Governor's revised budget diverts tobacco tax revenue for general fund obligations instead of improving access to care for Medi-Cal patients -AND- Hospitals worry about the 23 million that would lose coverage under AHCA

CAL/AAEM News Service at
Mon May 29 17:58:39 PDT 2017



May 16, 2017


Governor's revised budget diverts tobacco tax revenue for general fund
obligations instead of improving access to care for Medi-Cal patients 



 <> California
Medical Association



Last week, Governor Jerry Brown released his revised state budget, which
applied $1.2 billion in tobacco tax revenues to cover general fund
responsibilities in the Medi-Cal program. Instead of using that money to
improve access to care for the 13.7 million Californians served by
Medi-Cal-as intended by the voters of California-the revised budget proposal
takes tobacco tax funds to backfill a cut to the state's general fund
contribution to the program.


"We're disappointed that Governor Brown's revised budget continues to ignore
the clear language of the tobacco tax initiative (Proposition 56) and the
will of California voters," says California Medical Association (CMA)
President Ruth Haskins, M.D.


Last year, CMA co-sponsored Prop 56 with the intent of saving lives put at
risk by tobacco products and improving the access and quality of medical
services for all Californians - especially our most vulnerable communities
who rely on Medi-Cal for health care. The language of Prop 56 was clear -
the people voted overwhelmingly in support of improving payments to
providers to ensure that patients can see a doctor when and where they need


With more than 13.7 million Californians - one in three - relying on
Medi-Cal programs to provide basic and specialty care for serious diseases,
the stakes are high. Californians voted for the tobacco tax to remove these
barriers to reliable and quality care. California cannot afford to continue
starving this program by diverting Prop 56 revenues to cover the state's
general fund obligations. 


"Instead of improving access to care for the 13.7 million Californians
served by Medi-Cal, the budget takes tobacco tax revenues to backfill cuts
to the state's general fund contribution to Medi-Cal," says Dr. Haskins.
"This 'rob Peter to pay Paul' approach does nothing to improve California's
health - it maintains the unsustainable status quo and adds more patients to
the back of the line in over-crowded waiting and emergency rooms."


By embracing Medicaid expansion, California has made incredible strides to
reduce our uninsured population. Building on this important step, we now
need to provide Medi-Cal patients with real and equal access to health care.
"We urge the Legislature to adopt a budget that reflects their values and
dedicates tobacco tax revenues to their voter-intended purpose," said Dr.


CMA is developing an action center to facilitate legislative outreach. Stay
tuned for more information.


The State Legislature has until June 15 to adopt a final 2017-2018 budget.




May 24, 2017


Hospitals worry about the 23 million that would lose coverage under AHCA 



mpaign=financedaily> Modern Healthcare



By Mara Lee


The House's version of the Affordable Care Act repeal-and-replace bill would
leave 23 million more people uninsured and save the federal government $119
billion, according to the Congressional Budget Office. And that has
hospitals wondering how they'll care for those uninsured.


In its highly anticipated scoring of the American Health Care Act, the CBO
said the bill, by 2026, would reduce the federal deficit by $32 billion less
than an earlier version of the bill that the nonpartisan budget office


The savings-critical to the Republican's strategy to pass the bill in the
Senate-are lower because waiver states would receive some funding to help
customers who would be faced with higher costs.


The report considers the possibility of three options:


*  States that don't apply for waivers

*  States that apply for waivers but don't allow insurers to charge sick
people if their coverage lapses

*  States that apply for waivers and return to medical underwriting 


Premiums would fall about 10% to 30% in the second group but those savings
would come from dropping benefits considered essential by the ACA and people
with pre-existing conditions would no longer be protected-something
Republicans promised would not happen.


In the third group of states, "people who are less healthy (including those
with pre-existing or newly acquired medical conditions) would ultimately be
unable to purchase comprehensive nongroup health insurance at premiums
comparable to those under current law, if they could purchase it at all,"
the report states. "As a result, the nongroup markets in those states would
become unstable for people with higher-than-average expected health care


Any funding set aside by the bill to fund high-risk pools would not be
enough to cover the estimated 1 in 6 people who would live in states in the
third group.


The House passed the ACA repeal bill earlier this month with just two votes
to spare, after making a series of late changes to sway conservative


Republicans in the Senate, including Lamar Alexander of Tennessee told the
Hill that he wants a Senate bill to lower premiums and cover people with
pre-existing conditions.


