California’s budget has taken a billion-dollar hit as a result of the state’s decision to embrace the Medicaid expansion offered through the Affordable Care Act, and faces billions more in future years.
Enrollment in Medi-Cal has grown from fewer than 8 million people in 2013 to nearly 12 million in 2014, largely as a result of the Medicaid expansion. Most of those costs are covered by federal dollars, but costs for the state have also risen. Gov. Jerry Brown’s budget, released on January 9, anticipates the expansion will cost California taxpayers $943 million in the next fiscal year, largely in administrative costs.
In later years, as federal funding for the expansion declines from 100 percent to 90 percent of the new enrollees’ costs, California’s budget will face another large bite. Brown’s budget estimates the federal government will provide $14.2 billion for the expansion in fiscal year 2015-2016, a figure certain to rise over the next several years. California would have to find $1.5 billion or more by 2020, when the state will be required to pay 10 percent of the expansion costs.
California “should not have accepted funding to expand under Obamacare,” said Sally Pipes, president of the Pacific Research Institute. “Out-of-control health care spending is now crowding out nearly every other state priority, including roads, prisons, and public education.”
Sean Parnell ([email protected]) is managing editor of Health Care News
Sean Parnell ([email protected]) is a research fellow for health policy at The Heartland Institute.
