal matching presently funding California’s Medi-Cal expansion. Having to replace even a portion of this lost $18 billion would grievously stress California’s general fund and force the state to consider raising money from other sources or dramatically cutting back enrollment. The AHCA would also end the current ACA exchange premium support subsidies and cost-sharing reductions.

Read more on the potential impact of the AHCA on California and its enrollees.

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