BILL ANALYSIS Ó
Senate Appropriations Committee Fiscal Summary
Senator Kevin de León, Chair
SB X1 1 (Hernandez and Steinberg) - Medi-Cal: Eligibility.
Amended: As introduced Policy Vote: Health 6-1
Urgency: No Mandate: Yes
Hearing Date: March 4, 2013
Consultant: Brendan McCarthy
This bill meets the criteria for referral to the Suspense File.
Bill Summary: SB X1 1 would enact a number of changes to
simplify the eligibility, enrollment, and renewal process for
Medi-Cal, as required by the federal Affordable Care Act.
(Referred to as the "mandatory expansion" by the
Administration.)
SB X1 1 would extend Medi-Cal eligibility to all non-pregnant,
non-Medicare eligible, childless adults with income below 138
percent of the federal poverty level, as authorized by the
federal Affordable Care Act. (Referred to as the "optional
expansion" by the Administration.)
Fiscal Impact:
The Mandatory Expansion. By simplifying the process for
determining eligibility for Medi-Cal and enrolling program
participants, the bill will increase enrollment in the
program. The Legislative Analyst's Office projects that the
total costs due to increased enrollment of people already
eligible for the program will be about $620 million in
2014-15 ($290 million General Fund at traditional cost
sharing) rising to about $1.1 billion in 2020-21 ($460
million General Fund). Note that these costs will occur due
to changes mandated by federal law.
The Optional Expansion. By expanding Medi-Cal eligibility
to all childless adults under 65 years of age with household
income below 138 percent of the federal poverty level, the
bill substantially increases the eligible population,
increasing program costs. Under the Affordable Care Act
federal financial participation will be substantially higher
than current practice - starting at 100 percent and
declining to 90 percent by 2020 and thereafter.
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Page 1
o State Medi-Cal health care costs. The Legislative
Analyst's Office projects that, under reasonable
assumptions, about 1.8 million additional people will be
eligible for Medi-Cal under the bill and that about 65
percent of eligible persons will enroll in the program.
In 2014-15, total projected costs for medical services
under the optional expansion are projected to be about
$3.5 billion per year, entirely funded by the federal
government. In 2020-21, the total costs for medical
services under the optional expansion are projected to be
$6.0 billion per year, including about $605 million per
year in General Fund costs (based on the ultimate 90
percent federal matching rate for the optional expansion
population).
o State Medi-Cal administrative costs. In addition to
the direct costs to provide medical services to the
expansion population, there will be administrative costs
to make eligibility determinations and enroll
beneficiaries in Medi-Cal. Due to the changes to
eligibility and enrollment processes under the bill, per
capita administrative costs associated with the expansion
population may be lower than current per capita
administrative costs. Administrative costs are subject to
the standard 50 percent federal matching rate. By
2020-21, state General Fund administrative costs are
likely to be in the lows tens of millions per year.
o State savings in other health care programs and in
corrections. The Legislative Analyst's Office also
indicates that the state will see substantial savings in
other state health-subsidy programs, such as the
Genetically Handicapped Persons Program, the Breast and
Cervical Cancer Treatment Program, and other programs. As
Medi-Cal eligibility increases, some participants in
these state programs will be eligible for full scope
health benefits from Medi-Cal and may no longer need
services from these specialized programs. There is a good
deal of uncertainty about the impact of the Medi-Cal
expansion on these programs, but the Legislative
Analyst's Office indicates that state savings could be in
the low hundreds of millions per year. In addition, the
state could experience General Fund savings up to $60
SB X1 1 (Hernandez and Steinberg)
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million per year due to the shift of certain outpatient
medical costs for inmates to Medi-Cal under the
expansion.
o County health care savings. Under current law,
county governments are responsible for providing certain
health care services to medically indigent adults who do
not qualify for other public health care programs. Under
the proposed expansion of Medi-Cal, a portion of that
population would transition from county responsibility to
the Medi-Cal program. While there is a great deal of
uncertainty regarding how many people would transition
from county-provided health care coverage to Medi-Cal and
the cost savings to the counties, the Legislative
Analyst's Office indicates that the counties are likely
to realize cost savings in the range of $800 million to
$1.2 billion per year. It is important to note that under
SB X1 1, all county savings would be retained by the
counties and would not be shared with the state.
