Senate bill would slash Medi-Cal coverage in Santa Clara County

California politicians and hospital officials are speaking out against the Senate Republican health care bill, released to the public last week, that would claw back key provisions in the Affordable Care Act (ACA) including Medicaid expansion, premium subsidies and requirements for “essential” health care benefits in insurance plans.

The Senate majority leadership’s “discussion draft” of the health care bill, dubbed the Better Care Reconciliation Act of 2017, is a 142-page bill calling for defunding the expansion of Medicaid authorized under the ACA beginning in 2021. Future spending by the federal program would be limited by a “per capita” cap, which would leave California with significantly less money for the state’s Medi-Cal program.

Other provisions in the bill include eliminating the requirement for individuals to have health insurance insurance — the so-called individual mandate — and for employers to offer insurance plans to employees. The proposed bill also would allow individual states to determine what qualifies as essential benefits in insurance plans, which would give insurance companies latitude to not cover treatment for pre-existing conditions.

Add it all up, and the bill would increase the number of uninsured American by 22 million by 2026, slash $772 billion in Medicaid funding and reduce subsidies available for insurance plans by $408 billion, according to a report by the nonpartisan Congressional Budget Office.

“This bill is nothing short of a disaster, and it’s no wonder they did in secret,” U.S. Sen. Kamala Harris said in a media call Tuesday morning. “It is as bad as, or in some cases worse, than the House bill.”

The Senate bill would have a devastating impact on Medi-Cal, California’s Medicaid system, Harris said. More than a quarter of the 13.6 million Californians on Medi-Cal received coverage as a direct result of the ACA’s Medicaid expansion, including some of the most vulnerable people in need of affordable health care. Three in four Californians in nursing homes are on Medi-Cal, and one out of 10 veterans in California — about 183,000 — also rely on Medi-Cal for health coverage, Harris said.

Here in Santa Clara County, an estimated 130,000 residents gained Medi-Cal coverage through the Medicaid expansion, 68,000 of whom are served directly through the county’s health and hospital system and Valley Medical Center, according to Burt Margolin, the county’s federal legislation adviser. About $236 million in Medi-Cal revenue for the county comes directly from the ACA, also known as Obamacare.

An analysis by the Kaiser Family Foundation found that the Senate bill would push up the cost of premiums, particularly for older, lower-income Americans, while simultaneously offering less generous tax credits for people to pay for it. A 60-year-old resident in Santa Clara County making $40,000 a year would see a tax credit reduction from $8,220 each year to $5,790. At the same time, silver-plan premiums under the Senate bill would increase by $4,220, and bronze-plan premiums would increase by $2,870. The silver plan, according to the analysis, would go from consuming 10 percent of a senior’s income under the ACA to 27 percent.

In a statement released Monday, Congresswoman Anna Eshoo (D-Palo Alto) slammed the plan for being “heartless and cruel,” particularly for older Americans.

The proposed bill “provides less coverage to fewer Americans at higher costs and imposes a crushing age tax on people between the ages of 50 and 64,” Eshoo said in the statement. “The disastrous cuts to Medicaid will destroy jobs across America and force low-income families and seniors with long-term care needs to choose between life and death.”

In an op-ed earlier this year, Stanford Children’s Health president and CEO Christopher Dawes wrote that Medicaid plays an integral role in children’s health as well. Medi-Cal and the Children’s Health Insurance Program (CHIP) cover 36 million children — including 43 percent of patients at Lucile Packard Children’s Hospital Stanford — meaning any cuts to the entitlement program will disproportionately affect children.

If the bill rolls back the Medicaid expansion, it would affect all the children served by the hospital, he said. Losing patients limits the specialty programs the hospital provides for chronically ill children, and weakens wellness, early detection and preventive care.

U.S. Sen. Dianne Feinstein told reporters Tuesday morning that major children’s hospitals in California are going to have “great difficulty” surviving without the current level of Medi-Cal funding because so many families simply can’t afford health insurance any other way. She voiced frustration that the Senate bill pits the wealthy — who stand to get a tax break through the bill — against the less fortunate, while also negotiating the language of the bill entirely behind closed doors.

When asked whether the Democrats, if given a seat at the table, had any specific recommendations for improving the proposal, Feinstein said the bill is beyond fixing. The goal at this point, she said, is to prevent it from passing and start from scratch in a way that improves on the Affordable Care Act rather than gut it.

“It’s a bad plan through and through,” Feinstein said. “There aren’t one or two amendments that can fix it; it’s got to be defeated and then we can start over.”

As of Wednesday afternoon, the fate of the bill remained in the balance. Senate Majority Leader Mitch McConnell announced that a procedural vote on the bill will be delayed until after the Senate’s July 4 recess. The decision comes after a clear divide in the party, which holds a narrow majority, with a number of moderate and conservative Republicans signaling they do not support the legislation.

Many California residents have taken positions similar to the state’s two U.S. senators. A recent survey by the California Health Care Foundation found that 65 percent of the state’s residents support the Affordable Care Act, a record high, and 88 percent see Medi-Cal as an important program. The survey also found that 56 percent of Californians are worried that a family member will lose health coverage if the ACA is repealed.

Among local hospitals, the county-operated Santa Clara Valley Medical Center stands to get hit the hardest. Well over half of the patient visits and hospital days are funded by Medi-Cal, which has grown significantly since the passage of the ACA, according to county staff. But if the bill gets repealed, the responsibility for indigent care still falls in the hands of the county’s health and hospital system, meaning Valley Medical Center will have to make do with far less.

“This would have a huge impact on the county,” Santa Clara County Supervisor Joe Simitian said at a meeting last month. “Folks who were previously covered by Medi-Cal would be denied coverage or have insufficient coverage, and the responsibility for indigent care would again fall on the county — presumably without the reimbursement and resources necessary.”

The financial burden would be less severe at other hospitals. El Camino Hospital in Mountain View would lose about $5.6 million in annual revenue if expanded Medicaid coverage is eliminated, in part because only 7.3 percent of the hospital’s patients are covered by Medi-Cal, according to Dr. William Faber, chief medical officer at El Camino.

But the financial hit is only one part of the problem, Faber said. The potential loss of essential health benefits would affect everyone who walks through the hospital’s doors. Insurance companies could be allowed to drop coverage for myriad health services including preventive care, emergency services, prescription drugs, maternity care, substance-use disorders and mental health services.

“Nearly every patient at El Camino Hospital could be impacted by this bill,” Faber said.

Gov. Jerry Brown told reporters Tuesday that he wouldn’t take any action that would lessen care provided by health coverage in California. But he mostly shrugged off the question about how the state would proceed should the Republican Senate bill pass, saying that his assumption for now is that the bill will fail to receive the 50 votes needed.

“This is a very, very divisive, hateful piece of legislation. We gotta kill it,” Brown said. “And after that, if there’s a will, we can find a way to improve our health care system.”