"It's informative to know the estimated impact of the House healthcare
bill-but the Senate is writing its own bill, which will receive its own
score from the Congressional Budget Office before the Senate votes," he


The CBO estimates the bill would make coverage on the individual market
unaffordable for up to 23 million people-a slight drop from the initial
estimate of 24 million under the first version of the bill. In all, 51
million people under the age of 65 would be without coverage by 2026,
including those currently uninsured.


Excluding undocumented immigrants, who are not eligible for subsidies on the
exchanges or Medicaid, 8% of the population is uninsured. That would climb
to 15% in 2020, the CBO projects.


For providers, the changes to Medicaid are of most concern.


Rick Pollack, president of the American Hospital Association, issued a
statement that said: "We cannot support legislation that the CBO clearly
indicates would jeopardize coverage for millions of Americans."


Dr. Andrew Gurman, president of the American Medical Association, also
responded with a statement that said low-income families on Medicaid would
be hardest hit.


The AHCA proposes transforming Medicaid from an entitlement program to one
that gives states a set dollar amount for every person eligible for the
program. That amount would rise more slowly than the cost of treating
patients over time, so as to lessen the federal government's financial
exposure. It's this per capita cap that results in $834 billion in reduced
federal spending on Medicaid in 10 years, as estimated by the CBO.


The CBO estimates that 4 million fewer people will be on Medicaid after the
first year the law would be enacted. In 2019, Medicaid coverage would fall
by 6 million. In 2020, that number would hit 9 million, then 13 million the
next year, then 13 million the next, and by 2024, 14 million fewer people
will have Medicaid coverage than if Obamacare had been left in place.


"We understand the Republican point of view that the current escalation (in
Medicaid spending) is unsustainable for the country," said Dr. Akram
Boutros, CEO of Cleveland's MetroHealth System, which sees about 140,000
Medicaid patients every year. But shifting costs to states, and ultimately,
reducing eligibility and cutting payments to providers is not the answer,
adding that Medicaid has the slowest growth in spending of any payer.


Less than 1% of MetroHealth's revenue is from people covered in the
individual insurance market. Reining in medical spending growth is a larger
problem, he notes.


Boutros noted that hospitals agreed to take a cut on Medicare payment rates
with the expectation that 30 million more Americans would be covered by


The AHCA would increase Medicare disproportionate-share payments to
hospitals by $43 billion over 10 years due to a jump in uninsured patients.


MetroHealth's uncompensated care fell from 11% of revenue to somewhere
between 4.5% and 5.5% of revenue, varying over time.


Hospitals in all states that expanded Medicaid benefited similarly,
according to a study published last year in JAMA. Not only did those
hospitals see more Medicaid revenue and lower uncompensated care compared
with hospitals in states that declined the expansion, they had improvements
in profit margins as well, the study said.


About 20 million people gained insurance as a result of Obamacare, with more
gaining through Medicaid than expected, and fewer through individual plans.
About 14.5 million gained coverage through Medicaid, though several million
of those were people already eligible through the Children's Health
Insurance Program or Medicaid, but who had not applied.


Republicans have focused on the climbing premiums in the individual market
since Obamacare passed-and the losses to insurers and exits of those
insurers-as the reason that they must act urgently to repeal and replace the


If the AHCA passes in its current form, states could choose whether
insurance plans must cover the ACA's 10 essential health benefits. Insurers
could then charge more to cover maternity care and specialty drugs.


Still, according to the CBO, premiums would rise by about 20% in 2018 and 5%
in 2019-mostly because insurers could redesign products in states that
sought waivers.


The CBO expects individual markets in those states would ultimately fail.


The AHCA depends on penalties for lack of continuous coverage, rather than
the ACA's individual mandate, to prevent people from waiting to buy
insurance until they need care. Healthy people would pay less in the
underwritten pool, and so they could simply buy commercial plans to avoid
penalities if they ever dropped coverage.


In states that made changes to essential health benefits, but did not return
to medical underwriting, the CBO projects premiums would be roughly 20%
lower in 2026 than under current law, "primarily because, on average,
insurance policies would provide fewer benefits."


For someone who needed expensive specialty drugs, for instance, the CBO said
that their higher out-of-pocket costs would more than outweigh the cheaper


The CBO believes that in the states that don't apply for waivers, premiums
would be 4% lower than under current law, because the risk pool would skew
younger and healthier than it currently does. That's because the tax credits
proposed in the AHCA are more generous to young people and less generous to
those past 50, especially those with lower incomes. The AHCA also changes
the differential insurers are allowed to charge the oldest customers from
three times the youngest customers' premiums to five times.




Jeff Wells
Deputy Editor, CAL/AAEM News Service


Brian Potts MD, MBA
Managing Editor, CAL/AAEM News Service

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