Policies that will impact enrollment and costs. In addition
to the general uncertainty in projecting future Medi-Cal
enrollment levels and health care costs, there are certain
policy issues addressed by the bill that are likely to have
impacts on enrollment levels or per capita costs. The fiscal
impacts of these policy choices are not fully known at this
time. Key policy choices made in the bill include:
o The benefit package provided to the expansion
population. Federal law provides some flexibility to the
state to design a benefit package for the expansion
population (although the benefit package must provide the
essential health benefits required under the Affordable
Care Act).
SB X1 1 directs the Department of Health Care Services to
seek federal approval to provide the same benefit package
to the expansion population as is provided under the
current Medi-Cal population as well as providing coverage
required under the essential health benefit package. In
addition, the bill requires the existing Medi-Cal
population to also receive the same essential health
benefit benchmark coverage. In general, the existing
Medi-Cal benefit package is broader than the essential
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health benefit benchmark plan the state has selected (the
Kaiser Small Group plan), particularly in coverage of
long-term services and supports. However, the Kaiser plan
provides some additional benefits such as some
acupuncture services and more generous substance abuse
benefits.
The fiscal projections above assume that the expansion
population gets the existing Medi-Cal benefit package.
There may be additional costs, for both the existing
Medi-Cal eligible population and the expansion
population, by requiring both populations to receive
benefits equivalent to the Kaiser benchmark plan.
o Self-attestation by applicants. Federal law and
regulations allow states to accept self-attestation by
applicants of certain information, such as age, date of
birth, household income, and state residency (not
immigration status). SB X1 1 requires the Department to
accept self-attestation of this information. By allowing
applicants to self-attest (rather than requiring them to
provide documentation) this provision simplifies the
application process and is likely to increase enrollment.
o Full scope pregnancy-related coverage. Under current
state law, pregnant women with incomes up to 200 percent
of the federal poverty level are eligible for Medi-Cal.
Some of these beneficiaries are eligible for full-scope
benefits during pregnancy, while other beneficiaries are
only entitled to pregnancy-related benefits, depending on
a variety of eligibility factors. Draft federal
regulations indicate that Medicaid programs must provide
full scope benefits to pregnant women, unless the federal
government specifically authorizes states to limit such
benefits. SB X1 1 requires that all pregnant women
enrolled in Medi-Cal (up to 200 percent of the federal
poverty level) be provided with full scope benefits,
unless approval is granted by the federal government to
provide lesser benefits. (The author indicates that the
intent of the bill is to require full-scope benefits to
be provided to all pregnant women enrolled in Medi-Cal.)
o Elimination of the existing deprivation requirement.
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Under current state law, the Medi-Cal program covers
children and caretaker relatives who are "deprived" of
full parental support (i.e. one parent is absent,
deceased, disabled, unemployed or underemployed). Federal
law allows states to eliminate this requirement and SB X1
1 does so. It is not clear whether eliminating this
requirement would actually increase the number of
eligible individuals for the program.
o Projection of annual income. Federal guidance to
date indicates that projected annual income (rather than
an applicant's current monthly income) can be used to
determine income eligibility. The bill requires the
Department to allow applicants to use projected annual
income to determine income eligibility. The counties (who
currently perform eligibility determinations) have
indicated that they already allow some projection of
income when making eligibility determinations, so it is
not clear whether this would actually increase overall
enrollment in Medi-Cal.
Background: Under state and federal law, the Department of
Health Care Services operates the Medi-Cal program, which
provides health care coverage to pregnant women, children and
their parents with incomes below 100 percent of the federal
poverty level, as well as blind, disabled, and certain other
populations. Generally, the federal government provides a 50
percent federal match for state Medi-Cal expenditures. Under
federal law, most Medi-Cal services are only available to
citizens and legal immigrants.
