Senate Bill Cuts One Third of California’s Medicaid Funding

California Assembly Speaker Anthony Rendon (D-Los Angeles) has blamed the collapse of the state legislature’s effort to socialize the state’s $389.5 billion in healthcare spending on the U.S. Senate Republicans’ restructure of Obamacare, which threatens to “reallocate” over a third of California’s $82 billion of Medicaid funding to other states.

Rendon stated that SB 562 will not go to a floor vote by both houses of the legislature, because it was flawed by not addressing “financing, delivery of care, cost controls, or the realities of needed action by the Trump Administration and voters to make SB 562 a genuine piece of legislation.” But he emphasized that the Republicans’ Obamacare restructuring proposal is an existential threat to the Democrats’ dream of socializing a fifth of California’s GDP.

The United States spends about 17.8 percent of GDP, or about $3.4 trillion, on healthcare, according to the Centers for Medicare & Medicaid Services. California is by far the largest state market for healthcare spending, with 11.5 percent, or $389.5 billion, of all such expenditure.

Due to the historic design of Medicaid, the only limitation on enrollment is an individual’s or family’s income as a percent of the poverty rate. Obamacare drastically increased Medicaid enrollment by raising the percent of income over the poverty rate necessary to qualify for the program.

California received about $5 billion in Obamacare federal subsidies to help pay healthcare premiums for about 1.2 million individuals. But California’s big bucks came from Obamacare’s “Medicaid Expansion,” where the state received about an extra $15 billion to expand its Medi-Cal coverage by 3.5 million individuals.

As a result, California now has about 13.5 million individuals enrolled in Medi-Cal, or about 34.5 percent of the state’s 39.1 million residents. But with only 31 states and the District of Columbia participating, the total U.S. Medicaid expansion was 14.4 million individuals, according to the Kaiser Family Foundation. That means California captured over 24.3 percent of Obamacare’s Medicaid Expansion funding.

Of the 68.9 million individuals currently enrolled in Medicaid, California has 19.6 percent of all U.S. Medicaid enrollment and receives 19.6 percent of Medicaid funding, according to the Medicaid.gov website. But under the Republican Senate’s restructuring, that would change dramatically.

The Republican Senate’s restructuring of Obamacare does allow federal Medicaid funding to be “block granted” to each state, so California could develop its own socialized medicine benefit program. But the Senate’s restructuring coverts Medicaid funding from an unlimited number of enrollees, to a “per capita cap” funding amount based on the state’s population.

Given that California currently has 12.4 percent of the nation’s population and 19.6 percent of the nation’s Medicaid funding, the Senate Obamacare restructuring proposal would “reallocate” 7.6 percent of national Medicaid funding on a per capita basis to the other states.

That means that California would lose 37 percent of its $82.0 billion in Medicaid funding to the other states. That amounts to a California being at risk of losing $30.3 billion in federal funding.