An uninsurance bomb is about to go off, and it will touch Orange County

As many as 16 million lower-income Americans are projected to lose their federally financed health insurance over the next two years, mostly as a result of work-requirement and immigrant-focused rule changes coming to Medicaid, the program that in California is known as Medi-Cal.

Even if that forecast (from the Congressional Budget Office, among others) turns out to be low, it’ll be the biggest rise in uninsurance in the United States since the Affordable Care Act (Obamacare) fully took effect a dozen years ago. Pre-ACA, about 18.2% of all Americans lacked health insurance; at the end of last year, that figure was down to about 8.5%.

Now, that trajectory is expected to change. And experts say the coming burst of uninsurance will have ripple effects, touching those who are directly impacted because they lose coverage and, indirectly, nearly everybody else.

The first of these will be a noticeable decline in public health. People without health insurance tend to seek less preventative treatment, become sick more frequently, and die younger than do people with insurance.

But another result, according to experts and projections from government officials, figures to touch wallets.

Even though a smaller Medicaid program is the planned outcome of last year’s “Big, Beautiful” tax and spending bill (House Resolution 1) – and the smaller version of that program is projected to nearly $1 trillion in federal spending by 2034 – the broad economic effect isn’t yet clear.

The add-on consequences of dropping millions of newly uninsured people into the economy, nationally and in Southern California, are hard to quantify but easy to label as “expensive.”

For example, uninsured people still get sick and injured and, because of that, they still need – and get – treatment, typically from hospitals and emergency rooms, the most expensive venues in the health care system. The cost of that treatment will be shifted to states and hospitals and insurance companies and, ultimately, to insurance customers.

One estimate, from the Congressional Budget Office, projects that the “uncompensated care costs” for states could explode, to $36 billion nationally and about $4.1 billion in California. (Other reports note that the uncompensated costs for insurance companies – and, by proxy, their customers – will be far greater.)

For some non-economists who understand health insurance only as customers, the possibility that the rule changes of HR1 might not pay off is frustrating.

“Didn’t we have this argument a few years ago, when everybody was fighting about Obamacare? I thought we all agreed it was cheaper to insure people than to leave (people) uninsured,” said Jackson Tartabull, an aerospace consultant who lives in Laguna Niguel.

“All I can say is that if my insurance bill goes way up because we want to kick people off of Medicaid because some people don’t like immigrants, I’m going to be (irate),” he added.

About 1.7 million locals

Estimates on how HR1’s changes to federal health insurance for lower-income people will play out in Southern California paint a potentially dark picture.

About a million people in Orange County currently qualify for Medi-Cal, and a study issued earlier this year by the UCLA Center for Health Policy Research and the UC Berkeley Labor Center projects that as many as 249,000 of those people could lose their plans over the next two years. The same study projects that by 2028, the number of newly uninsured could rise by 1.1 million in Los Angeles County, by 189,000 in Riverside County and by 177,000 in San Bernardino County.

Those estimates are based on new work-requirement and immigration rules that HR1 mandates for Medicaid, and on other changes coming to Medi-Cal that are being imposed by the state. The combined result will be a mass exodus; the forecasters from UCLA and Berkeley project that nearly 3 million people in California will leave Medi-Cal over the next 24 to 32 months.

County officials who administer federal health insurance locally aren’t, yet, so specific.

They said federal and state officials are still hammering out details of the new rules for federal health insurance and, because of that, they could only say that about 330,000 people in the county are likely to be affected by those rules and that many of them eventually could fall out of coverage.

“Until we have full clarity on the exemptions that will be allowed by the state, we can’t project any specific numbers,” said Mike Edmundson, who directs Orange County’s Assistance Program Division, which helps determine who is and isn’t eligible for Medi-Cal, which in Orange County typically is provided by the county’s CalOptima Health system or Kaiser Permanente.

“We can only anticipate that there’s going to be a decrease.”

What is known, or at least widely agreed upon, is that all that lost insurance will be painful.

For tens of thousands of locals, routine medical check-ups will stop being routine. Screenings for cancer and heart disease will be skipped. Drugs that manage or stave off illnesses like diabetes and blood clots will be taken less if at all.

