Medi-Cal Expansion under the Affordable Care Act: Significant Increase in Coverage with Minimal Cost to the State

In early 2013, the California Legislature will consider bills implementing a key provision of the Affordable Care Act (ACA) which required states to expand Medicaid eligibility to low-income adults under age 65, including those without children living at home. This Expansion was effectively made optional for states by a 2012 Supreme Court decision and has not yet been formally enacted in California. In this report, the authors find that the Medi-Cal Expansion offers California the opportunity to significantly increase health insurance coverage at minimal cost to the state budget.Using the California Simulation of Insurance Markets (CalSIM) model, the authors predict that more than 1.4 million low-income adults will be newly eligible for Medi-Cal under the Expansion beginning in 2014. Other mandatory provisions of the ACA will lead to increased enrollment among Californians who are already eligible for Medi-Cal but not enrolled. This increase in coverage will have far-reaching benefits for Californians’ health outcomes and the California economy.The report also estimates that the federal government will pay for at least 85 percent of new Medi-Cal spending in 2014 through 2019. In the initial years of implementation, most new state Medi-Cal spending will result from required Medicaid changes and will occur whether or not the Expansion is implemented. We find that the new state spending on Californians newly eligible for Medi-Cal will be largely offset by increased state tax revenues and potential savings in other areas of the budget.This is a joint report from the UC Berkeley Center for Labor Research and Education and the UCLA Center for Health Policy Research and funded by The California Endowment