California: The high health care cost of being Trump’s enemy
President Donald Trump makes his disdain for California clear, lashing out at the Golden State as a “filthy dirty” and “horrible” outpost cursed by homelessness and wildfires. California, in turn, has challenged the Trump administration dozens of times on issues such as auto emissions, immigration and union dues.
But it’s not cheap being one of Trump’s favorite enemies. And nowhere is that more apparent than in health care.
State Attorney General Xavier Becerra has spent millions of dollars challenging the Trump administration more than a dozen times on health care issues. For instance, he has taken the lead in legally defending the federal Affordable Care Act, and in fighting the administration’s “public charge” rule, which makes it harder for immigrants to obtain permanent residency status if they use certain public benefits, such as Medicaid.
And state lawmakers are adopting legislation to counteract federal health care actions, racking up the costs of passing and implementing new rules, such as banning the sale of short-term health plans and preventing the state from imposing work requirements on its Medicaid recipients.
The state’s total tab for its feud with the Oval Office is at least in the hundreds of millions, with billions more at stake. Here are three major ways California is losing health care money:
Title X Funding
In February 2019, the U.S. Department of Health and Human Services changed the rules for Title X, a program that funds family planning services. Under the previous rules, federal funds couldn’t pay for abortions. Now, these funds cannot even go to providers that refer patients elsewhere for abortions.
Clinics like Planned Parenthood affiliates, which refuse to abide by the new regulations, have surrendered their Title X money.
In California, that means the funding has been cut by millions of dollars. Essential Access Health, which runs the Title X program in California, said it couldn’t put a dollar figure on exactly how much funding has been lost. But according to the group, more than 366 health centers in 38 California counties received Title X funds in 2018. Today, that’s down to 251 centers in 19 counties.
While disputes over contraception coverage can be ideological, they also boil down to dollars and cents, according to Priscilla Smith, a reproductive law expert at Yale Law School.
“For California, that means more and more people who don’t have access to the coverage of their contraception will be using state resources both for contraceptive coverage and for health issues that result from their lack of access,” Smith said.
Essential Access Health, along with the state of California, Planned Parenthood and other plaintiffs, took the Trump administration to court over the regulations. A federal appeals judge sided with the administration in late February.
Another big loss for the state could come from wonky tax policy.
The managed care organization (MCO) tax is a surcharge on the managed-care plans that provide coverage to about 10 million enrollees on Medi-Cal, California’s public health insurance program for low-income people.
The tax has been around for several years but expired in July. Gov. Gavin Newsom’s administration asked for federal approval to extend it for three years — a request that seemed like such a sure thing.
“Based on the recent federal approval of a similar tax in Michigan, federal approval of a reauthorized California MCO tax package appears likely,” according to a February 2019 report by the state Legislative Analyst’s Office.
No such luck. In February, federal officials rejected California’s request. Though it doesn’t affect the state this year, it will cost Medi-Cal up to $2 billion in lost revenue in the 2021-22 fiscal year.
“Michigan got something very similar — how come we didn’t?” asked Edwin Park, a research professor with Georgetown University who is based in California.
California would have to wipe out its reserves in the next two fiscal years to keep the Medi-Cal program whole, said Scott Graves, director of research at the California Budget & Policy Center.
“It creates a big hole down the road in the forecast,” he said.
The state plans to resubmit its request later this year, but the federal government isn’t racing to do California any favors.
“Because California is California, the concern is the Trump administration won’t approve,” Park said.
Boosting The Affordable Care Act
One of the Trump administration’s pet projects has been to repeal, replace or otherwise dismantle the Affordable Care Act.
Take the simple issue of advertising for Obamacare health insurance plans. In 2017, the Trump administration announced it would slash the federal budget for advertising during open enrollment season by 90%.
California responded by increasing its advertising budget. For the 2020 open-enrollment season, the state budgeted $121 million in marketing and outreach. The federal government budgeted $10 million.
And when the Trump administration eliminated the Affordable Care Act tax penalty for not having health insurance, California created one — and offered state-funded subsidies to help some people pay for insurance. This year, the state is spending about $430 million to subsidize the premium costs for about 625,000 people.
“Obviously it would be great if the administration was doing its fair share, as they did in the old administration,” said Anthony Wright, executive director of Health Access California, a consumer advocacy group.
California can absorb the costs of bolstering the Affordable Care Act, Wright said. What it can’t do, he said, is make up the difference if the Trump administration adopts other items on its health care wish list, such as making big cuts to the Medicaid program.
In his preliminary 2020-21 federal budget, Trump proposed cutting $920 billion from the program over the next decade — although that’s unlikely to fly in the Democrat-controlled House of Representatives.
“The things that keep me up at night are the broad Medicaid changes that are in the billions of dollars,” Wright said. “That is stuff that’s on a whole other level.”