On Thursday, the U.S. Ninth Circuit Court of Appeals ruled that the state of California had the authority to slash Medi-Cal reimbursements by 10%, overturning various injunctions blocking the state from implementing a 2011 law that was passed to help California Gov. Jerry Brown close the state's budget deficit.
This ruling may make it more difficult for the state to implement Obamacare in 2014, especially the 25% expansion of the Medi-Cal program and California's state-based health insurance exchange, because there may not be enough doctors in California who can afford to treat patients on Medi-Cal.
The ruling, which can be "applied retroactively to June 1, 2011," will impact as many as "2 million new patients who could become eligible for Medi-Cal" in 2014 when Obamacare goes into effect.
Lynn S. Carman, an attorney for a group of pharmacies, told the Los Angeles Times the ruling would “destroy the Obamacare program."
"If this decision stands it will not only destroy the Medicaid program in California, but it will destroy the Obamacare program for millions of Americans who are now being shoved into the Medicaid program under the Affordable Care Act," Carman said. "They will not be able to obtain quality healthcare or access to services because providers cannot provide services at less than what it costs to furnish them."
Currently, Medi-Cal covers "families and disabled Californians" but Obamacare will extend "its coverage to single, childless adults beginning in 2014."
But California, which already has low reimbursement rates for Medi-Cal, had already been facing a shortage of doctors for Medi-Cal patients.
According to a July 2010 study conducted by the California HealthCare Foundation, “25% of physicians provided care to 80% of Medi-Cal patients” and of the 90% of doctors who were accepting new patients, only 57% said they were taking on new Medi-Cal patients.
But since healthcare and education take up most of California's budget, Gov. Jerry Brown has sought more cuts to the Medi-Cal program to close the budget deficit.
According to the Los Angeles Times, it is estimated that the “10% cut to medical providers and pharmacies would save the state $50 million a month.
But interviews with doctors across the state who have already stopped taking Medi-Cal patients show that the ruling will make Obamacare even less feasible in California and the expansion of Medi-Cal may cause chaos as new Obamacare patients will realize they will not even be able to find doctors willing to treat them because treating Medi-Cal patients will threaten to put physicians out of business.
Dr. Ted Mazer, a San Diego ear, nose and throat surgeon, told the Times he stopped talking Medi-Cal patients because the reimbursements did not even cover his costs.
"So few doctors will see Medi-Cal patients that I was seeing them from the Mexican border to Riverside County to Orange County," Mazer, who is an officer of the California Medical Assn., said. "The reimbursement costs are so poor they don't even cover costs, let alone pay for the administrative hassle. I can only see so many until I go under."
And with the Ninth Circuit's ruling and the looming Obamacare regulations, this problem will only get worse after 2014, when much of Obamacare becomes law.