The Effects on California Under the American Health Care Act

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Analysis by Reporting San Diego

March 7, 2017 (San Diego) As more details emerge with the replacement to the Affordable Care Act (ACA), the more Californians should worry. The plan will impact the state Medicaid system, known as Medi-Cal. The system was expanded in 2010 using the federal subsidies that were part of the ACA. The state currently receives $15.3 billion dollars, according to the State budget analyst.

The American Health Care Act (AHCA) will phase out these subsidies starting in 2020, after the midterms but before the November presidential election. About 3.7 Californias receive their health care through this expansion and giving people some tax rebate that they can go on the private market to buy insurance will mean many will lose it.

It also changes how the Medicaid program works. The program was established as part of the war on poverty under President Lyndon Baines Johnson in 1965. The program promised to reimburse states for the cost of health care delivered to their poorest citizens. It does not matter how large those costs are. Conservatives argue that this is neither the role of the federal government, and they see it a a growing entitlement. At this moment it is growing to the tune of $500 billion and it is expected to continue to grow.

As we covered yesterday, the AHCA would give the states a fixed amount of money, and states would have to come up with the difference. It will cap the funds states receive, never mind the cost of health care is still growing, albeit slower than it was before the implementation of the ACA.

https://reportingsandiego.com/2017/03/06/social-security-under-attack/

According to PWC:

2017 will be a year of equilibrium for medical costs. The forces that increase health costs are being tempered by a demand for value in the New Health Economy.

  • PwC’s Health Research Institute projects the 2017 medical cost trend to be the same as the current year – a 6.5% growth rate.
  • There are signs that the decade’s slowing medical cost growth rate could tick back up as new healthcare access points increase utilization.
  • Healthcare organizations must increase access to consumer friendly services while decreasing unit cost.

Other sources agree that the growth of cost has significantly slowed down as well. This was one of the policy promises of the ACA. There will also be severe impacts to the state economy. According to the Berkeley Labor Center:

  • The impact would be felt most in California counties with high Medi-Cal enrollment. Of the seven medium- to large-sized counties in which more than 10 percent of the population relies on the Medi-Cal expansion, six already suffer from high unemployment.
  • Each of these high-impact counties is estimated to lose thousands of jobs on net with a partial ACA repeal: Fresno (6,000), Kern (5,000), San Bernardino (12,000), San Joaquin (4,000), Stanislaus (3,000), and Tulare (3,000).
  • Los Angeles County is expected to lose 63,000 jobs.
  • An ACA repeal would especially harm workers in the healthcare industry, which is estimated to lose 135,000 of the 209,000 eliminated jobs.
  • Many other industries would also be adversely affected by an ACA repeal, including healthcare suppliers and local businesses such as restaurants and retail outlets where healthcare workers spend their income

These are counties that voted heavily for Donald Trump in the election. More important data emerges from California Healthline using state data.

In the northern coastal counties of Humboldt and Mendocino, almost one in five people have insurance either through the Medi-Cal expansion or Covered California.

Potentially millions of  Californians will go back to whatever existed, before the ACA. This will place public health at risk since they will lose access to health care.

Republican leaders in Congress has spoken of how this will increase access, and that is all it does, assuming you have the money to pay for it. It also penalizes those who lose insurance for whatever reason. They will have to pay a surcharge of 30 percent, that will go to the insurance companies if they decide to buy insurance again in the open market. This gap in coverage is of precisely 63 days.

One more critical point. This bill has not been scored by the Congressional Budget Office, which tends to tell us how much a bill will cost. Nor is this going through regular order. As we pointed yesterday, this is a markup of the ACA, since they intend to go through the reconciliation process. We also need to point out how badly the politics are going for this.

The Heritage Foundation, Freedom Works and the CATO institute have come against it. CATO went so far as to call it  Obamacare-Lite

Here is the Tweet from Freedom Works:

Then there is Heritage Action, a Koch Brothers-funded group that called it “bad politics, and more importantly, bad policy.”

The Club for Growth also added to the song and dance earlier in the day on Twitter,

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Some Republican members of the House are already bailing, So the reception has been very negative. Speaker Paul Ryan can afford to lose 20 of his Caucus members, assuming the Democrats remain as a block. In the Senate, McConnell seems to have lost 4 of his and assuming the Democrats remain united, this is likely not going anywhere.

This afternoon the president endorsed this plan since there is resistance among core conservative legislators. Earlier in the day Vice President Mike Pence lobied for teh bill with very conservative members. 

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If this feels it is rushed, it is. The reason is that the more people that take a peek under the hood, the more opposition that grows to this bill.

Edited to add the letter from the American Hospital Association opposing the AHCA.

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