California would lose $78 billion — more than any other state — under GOP health bill
California would lose more federal funding than any other state under the latest GOP plan to repeal the Affordable Care Act, according to an analysis released Wednesday by the health policy consulting firm Avalere Health.

California would lose more federal funding than any other state under the latest GOP plan to repeal the Affordable Care Act, according to an analysis released Wednesday by the health policy consulting firm Avalere Health.

By 2026, California would lose $78 billion in federal money for the Medi-Cal insurance program for the poor and in federal subsidies for low-income residents who buy health insurance through Covered California, the state exchange created under the ACA. That figure represents a 13 percent drop in federal funding levels, according to the analysis, which was funded by the left-leaning think tank Center for American Progress.

Blue states like California and New York that accepted the ACA’s additional federal dollars to expand Medicaid would be hit disproportionately hard by the bill, advanced by Sens. Lindsey Graham (R-S.C.) and Bill Cassidy (R-La.). By comparison, some red states that did not expand Medicaid would see an increase in federal funding. Texas, for instance, would receive $35 billion more from the federal government in 2026, the analysis found.

“The bill reallocates funding from states that expanded Medicaid to those that did not,” said Caroline Pearson, senior vice president at Avalere Health. “So a large state like California, which has had a big Medicaid expansion under the ACA, (is) going to be worse off.”

The Graham-Cassidy bill is similar to previous GOP bills that failed to gain enough support in the Senate earlier this year. It would eliminate the ACA’s individual and employer mandate and the expansion of Medicaid — which allowed California to enroll 4 million new people. It would also phase out federal subsidies currently used by 1.3 million low-income Californians to buy health insurance through Covered California.

Cassidy and Graham released their own estimates of how the bill would impact states, finding that California would receive roughly the same amount of federal funding under their plan. However, outside analysts said this estimate understates the impact to states because it was based on a misleading comparison. Rather than comparing spending levels under the GOP bill to spending levels under the ACA for the same year, it compares spending levels under the GOP bill for 2026 to spending levels under the ACA for 2020. This comparing apples to oranges, analysts said, because health costs rise over time, regardless of changes to health policy.

The non-partisan Congressional Budget Office plans to release a partial assessment of the bill next week.

The bill proposes grouping together the two streams of federal funding — federal subsidies for those buying Covered California plans and federal funding for Medi-Cal expansion — capping it, and then decreasing the amount over time through a mechanism known as a block grant. The funding for the block grants would end altogether after 2026, though Congress would have authority to reauthorize them.

In addition, the bill would impose a cap on federal funding for the overall Medi-Cal program. Currently, Medi-Cal is an open-ended program, meaning federal contributions increase to accommodate changing health care needs among beneficiaries.

This week, a group of Republican governors, led by Wisconsin’s Scott Walker, expressed support for the bill, saying that block grants give states flexibility and control over spending — though some GOP governors, including John Kasich of Ohio and Brian Sandoval of Nevada, have said they oppose the bill.

While the state would get flexibility in deciding how to spend the block grant, the net loss in federal dollars would be so significant that state officials would likely have to cut benefits for Medi-Cal recipients or make eligibility rules stricter so fewer people would receive benefits, experts said.

“Those caps on federal funding would mean billions of lost Medi-Cal dollars in the state, and the state legislature would have to decide how to respond to that,” said Laurel Lucia, a health policy researcher at the UC Berkeley Labor Center, which released a separate analysis this week on the impact of the Graham-Cassidy bill. “They could cut eligibility, benefits. They could find money in other parts of the budget. But the cuts we’re talking about are at such a large scale it’d be difficult choices they’d face.”

The UC Berkeley analysis found that 6.7 million Californians would lose health insurance in 2027 under the bill: the 4 million enrolled in Medi-Cal expansion, 1.3 million who have subsidized coverage through Covered California, and an additional 1.4 million children, seniors and people with disabilities currently on Medi-Cal. A small percentage of these individuals may be able to buy coverage without subsidies or enroll in employer-sponsored health plans, but the vast majority would become uninsured, researchers said.

The center based its findings on data from the left-learning Center on Budget and Policy Priorities, and the assumption that California would respond to the Medi-Cal funding cap by cutting eligibility or limiting enrollment for certain groups.

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“This bill would be more severe than simply rolling back the ACA,” Lucia said. “It rolls back the ACA and makes additional cuts to Medi-Cal on top of that.”

Catherine Ho is a San Francisco Chronicle staff writer. Email: cho@sfchronicle.com Twitter: @Cat_Ho

Uncovered

The new GOP health plan would have a significant impact on Californians who get health insurance through Covered California or Medi-Cal. This chart shows how many people in each Bay Area county and in the state as a whole are projected to lose coverage by 2027 under the proposed plan.