BILL ANALYSIS �
AB 43
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Date of Hearing: May 4, 2011
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
AB 43 (Monning) - As Amended: April 25, 2010
Policy Committee: HealthVote:13-6
Urgency: No State Mandated Local Program:
Yes Reimbursable: Yes
SUMMARY
This bill expands Medi-Cal coverage to all persons with income
that does not exceed 133% of the Federal Poverty Level (FPL)
generally low-income childless adults, effective January 1,
2014, and allows the Department of Health Care Services (DHCS)
to phase in this coverage to the extent permitted by federal
law. It also requires DHCS to submit to the Legislature a
report required by the federal Centers for Medicaid and Medicare
Services describing the transition plan for individuals who will
gain Medi-Cal coverage in 2014.
FISCAL EFFECT
1)There are unknown, likely significant costs, potentially in
the millions, for systems changes, staffing, and other
administrative activities to implement the eligibility
expansion required under federal law. Further federal
guidance and state planning are needed in order to estimate
the administrative costs associated with the expansion. Since
the eligibility expansion is required under federal law, the
state would likely incur these costs even in the absence of
this bill.
2)Estimated federal expenditures associated with coverage of the
newly eligible population are up to $2.7 billion beginning in
state fiscal year 2013-14, and up to $5.5 billion for the
first full year of implementation in 2014-15 (the newly
eligible population is initially funded with 100% federal
funds). The actual expenditures and timing of expenditures
will depend on the take-up rate and how quickly individuals
enroll. Beginning in 2014, state and federal authorities will
implement a number of changes related to health care coverage,
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including the individual mandate to obtain health care
coverage. It is unknown what portion of individuals will
apply for Medi-Cal coverage due specifically to the
eligibility expansion in this bill, as compared to other
changes.
3)The estimated state fiscal impact associated with coverage of
the newly eligible population is up to $150 million in state
General Fund (GF) beginning in state fiscal year 2016-2017,
and up to $450 million GF by 2018-19.
4)The state is expected to realize cost savings in various
smaller state health care programs, since a significant
portion of the population currently served by these programs
will likely seek comprehensive health care coverage through
Medi-Cal when eligibility is expanded. The California Health
and Human Services Authority estimates that the state will
save approximately $1.4 billion ($600 million GF) annually in
2014-15, the first full year of the eligibility expansion, as
compared to projected expenditures. The majority of these
savings will likely be due to the expansion of Medi-Cal
eligibility.
COMMENTS
1)Rationale . This bill implements the expansion of Medi-Cal
eligibility to low-income childless adults, a population group
not currently eligible for Medi-Cal, by January 1, 2014 as
required under federal law. In addition, by requiring DHCS to
submit their initial transition plan to the Legislature, the
author intends to increase legislative oversight of the
eligibility expansion.
2)Background . The Patient Protection and Affordable Care Act
(ACA) establishes a new eligibility category for all
non-pregnant, non-Medicare eligible childless adults under age
65 who are not otherwise eligible for Medicaid, and requires
minimum Medicaid coverage at 133% of the federal poverty level
(technically, eligibility is extended to 138% of the FPL using
new income-counting rules established in the ACA).
The federal matching rate for newly eligible Medi-Cal
enrollees is significantly higher than the state's current
rate. For federal fiscal year (FFY) 2014 through FFY 2016,
the newly eligible population is 100% federally funded; the
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rate then falls to 95 % for FFY 2017, to 94 % for FFY 2018, to
93 % for FFY 2019, and to 90 % for FFY 2020 and beyond. This
rate only applies to the new eligibility category established
in this bill; expenditures for individuals enrolled under
current eligibility categories are matched at the state's
normal rate of 50%.
3)Low Income Health Program and the Section 1115 Waiver . In
November 2010, California received federal approval for a new
five-year Section 1115 Medi-Cal Demonstration/Pilot Project
Waiver, entitled "A Bridge to Reform." Under Section 1115 of
the Social Security Act, states can submit proposals to test
promising new health care payment and delivery mechanisms and
receive federal approval to waive some of the federal Medicaid
rules while still receiving federal Medicaid matching funds.
The 2010 waiver created a county-based Low Income Health
Program (LIHP). Through the LIHP, the population from 0-133%
of the federal poverty level (FPL), who under federal law will
receive coverage under Medi-Cal in 2014, will be provided a
core set of services, including inpatient and outpatient
services, prescription drugs, mental health, and other
medically necessary services. Counties will use local funds to
leverage federal Medicaid matching funds. All counties have
indicated that they intend to participate in the LIHP to some
extent. The LIHP authorizing legislation included provisions
regarding eligibility redetermination and standardized
enrollment procedures that will allow the LIHP population to
transition into Medi-Cal in 2014.
4)Effect on Current State Programs . The state currently
administers a variety of health care coverage programs serving
specific populations. Many of the individuals served by these
programs will either be eligible for Medi-Cal in 2014, or to
purchase subsidized, comprehensive coverage through the
state's new health insurance exchange. For example, most
current enrollees in the state's AIDS Drug Assistance Program
(ADAP) will be able to procure comprehensive coverage through
Medi-Cal or the exchange.
Analysis Prepared by : Lisa Murawski / APPR. / (916) 319-2081
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