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Without Federal Support, Health Care in California Will Suffer

The COVID-19 pandemic is having a catastrophic impact on the U.S. economy as more than 30 million people have lost their jobs in just two months. While Congress has passed legislation to boost unemployment benefits, many of those newly jobless people have also lost their health insurance. Many will turn to Medicaid, called Medi-Cal here in California, which will further strain our California state budget. Medi-Cal could see enrollment jump by as many as three million. At the same time, California is projecting a $54 billion budget deficit in the wake of COVID-19. Unlike the federal government, states cannot print money, so the next round of federal stimulus legislation must include funding that will allow states to stabilize the Medicaid system.

L.A. Care Health Plan, the nation’s largest publicly operated health plan serving nearly two million Medi-Cal members, is leading efforts to make that happen. It composed two letters to congressional leadership articulating exactly what should be included in the next stimulus package. Fifteen of California’s public health plans signed the first letter. Twenty-seven public and commercial plans from across the country signed the second.

Both letters outlined four critical measures that should be included in the next COVID-19 relief package. The recently passed House bill included some of what is needed, but not enough. As lawmakers continue debating another bill, we urge them to seriously consider these four measures:

  • Increase Federal Share of Medicaid Funding – The recession we are currently in will take a long time to reverse. States will experience a decline in revenues, just as the need for services, like Medicaid, jumps. While this will be a temporary state of affairs, analysis reveals states will require as much as $192 billion in additional federal funding to sustain Medicaid programs over a two-year period. There is precedent. In the last recession, Congress appropriated funds to keep Medicaid solvent for all states for 27 months.
  • Suspend the Proposed Medicaid Fiscal Accountability Rule (MFAR) – Last November, the Trump administration proposed a Medical Fiscal Accountability Rule (MFAR) that would restrict the amount of federal Medicaid dollars when states use supplemental measures, like provider taxes or intergovernmental transfers, to generate state Medicaid funding. It was a bad idea in flush times and a disaster during a recession. This is no time to reduce funding for critical safety net programs.
  • Extend Presumptive Eligibility for Medicaid – Again, we are expecting a jump in Medi-Cal enrollment because of COVID-19 job losses. L.A. Care alone could see as many as 400,000 new enrollees. Counties across the country are going to be under considerable pressure to process all applications in a timely manner. Presumptive eligibility provides immediate short-term health care coverage for those who appear to be eligible after suffering a job loss. Without it, they could wait weeks or months to complete the enrollment process, forgoing needed care.
  • Cease Implementation of the Public Charge Rule – The rule, which now lists Medicaid and other necessary services for consideration when applying for a green card, has already created a chilling effect among those in the country legally. We know that chilling effect means many will not seek needed medical care until forced into a much costlier emergency room visit. We opposed the rule when it was first proposed and now, we are asking, at a minimum, for a suspension during the pandemic.

Without more federal assistance, states will have three difficult choices for Medicaid: cut benefits, cut reimbursement rates for providers, and/or cut eligibility. In California, the governor’s May budget revision included two of the three. The new budget proposal cuts recently reintroduced programs that were cut 10 years ago in the last recession – things like optometry, podiatry and some dental care. Reimbursement cuts are in the new budget proposal and that could be devastating since California already has low reimbursement rates and a shortage of safety net providers. Fortunately, eligibility requirements did not change – at least, not yet. Again, this is just a proposal with the final budget not due until mid-June.

Even with additional help from the federal government, it’s doubtful the Medicaid system will be made whole. However, without that help, it will be disastrous. It is going to take time for the economy to recover from this pandemic, and proper health care for the workforce will be instrumental in that recovery. If the Medicaid system does not receive the necessary support, you can bet the workforce will be less healthy. These are the same people who will end up in emergency rooms getting costlier treatment … costs that will be passed on to everyone. It doesn’t have to happen.

We keep hearing that “we are all in this together.” I hope Washington lawmakers understand that high-quality health care is going to be needed even after the pandemic subsides.

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