No state did Obamacare quite like California.
Here, we built our own state-insurance market. Here, we got a jumpstart on shifting low-income residents onto Medi-Cal (the state’s Medicaid program) as early as 2010. Here, insurance policies were standardized, consumer protections were tightened, and multi-lingual, statewide PR campaigns were kicked into overdrive. While other, redder states dragged their institutional heels, California took to the Affordable Care Act with gusto.
For boosters of the law, the results speak for themselves. From 2013 to 2015, the share of Californians without health insurance fell from 17.2% to 8.6%, the largest drop in the country.
“California showed that the ACA can work,” says Laurel Lucia, MPP ’05, of the UC Berkeley Center for Labor Research and Education.
And now that the ACA is on the legislative chopping block, perhaps no state stands to lose more.
“Both the [presidential] campaigns were talking about jobs and both were talking about the ACA. But I don’t think many people realized there was such a strong connection between the two issues.”
According to a report put out by the Labor Center last month, repealing the ACA would mean a loss of more than $20 billion in annual federal funding for California.
Even in a France-sized economy like ours, that’s a sizeable chunk of change. At just about 1% of the state’s gross domestic product and one-tenth of the governor’s proposed 2017 budget, a loss of that magnitude would do more than just affect our healthcare system, says Lucia, it would shock our economy.
According to the Labor Center report, repeal would spell the loss of 200,000 jobs and $1.5 billion in foregone tax revenue.
“Both the [presidential] campaigns were talking about jobs and both were talking about the ACA,” says Lucia, who co-authored the report with Labor Center chair, Ken Jacobs. “But I don’t think many people realized there was such a strong connection between the two issues.”
Under the Affordable Care Act, roughly $5 billion of federal funding goes to Covered California, the state’s individual health insurance exchange, subsidizing coverage for roughly 1.2 million people. The remaining $15.5 billion is used to cover newly eligible Medi-Cal enrollees—about 3.67 million of them. Under the ACA, states were offered the opportunity to dramatically expand Medicaid eligibility, with the federal government footing over 90% of the bill.
All that extra spending goes to doctors, nurses, technicians, and other healthcare providers. Since those providers likely have a habit of eating, shopping, and paying their bills, that funding also means more spending on everything else. Such is the transactional churn that pumps up the economy and maintains job growth. And according to the Labor Center report, the end of the ACA will mean a little bit less of that churn.
That will be particularly true in counties where ACA spending is the highest, says Lucia. Take Fresno County, for example. According to a separate report put out by the Labor Center, 12% of the county’s residents are covered through the Medi-Cal expansion and another 2% get subsidized insurance through Covered California. If the ACA is repealed, the Center projects a local loss of 6,000 jobs.
Nor is California alone in this predicament.
Last week, the Congressional Budget Office, the official nonpartisan scorekeeper for federal legislation, forecast that rescinding both exchange subsidies and Medicaid expansion funding will leave 27 million people nationwide without health insurance in the first year. Furthermore, as the repeal of the individual mandate frees the young and healthy from the obligation to buy insurance, insurance companies will be saddled with older, sicker, and costlier pools of policyholders. As a result, the CBO projects that individual market premiums will rise by 50% and that one in ten Americans will be left living in areas without individual coverage options.
Congressional Republicans point out that such gloomy prognostication only tells half of the story, because it does not analyze the impact of whatever will replace the ACA.
That replacement remains a work in progress. And as GOP lawmakers now confront the hard reality of crafting a health care law that simultaneously meets the various (and perhaps contradictory) goals of expanding coverage, reducing costs, increasing quality, satisfying the party base, and satisfying the new president, California Democrats are waiting for the other shoe to drop.
“I don’t think they know what they’re going to replace it with,” says Senator Ed Hernandez of California District 22, who chairs the Senate Committee on Health. “Until we know, how do we have a conversation?”
Still, there are hints of what is to come. On the campaign trail, President Trump touted a plan to allow insurance companies to sell across state lines. That has some Golden State public health advocates worried, as they fear it could undermine the state’s exacting consumer protection standards for insurance policies.
