State-Based Expansion Makes More Sense, LAO Says

After conducting a review of the two choices California officials are considering for optional Medi-Cal expansion, the state Legislative Analyst’s Office yesterday strongly recommended the state-based option, rather than a county-based plan.

On a busy Tuesday for health care policy in Sacramento, the Assembly Committee on Health yesterday convened the first hearing of the legislative special session on health care reform and passed the first component of it, AB 1X-1 by Assembly Speaker John Peréz (D-Los Angeles).

The proposed bill establishes the framework to expand Medi-Cal to childless adults under age 65 in California, up to 138% of federal poverty level. It would streamline the eligibility and enrollment process to follow the mandate of the Affordable Care Act, and offer California’s version of federally-required essential health benefits.

“AB 1X-1 implements key provisions of the ACA, and will ensure that California can fully participate in national health care reform,” Peréz said. “It will ensure a healthier workforce. And it will bolster our health care industry and our overall economy.”

The bill was approved along party lines within the Health committee, 13-6. It now heads to the Assembly Committee on Appropriations.

The LAO report addressed another important aspect of the optional Medi-Cal expansion effort — the decision still to be made on whether that expansion will be a state-based or county-based system.

“In our view, the state is in a better position to provide Medi-Cal for that newly eligible population,” said Ross Brown, a fiscal and policy analyst with the LAO. “We see some efficiencies beyond the county-based approach, with reduced program fragmentation under the state-based option.”

The LAO report had three major points to make, Brown said:

• California is right to go ahead with the optional Medi-Cal expansion. It stands to gain in many ways from the expansion with little financial risk, the LAO report said. “We estimate that fiscal savings to the state as a whole are likely to outweigh the cost of the expansion for at least a decade,” the report concluded, “although these estimates are subject to significant uncertainty.”

• State and county officials need to reassess their fiscal relationship in regard to indigent care, assuming the state-based option is chosen, because responsibility for care of the expansion population shifts from the counties to the state. “Given this shift of responsibility, we further recommend the Legislature redirect a portion of funding currently allocated to counties under 1991 realignment for indigent health care,” the report said.

• Gov. Jerry Brown (D) outlined two proposals for the optional expansion of Medi-Cal, and has not indicated a predilection for either the county- or state-based plan. But LAO analysts said the choice was pretty clear: that a county-based system might cause undue confusion and administrative hassle, and that a state-based system made more sense, on several levels.

“Under the county-based plan, if they just handled the newly eligible population, that could result in churning, and additional administrative costs,” Ross Brown of the LAO said. “In the state-based plan, there is some potential for parents to share coverage with their children, and it would reduce administrative complexity.”

The county plan was floated, in part, because of the success of the Low Income Health Plan, which is a bridge to Medi-Cal expansion under the ACA, and is run by the counties. Making the expansion county-based, Ross Brown said, might be a smoother transition for the half-million Californians enrolled in LIHP, but not for anyone else.

“In the long view, the state is much better positioned for expansion of Medi-Cal than most counties are,” Ross Brown said. “The level of government with programmatic responsibility should also have fiscal responsibility. Currently that has been with the counties, and under the state-based plan, that would shift for some of the population, so it’s reasonable to reassess the fiscal relationship for a portion of that population.”

Related Topics

Capitol Desk Medi-Cal