Healthcare overhaul may threaten California’s safety net

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Millions of uninsured Californians will gain medical coverage under the national healthcare overhaul beginning in January, but Guadalupe Luna won’t be one of them.

Luna, an illegal immigrant and tamale vendor in Los Angeles, doesn’t qualify. So she will continue going to the clinic where she has received free care for more than 20 years: Los Angeles County’s Hudson Comprehensive Health Center. There, publicly funded doctors will help manage her diabetes and high cholesterol.

An estimated 3 million to 4 million Californians — about 10% of the state’s population — could remain uninsured even after the healthcare overhaul law takes full effect. The burden of their care will fall to public hospitals, county health centers and community clinics. And those institutions may be in jeopardy.


County health leaders and others say the national health law has had the unintended consequence of threatening the financial stability of the state’s safety net.

Newly insured patients who no longer have to rely on public hospitals and clinics may seek care elsewhere, meaning a loss in revenue, they say. And under the federal law, some of the funding that goes to safety-net hospitals is also set to decrease.

Now, as the state scrambles to create the new healthcare infrastructure, Gov. Jerry Brown is proposing to take back another crucial pot of money that counties have depended on for more than two decades to care for the uninsured.

“Safety net providers are imperative ... and some of their funding streams are in serious danger,” said Lucien Wilson, director of the Insure the Uninsured Project, a consumer organization.

Melissa Stafford Jones, president and chief executive of the California Assn. of Public Hospitals and Health Systems, said many of the patients who are uninsured now still won’t have coverage next year. “Those communities are still going to need care, and we need to have a safety net to serve them,” she said.

Under the healthcare overhaul, the state could enroll as many as 1.4 million additional residents in Medi-Cal, its program for the poor and disabled, and sign up 2.1 million others for subsidized private insurance through a marketplace known as Covered California, according to a recent UC Berkeley report.


About a quarter of those left uninsured will be undocumented immigrants, and nearly three-quarters will be U.S. citizens or green-card holders, according to the report. Some already qualify for Medi-Cal but don’t receive it; others will be eligible to buy subsidized healthcare through Covered California but won’t be able to afford it.

Martin Garcia, 39, a U.S. citizen with five children, said he doesn’t know if he could get Medi-Cal now or what he might qualify for next year. Garcia lost his job and insurance in 2010 and recently started going to the Hudson clinic in Los Angeles because of stomach pains.

Garcia needs hernia surgery, which he said he will receive at L.A. County-USC Medical Center, a public hospital. He said he was relieved to learn that he could get free healthcare through the county. Without it, he said, “I really don’t know what I would do. I would probably head to Mexico.”

Even with massive outreach by the state, it will take time for eligible people to learn about and enroll in the new coverage. During the early years, the demand for public health services is expected to remain high, and counties will be responsible, said report author Ken Jacobs, chairman of the UC Berkeley Center for Labor Research and Education.

To pay for care for the uninsured, counties have long relied on revenue from sales tax and vehicle license fees — a pot of money known as realignment funds. In fiscal year 2012, the funds amounted to an estimated $1.3 billion.

Brown argues that counties will no longer need all that money because so many of the uninsured will gain coverage under the federal law. At the same time, the governor’s administration has said, the state will need the funds if it is going to run the expanded Medi-Cal program.


“There is going to be a fundamental shift in responsibility of healthcare to the state from the counties,” said Toby Douglas, director of the state Department of Health Care Services. “There needs to be a realignment of county dollars.”

The Legislative Analyst’s Office released a report this month recommending that the state run the Medi-Cal expansion and that it take control of some of the realignment funding to help pay for that expansion.

But county health directors argue that the state is just trying to balance its budget on the backs of safety-net systems. They say the counties already struggle to meet demand and contend the state should not take the money before it’s clear how many people will sign up for Medi-Cal and how much savings there will be for counties.

“The state needs money, and they see this as an opportunity to get it,” said Mitch Katz, director of the Los Angeles County Department of Health Services. “I think it is completely unreasonable.”

If the state does take back the realignment funding, counties such as Los Angeles that run their own hospitals and clinics could be seriously affected, he said.

Alex Briscoe, director of Alameda County’s Health Care Services Agency, said the state proposal shows a “fundamental misunderstanding” of the pressures facing safety-net systems. About 100,000 people might remain uninsured in the county, he said. “If the state takes the money, who is going to pay that care?”


In addition, Briscoe said the state doesn’t have any justification for taking the money because the Medi-Cal expansion is 100% covered by the federal government for the first three years.

Who ends up paying doesn’t matter to Luna, the tamale vendor. But without the Hudson clinic, the 43-year-old said, her diabetes would spiral out of control.

“I don’t have anywhere else to go,” she said. “I have to come here.”

Luna is one of about 42,000 patients who go to the clinic and urgent care center to manage their chronic diseases, get their children vaccinated, check their eyes and monitor their pregnancies.

Hudson’s administrator, Michael Mills, said that even after the healthcare law takes full effect, the clinic will be vital to the community. Nearly half its patients now are uninsured, and many will remain without coverage next year.

“Those are our patients,” Medical Director Rona Molodow said. “Those are the people the county has traditionally served.”