Though there isn’t a data point for it, the new rules will touch so many people, and take away so much health care, that at least some of the newly uninsured will die.

And it’ll boost costs for everyone else.

The people who lose coverage, Edmundson said, will go to hospitals and emergency rooms for care when they become acutely ill or injured, instead of seeking less expensive and typically more effective preventative care. Though the county and the state have yet to make an official financial projection on what those visits will cost insured people and taxpayers, he said the finances are being studied.

“It’s going to tax the hospital system. And if people can’t pay their bill because they’re uninsured, it has to be passed along somewhere.

“I know that there is significant concern about the cost implications of these changes.”

What’s more, the people targeted for new work rules are working-age adults, ages 19 to 64. When those people can’t meet those requirements (generally by working at least 20 hours a week or volunteering or studying a similar time), their removal will add financial stress to the system.

“As individuals fall off of coverage, who are younger and presumably healthier than the people who remain in the system, it’ll have downstream effects,” Edmundson said.

“The cost of paying for coverage is going to go up.”

But that’s in the future, and it’s only a possibility. For now, the county and other Medi-Cal offices around the state are scrambling to make sure they’re ready when the new HR1 rules kick in, dates that aren’t yet set in stone. They’re uploading new rules into the California Statewide Automated Welfare System computer system.

And they’re starting to reach out to enrollees who might be affected; people like Matteo Hernandez, a 32-year-old landscape worker from Santa Ana who said he and his family have received Medi-Cal health insurance since the start of the pandemic.

“My wife is who I’m worried about,” Hernandez said.

“I’ve got a green card. I’m good. But she’s only got an application to be here under (asylum), so I don’t know if she’s going to keep staying on insurance or what.

“I’m told the kids will be OK,” he added, referencing children he said are 6, 9 and 11.

“But if the new rules say (his wife) can’t get insurance, I don’t know what we’ll do. She’s pretty healthy, but still… “

The rules

Hernandez is right to worry about his wife’s health coverage.

A key part of the new rules of HR1 – and recent changes by the state – is to push many different categories of immigrants away from federal health insurance.

California, which previously has offered insurance to all kinds of immigrants, has already started to accommodate the federal mandates. On Jan. 1, for example, the state suspended a program that had allowed undocumented residents to receive Medi-Cal benefits. Though it’s unclear how many were affected, roughly 120,000 undocumented people in Orange County were enrolled in Medi-Cal.

The next key date is Oct. 1. That’s when an HR1 rule is projected to kick in that will push people known as “lawfully present non-citizens” – including immigrants who are seeking asylum or refugee status, former victims of human trafficking and violence, and others – out of Medicaid. Nationally, that could touch several million people; it’s unclear how many will be from Southern California.

Then, starting at some point next year, work-requirement rules similar to those set to begin in mid-June for recipients of (Supplemental Nutrition Assistance Program, known in California as CalFresh, will also kick in for Medi-Cal. Able-bodied people between the ages of 19 and 64 – meaning people without disabilities or mental health issues, or who are caring for younger children or aging parents – will have to prove they are working or volunteering or studying at least 20 hours a week in order to qualify for federally subsidized health care. An estimated 330,000 people in Orange County are expected to fall into that world, though Edmundson noted many of those people are already working.

Also next year, all Medi-Cal enrollees will have to start reapplying for assistance every six months, instead of once a year as they do now. That shift, Edmundson said, will make it more expensive for the county to administer the program – by doubling the workload without offering any federal money for new employees – while also reducing the number of people who get help.

“We tend to lose people when they fail to make contact,” he said. “This is just more opportunity for that.”

Other rules – including requiring all but the lowest-income enrollees to pay $30 a month for their insurance – are expected to kick in over the next two years.

For people who get insurance through their work, or through the federal marketplace, like consultant Tartabull, the bill might not come due for a couple years. But after that?

“We’ll be paying more,” Tartabull said. “I can’t tell you, honestly, that I understand all the details of what’s being discussed. But that much – we’ll pay more – I totally get.”

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