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California to Implement Affordable Care Act Amid Budget Constraints

by Lucy Ma, published


The Public Policy Institute of California published a recent report that takes a closer look at how the federal Affordable Care Act will be implemented in California and the unique health care challenges facing the state.

California currently has over 7 million uninsured residents who will be affected by the sweeping policy changes taking place under the Affordable Care Act. While the goal of the ACA is to achieve near-universal health care coverage by providing a strong federal framework, states are given a level of flexibility in choosing how to implement the law. Major provisions of the mandate won’t be taking effect until 2014, but states like California are already taking early steps in laying the groundwork necessary for reform.

Uninsured Californians are a large and growing trend, and employer provided coverage has fallen steadily in the state over the past decade, down to just 53% in 2010.

According to the figures, nearly 70% of those currently uninsured are employed either full time or part-time and 90% of those uninsured live in a household with someone who is employed full time.

Furthermore, nearly 60% of those uninsured in California are Latino residents, showing that there is a significant racial and ethnic disparity when it comes to coverage. These figures present a significant problem considering that the cost of health care has continued to climb upward, outpacing both economic growth and inflation, while the quality of care in California remains below the national average.

State spending on health care is already a sizable and ever-growing investment. Medi-Cal is currently California’s second-largest general fund expenditure at an estimated $15.4 billion annually.

In order to promote affordability and comply with the ACA mandate, Medi-Cal will need to undergo a further expansion as a higher number of low-income individuals will now become eligible for coverage under the ACA. The coverage expansion will place increased strain not only on the state’s budget, but on the network and workforce on which the delivery of care is dependent. A comprehensive strategy will need to include simplifying eligibility requirements, streamlining application processes, and reforming care delivery.

In addition to expanding Medi-Cal coverage and improving its structure, there will also be the creation of a new California Health Benefit Exchange, the purpose of which is to provide a subsidized marketplace for employers and individuals to access and purchase their preferred health plans.

Policymakers in California will need to carefully consider how certain coverage responsibilities for low-income health care will now shift from county governments to the state, and how to most effectively implement these changes. There remains a gap to be bridged between providing coverage and final outcomes. Despite the considerable expansions, a vast number of Californians- an estimated 3 million- are expected to remain uninsured.

The full PPIC report is available here:


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