Through the passage and implementation of the Affordable Care Act in 2010, California has seen massive changes in its healthcare landscape. Its uninsured population has been cut in half, going down from 6 million to 3 million. One in 3 Californians has coverage through Medi-Cal expansion. In addition, all health plans nationwide must provide dependent coverage till age 26, are prohibited from imposing pre-existing condition exclusions, and may have no lifetime coverage limits or unreasonable annual limits. They are also all required to cover at least 10 essential health benefits:
- Outpatient Medical Care
- Emergency Services
- Prescription Drugs
- Maternity and Newborn Care
- Mental Health and Substance Use Disorder Services
- Rehabilitative Services and Devices
- Laboratory Services
- Preventive Services and Chronic Disease Management ✓ Pediatric Services (Including Vision and Dental)
With our new presidential administration and congressional majority leaders, the ACA’s future is in jeopardy, as they intend to repeal or make major changes to this law. Below is an executive summary excerpt of the recently released California Legislative Analyst Office report, The Uncertain Affordable Care Act Landscape: What It Means for California (PDF).
The summary and full report review: provisions of the ACA, how the ACA has altered California’s health care landscape, the uncertain future of the ACA, major ACA provisions at risk for repeal and their consequences for Californians, common themes of Republican replacement proposals, and legislative considerations given the ACA’s uncertain future.
See the executive summary below, and view the full report here.
Major Provisions of the Patient Protection and Affordable Care Act (ACA). The ACA was signed into law in March of 2010. The ACA made substantial changes to how health care services and health insurance coverage are provided nationwide. Major provisions of the ACA include: (1) insurance market changes, (2) subsidized coverage for qualifying individuals through federal and state Health Benefit Exchanges, (3) federal funding for an expansion of program eligibility in state Medicaid programs, (4) additional federal financial participation in other health care programs and services, and (5) new federal revenues.
The ACA Fundamentally Altered California’s Health Care Landscape. California’s health care landscape looks very different from before the full implementation of the ACA. Some of the major impacts that the ACA has had on the state, in addition to the insurance market changes, include:
- One in three state residents is now enrolled in the state’s Medi-Cal program, reflecting the state’s adoption of the ACA optional Medicaid expansion.
- A significant reduction in the number of uninsured state residents—from 6 million in 2013 to 3 million in 2015.
- More than $20 billion in additional federal funding each year for health care coverage, through enhanced federal funding for the ACA optional expansion and federal subsidies for coverage purchased on the state’s Health Benefit Exchange—Covered California.
Significant Federal Uncertainty About the Future of the ACA. The new presidential administration and congressional majority leaders have stated an intent to repeal (or at least make major changes to) the ACA and have taken procedural steps to begin doing so. However, there is substantial uncertainty as to (1) whether and which components of the ACA might be repealed, (2) when any repealed components of the ACA would become inoperative, and (3) what policies could replace those in the ACA.
The ACA Provisions Most at Risk for Repeal . . . Congressional Republicans have initiated the first steps of the federal “budget reconciliation process” to facilitate the potential repeal of certain major components of the ACA. Some of the components potentially subject to repeal through use of this process include federal funding for the ACA optional expansion, federal funding for premium subsidies and cost-sharing reductions through Health Benefit Exchanges, enhanced federal funding for other health care programs and services in Medicaid, and the individual and employer mandate tax penalties.
. . . Would Have Significant Consequences for California. Changes in the ACA components most at risk for repeal—absent replacement policies—would have significant consequences for California. These include the potential loss of substantial annual federal health care funding, the uncertain survival of Covered California, a potentially considerable increase in the number of uninsured Californians, and a possible disruption of the commercial health insurance market.
Common Themes of Republican Replacement Proposals. Congressional Republicans have offered several replacement proposals that build off of the repeal of some or all components of the ACA. Some of the broad common themes from several of the Republican ACA replacement plans include: (1) continuing to use the tax system to make health coverage available, (2) aiming to increase competition and choice while reducing costs, (3) promoting flexibility for state Medicaid programs, and (4) reducing growth in federal health care expenditures.
Common Federal Health Care Policy Changes in Republican Replacement Proposals. To achieve the common themes of their proposals, Republican replacement plans often contain a number of common policy proposals, each with significant fiscal and/or policy implications for the state. These include:
- Replacing ACA premium tax credits and cost-sharing reductions with an alternative health care tax credit structure.
- Encouraging the use of health savings accounts.
- Limiting the tax excludability of employer-sponsored health benefits.
- Requiring continuous health insurance coverage.
- Removing ACA requirements on essential health benefits.
- Facilitating the use of catastrophic health insurance coverage.
- Facilitating the interstate sale of health insurance plans.
- Converting Medicaid into a block grant or per capita allotment program.
- Reconstituting high-risk pools.
Legislative Considerations Given the ACA’s Uncertain Future. Given the uncertainty around the future of the ACA and the substantial federal funding that is potentially at risk, we recommend the Legislature maintain fiscal prudence in preparation for changes at the federal level, and consider how changes to the ACA could require a reevaluation of the state-local health care financing relationship.