- New analysis shows that the Graham-Cassidy plan could trigger the collapse of California’s individual market as soon as 2021, meaning that both those with and without pre-existing conditions would face having no health insurance options.
- California and most states would be forced to choose between protecting low-income people or the individual market. By 2027 Graham-Cassidy could lead to 7.5 million more uninsured Californians — a higher number than before the implementation of the Affordable Care Act.
- The impact on Californians would be immediate: Under most scenarios, there would be between 1.5 and 2 million fewer Californians with health coverage as soon as 2021.
SACRAMENTO, Calif. — Covered California released an analysis on Monday that details the potential impact of the proposed amendment to the American Health Care Act of 2017, known as the Graham-Cassidy plan. The analysis finds the proposal could trigger the near-term collapse of California’s individual health insurance market and under any likely scenario would lead to 7.5 million Californians losing their health insurance by 2027 — which would be more than the state saw prior to the implementation of the Affordable Care Act.
“The Graham-Cassidy plan takes resources away from California and from the majority of states, which means that far fewer Americans would have insurance or the existing protections from insurers,” said Peter V. Lee, executive director of Covered California. “The effect on California would be devastating, and lead not only to there being more uninsured people than there were before the Affordable Care Act, but would also cause huge negative impacts on the health care delivery system, the economy and on those with employer-based coverage.”
The analysis, developed by John Bertko, chief actuary for Covered California, and Wes Yin, an economist at the University of California, Los Angeles, modeled two scenarios that examined how California leaders might respond to a federal funding cut of nearly $139 billion between 2020 and 2027. In both cases, the consequences of the cuts would start taking effect in 2020 and quickly lead to millions losing their coverage.
The first scenario assessed what would happen if California used its greatly reduced funding to protect low-income Californians who have benefited from the expansion of Medi-Cal, California’s Medicaid program. The second scenario examined what would happen if California chose to protect the individual market at the expense of lower-income Californians.
“Proponents claim Graham-Cassidy gives states flexibility and choice, but in reality it puts states into a lose-lose situation,” Lee said. “Under this plan, California and states across the nation would be forced to either turn their backs on their most needy residents, or let the individual market be destroyed. Either way, millions lose coverage.”
Under any scenario, California would receive far less federal funding than it does today. In addition, the report highlights the fact that many states that are described as “winners” would actually get less funding over the long term. The report found that these states, which would gain new federal funding at the expense of dozens of other states that have effectively implemented the Affordable Care Act, could do more for their residents if they were to also expand their Medicaid program, as California and 31 other states, including the District of Columbia, have done. These states include Alaska, Arizona, Indiana, Nevada, Ohio, Pennsylvania and West Virginia.
“Graham-Cassidy would be devastating for California and roll back historic gains in expanding health care in our state,” said Diana Dooley, Secretary of the California Health and Human Services Agency and Chair of the Board of Covered California. “No amount of state ‘flexibility’ can make up for the havoc this bill would wreak on California’s health care system.”
The analysis sought to model the potential impact on coverage, whereas most of the projections nationally have focused solely on the changes in federal funding. “We wanted to project the potential impact on Californians rather than allow the abstract issues of ‘changes in billions of dollars in funding’ to cloud the reality that millions would likely lose coverage,” said John Bertko.
In the first scenario, in which resources are used to first protect lower-income Californians who have benefited from the expanded Medi-Cal program, the result would be that nearly 800,000 Californians who get help purchasing private coverage through Covered California would lose their coverage in 2020, and more than a million would lose their financial assistance in 2021.
The dramatic decrease in the number of people covered in the individual market would have the effect of increasing premiums by more than 70 percent in 2020. There would also be catastrophic effects on the risk pool, as healthier consumers are priced out of coverage both in Covered California and in the off-exchange individual market.
In this scenario, California’s individual market could experience what is commonly referred to as a “death spiral” and collapse as soon as the year 2021. “The decline in the number of those receiving financial help to buy individual market coverage, while requiring health plans to provide coverage to those with pre-existing conditions, would very likely lead to the collapse of the individual market by 2021 if not before,” said economist Wes Yin, coauthor of the analysis.
Along with Medi-Cal funding cuts, this scenario could lead to 7.5 million more uninsured Californians by 2027 — far more than there were prior to the implementation of the Affordable Care Act.
In the second scenario, the analysis models the impact of Medi-Cal beneficiaries’ bearing the brunt of the reduced funding, while the individual market is provided protection by maintaining the financial support to 1.2 million Californians. Under this scenario, 2.9 million Californians would lose coverage by 2026. In 2027, when additional portions of federal funding disappear, the individual market would likely collapse and even more Medi-Cal beneficiaries would lose coverage — like the first scenario — leading to an increase in the state’s uninsured by 7.5 million.
“Under both scenarios, there aren’t enough of the resources required to sustain a viable individual market and protect low-income Californians,” Lee said. “California and the nation can do better. As we get ready to launch our fifth year of open enrollment, we hope that the Senate will resume bipartisan discussions on the steps needed to stabilize the individual market to protect millions of Americans.”
Click here to see the full analysis, “Potential Impacts of Graham-Cassidy-Heller-Johnson on Californians and the Individual Health Insurance Market,” – http://www.coveredca.com/news/pdfs/CoveredCA_Potential_Impacts_Graham-Cassidy-9-25-17.pdf.
Covered California also joined with other state-based marketplaces on Monday in sending a letter to Congressional leaders calling out both the challenges the markets face and the virtual impossibility most states would face in trying to establish to establish a new health care system by 2020. Read today’s letter here – http://www.coveredca.com/news/PDFs/GCHJ_SBM_ResponseLetter_9.25.17_FINAL.pdf.
Today’s letter follows one sent last month where Covered California and other state-based marketplaces urged Senators to take immediate steps toward stabilizing markets through greater flexibility and continued investments in marketing and outreach. Read the Aug. 29 letter here - http://www.nashp.org/wp-content/uploads/2017/01/HELP-Letter_SBMsandSBMFPs_Aug2017.pdf.
Since the implementation of the Affordable Care Act, California has reduced its uninsured rate from 17 percent in 2013 to a historic low of 7.1 percent by the end of 2016.
About Covered California
Covered California is the state’s health insurance marketplace, where Californians can find affordable, high-quality insurance from top insurance companies. Covered California is the only place where individuals who qualify can get financial assistance on a sliding scale to reduce premium costs. Consumers can then compare health insurance plans and choose the plan that works best for their health needs and budget. Depending on their income, some consumers may qualify for the low-cost or no-cost Medi-Cal program.
Covered California is an independent part of the state government whose job is to make the health insurance marketplace work for California’s consumers. It is overseen by a five-member board appointed by the governor and the Legislature. For more information about Covered California, please visit www.CoveredCA.com.
