California Could Incur High Costs From Plans To Expand Medicaid

Health care reform proposals that seek to extend coverage to millions of uninsured U.S. residents could further strain California's budget, the San Jose Mercury News reports.

President Obama and Democrats in Congress currently are pushing to extend insurance coverage by expanding Medicaid. For example, some proposals would raise Medicaid's income eligibility cutoff level to 133% of the federal poverty level.

Officials working for Gov. Arnold Schwarzenegger (R) estimate that this plan could result in 1.6 million more people qualifying for Medi-Cal, California's Medicaid program.

Medi-Cal currently has about 6.8 million beneficiaries, making it the largest Medicaid program in the country.

Potential Costs of Reform

In a worst-case scenario, California officials estimate that a national Medicaid expansion could result in as much as $8 billion in new costs per year for the state.

The state also could incur higher costs if national reform legislation ratchets up Medicaid reimbursement rates.

In response to such concerns, Sen. Barbara Boxer (D-Calif.) said last week that Senate Majority Leader Harry Reid (D-Nev.) has issued a verbal commitment that reform plans would classify California as a "high need" state struggling with significant Medicaid costs.