The federal Affordable Care Act allows states to expand Medicaid
(Medi-Cal in California) eligibility to persons under 65 years
of age, who are not pregnant, not entitled to Medicare Part A or
enrolled in Medicare Part B, and whose income does not exceed
133 percent of the federal poverty level (effectively 138
percent of the federal poverty level as calculated under the
Affordable Care Act). As enacted, the Affordable Care Act
required states to expand their Medicaid programs to 138 percent
of the federal poverty level. In June of 2012, the United States
Supreme Court ruled that mandating the Medicaid expansion is
unconstitutional. Subsequently, the federal Health and Human
Services Agency released guidance indicating that states may
only reject the Medicaid Expansion or fully enact the Medicaid
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Expansion.
The Affordable Care Act provides a significantly enhanced
federal match for the Medicaid expansion. Under the law, the
federal government will pay for 100 percent of the cost of the
Medicaid expansion in 2013-14 declining to a 90 percent federal
match in the 2020 federal fiscal year and thereafter.
In addition to the expansion of coverage, the Affordable Care
Act simplifies the process for determining eligibility for
Medicaid programs by making a large number of changes to the
process for applying, determining eligibility, enrolling and
redetermining eligibility by state Medicaid agencies. For
example, the federal law generally removes the requirement that
applicants pass an asset test and federal law requires state to
generally use a simplified income test (Modified Adjusted Gross
Income or MAGI).
Proposed Law: SB X1 1 would enact a number of changes to
simplify the eligibility, enrollment, and renewal process for
Medi-Cal, pursuant to the federal Affordable Care Act. (Referred
to as the "mandatory expansion" by the Administration.)
The bill would place requirements of the federal Affordable Care
Act into state law, including:
Eliminating asset tests for most applicants and shifting to
a Modified Adjusted Gross Income (MAGI) standard for
calculating income.
Extending Medi-Cal eligibility to former foster youth up to
26 years of age.
Requiring the Department of Health Care Services to develop
an equivalent income level for groups who will be
transitioned to using MAGI to determine eligibility. (The
purpose of this provision is to ensure that currently
eligible populations do not lose coverage due to the change
in income calculation methods.)
Repealing the state requirement that Medi-Cal participants
file semi-annual status reports and be redetermined for
eligibility semi-annually.
The bill would implement certain options to the state authorized
under the federal Affordable Care Act, including:
Allowing individuals to self-attest to certain information,
such as income, family size, and state residency. (Such
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information would then be checked against existing state and
federal data sources.)
Providing that all pregnant women enrolled in Medi-Cal (up
to 200 percent of the federal poverty level) are eligible
for full scope benefits, rather than being limited to
pregnancy-only benefits. (The author indicates that he
intends to clarify this provision of the bill to this
effect.)
Authorizing applicants to use either currently monthly
income or projected annual income to determine income
eligibility.
SB X1 1 would extend Medi-Cal eligibility to all non-pregnant,
non-Medicare eligible, childless adults with income below 138
percent of the federal poverty level, as authorized by the
federal Affordable Care Act. (Referred to as the "optional
expansion" by the Administration.) The bill would require the
Department to seek federal approval to provide the same benefits
package to the expansion population as is currently provided in
the Medi-Cal program. The bill would also require the currently
eligible population to receive a benefit package equivalent to
the state's essential health benefit benchmark plan (the Kaiser
Small Group plan).
The bill would require the Department (in accordance with the
state's existing Bridge to Reform Medicaid Waiver) to prepare a
transition plan to Medi-Cal for individuals who are eligible for
the Medicaid expansion and who are or will be covered as part of
the Bridge to Reform waiver.
Related Legislation:
AB 43 (Monning, 2012) and SB 677 (Hernandez, 2012) were
substantially similar to this bill. Neither bill was
enacted.
SB 1478 (Hernandez, 2012) would have extended Medi-Cal
eligibility to former foster youth up to 26 years of age.
That bill was held on this committee's Suspense File.
AB X1 1 (J. Perez) is identical to this measure. That
measure is on the Assembly Floor.
SB 28 (Hernandez) is substantially similar to this measure.
That bill is in the Senate Health Committee.
Staff Comments: The bill is keyed as a reimbursable mandate
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because county social service programs perform eligibility
determinations for Medi-Cal and are responsible for certain case
management. Those costs to the counties are reimbursed through
the Medi-Cal program.
As noted above, counties are likely to see significant
reductions in costs for providing health care to medically
indigent adults under the bill. It is important to note that
none of those savings would accrue to the state under this bill.