Likewise, on CBS’s Face the Nation last Sunday, Kellyanne Conway, counselor to the president, suggested that the Trump administration would support converting Medicaid into a block grant system (meaning that rather than being provided as needed based on enrollment, funds would be allocated in fixed amounts to the states).
But no matter the details of the ACA’s replacement, says Senator Hernandez, if the GOP plan rescinds current subsidies and Medicaid funding, it will blow a hole in the state budget.
“If we were to lose all or most of that, we would not have the general fund money available to backfill,” he says. “Essentially you would have individuals who had never had insurance—who now have it—who would then be back without any insurance. That’s the long and short of it.”
Of the proto-proposals emerging from the GOP caucus, one plan presented earlier this week by Senators Bill Cassidy of Louisiana and Susan Collins of Maine may offer some optimism for defenders of the ACA. A “choose your own adventure” approach to political compromise, the Collins-Cassidy plan would give states one of three options—ditch Obamacare, come up with something else, or keep it and all of its subsidies.
The plan is low on detail and has so far been met with jeers from D.C. Democrats and silence from Republicans. But according to Amy Adams, MSW ’98, the senior program officer at the California Healthcare Foundation, allowing states to pave their own way might be the best hope for Californians.
“I think one of the questions about all the federal proposals is how much flexibility will there really be for California to go beyond and how much support will there be,” says Adams.
“The prospects of getting a national bill passed are pretty much zero, but the idea of getting a statewide program actually has some pretty good prospects because of the composition of the legislature.”
And no matter what comes out of D.C., California policymakers will likely lead the charge to safeguard—or at least salvage—the legacy of Obamacare.
“Everyone is looking for a way to maintain the coverage gains that California has had,” says Adams. “Everyone is going to have to be thinking really creatively about what we can do.”
Some are pushing for more creative solutions.
In 2006, then-Senator Sheila Kuehl launched a legislative effort to construct a Californian single-payer system: a government-run program that would be the sole legal provider of health insurance in the state. The bill passed both the Senate and Assembly, though it was vetoed by Governor Schwarzenegger. A similar attempt was mounted by Senator Mark Leno in 2011, but died on the Senate floor.
According to Dr. Anne Simons, a San Francisco–based physician and a member of the California chapter of Physicians for a National Health Program, the third time might be the charm.
“The repeal of the ACA creates more of a window for doing this,” she says. “The prospects of getting a national bill passed are pretty much zero, but the idea of getting a statewide program actually has some pretty good prospects because of the composition of the legislature.”
Indeed, with Democratic supermajorities in both chambers and a Democratic governor, Sacramento is much friendlier turf for socialized medicine than GOP-dominated D.C.
Still, even in bluest California, Simons concedes that there are barriers. Banning insurance companies may present legal challenges. Finding a way around Medicare, the federal program that already provides insurances to senior citizens in the state, will require some cooperation with federal regulators. And then there’s the whole issue of money.
“Whether it’s the Affordable Care Act, whether it’s a delegated model, whether it’s a MediCare model, whether it’s Medi-Cal, there’s a cost to healthcare,” says Senator Hernandez. “It’s not that I’m opposed to [single-payer], I just want to know where the money is going to come from.”
Last week, Senator Hernandez and a handful of other Democratic lawmakers held a public hearing in Bakersfield, intended to showcase the value of the ACA. Towards the end of the evening, a woman approached the microphone and introduced herself as Bernice Bonias, a representative of the local chapter of the California Alliance for Retired Americans.
“If D.C. legislators accomplish their goal of doing away with the Affordable Care Act, what do we have as a backup?” she asked the assembled lawmakers. She recalled Senator Kuehl’s single-payer effort and noted that such a system might be more efficient in the long run. “Is that in anybody’s bill presently?”
But if any of the Democrats in the room are considering that option, they aren’t ready to announce it yet.
“Right now I’m more interested in making sure that we have what we have right now,” said Senator Hernandez. “But more importantly that we protect it.”
