When Martin Luther King Jr.-Harbor Hospital shut its doors in 2007, the shockwaves spread far beyond its own patient rolls. Nearby Los Angeles hospitals were suddenly flooded with people who had nowhere else to turn, and emergency room wait times stretched past 11 hours in some facilities. Trauma cases piled up. So did the number of uninsured patients walking through the door. It wasn’t just King-Harbor’s former patients who suffered the fallout — privately insured patients at neighboring hospitals felt it too, as researchers later found the closure drove up mortality rates and cut access to care across the region.
Now, health experts fear a similar chain reaction could play out on a much larger scale. Deep federal and state cuts to Medicaid are projected to double California’s uninsured rate, pushing an estimated 2.2 million people off health coverage by 2030. While low-income residents who depend on Medi-Cal will bear the brunt of the damage, industry leaders warn that the pain won’t stop there — even Californians with employer-based or private insurance are likely to feel the squeeze.
“The way that everybody feels it is an inability to get access to the care they need when they need it,” said Carmela Coyle, president and CEO of the California Hospital Association.
Because the healthcare system is so interconnected, researchers say reduced services, declining quality of care and rising premiums could ripple outward to nearly everyone, not just those losing coverage directly.
How we got here
The rollback traces back to President Donald Trump’s tax legislation signed last year, which slashes federal Medicaid spending by close to $1 trillion over the next 10 years. State officials estimate Medi-Cal alone stands to lose about $30 billion annually as a result.
Under the new rules, many low-income adults will face work requirements and shorter windows to prove their eligibility — provisions that research shows tend to knock people off public assistance not because they’re ineligible, but because of paperwork and bureaucratic hurdles. California lawmakers have also trimmed state-funded health benefits for undocumented immigrants and refugees.
Bukola Olusanya, a street medicine provider with St. John’s Community Health in South Los Angeles, said the new work requirements will be nearly impossible for many unhoused patients to satisfy, even those who qualify for an exemption because of a disability.
“We’re talking about people that do not have access to a cell phone,” Olusanya said. “They don’t have access to internet. They don’t have access to a printer or paper or anything for them to complete the eligibility process.”
Anthony Wright, executive director of the advocacy group Families USA, said the combined cuts threaten to undo much of the coverage progress California has made over the last decade.
“From a pure dollars-and-cents point of view, it is the biggest rollback in coverage in history,” Wright said.
Hospitals absorb the first hit
Hospitals are usually the first to feel the strain, since federal law requires emergency rooms to treat anyone who walks in, insured or not. When more patients lose coverage, hospitals are left to cover the cost of their care. The California Hospital Association projects uncompensated care statewide will double, from roughly $2 billion to $4 billion a year. That’s a troubling prospect, Coyle said, given that more than half of California’s hospitals are already operating in the red.
When hospitals face financial strain, they typically respond by cutting costs in ways that touch every patient, regardless of insurance status — trimming staff, reducing wages, scaling back expensive service lines such as labor and delivery, or closing emergency departments altogether rather than absorbing more unpaid care. Some facilities, especially those already on shaky financial footing, could close entirely.
“If you don’t have as many (paying) patients, your income as an organization goes down,” said Nadereh Pourat, associate director of the UCLA Center for Health Policy Research. “These are nonprofit institutions, so all of that income goes toward delivery of care.”
Coyle noted that the Affordable Care Act had offered hospitals a financial lifeline by expanding Medi-Cal eligibility to millions of low-income Californians and creating a marketplace for middle-income residents to buy coverage. In the decade before that expansion took hold, 26 California hospitals closed outright, and another 22 shut down their emergency departments. Bracing for the new round of cuts, hospitals across the state have already laid off more than 3,000 workers.
Covered California feels the pinch
Nearly 2 million Californians with private coverage are already experiencing fallout from a separate but related decision: Congress’s refusal last year to extend roughly $3 billion in subsidies that helped middle-income families afford plans through Covered California, the state’s Affordable Care Act marketplace. Without that assistance, premiums spiked in January, prompting many enrollees to downgrade to skimpier plans.
Since the start of the year, about 140,000 people have already dropped their Covered California coverage, and researchers at UC Berkeley and UCLA expect another 176,000 to follow. State officials have also announced that premiums are set to climb by nearly 10% next year.
Charles Bacchi, president and CEO of the California Association of Health Plans, said rising costs tend to push healthier, lower-risk enrollees out of the insurance pool first.
“They’re the first ones to drop coverage because they start to question the financial bargain of the whole thing. Why am I buying this? The cost keeps going up and I don’t use it that much, so I drop it,” Bacchi said.
That exodus leaves behind a pool of sicker, costlier patients, which drives premiums even higher — a cycle insurers call a “death spiral.”
Will your premium actually rise?
For Californians who get coverage through their employer, there’s less consensus on exactly how much of this cost gets passed along. Research suggests hospitals typically absorb around 80% of the added expense created by rising numbers of uninsured patients.
“I don’t know if privately insured patients really get hurt, and I think that’s partly why Americans seem to be comfortable with the fairly inequitable arrangement we have,” said Tal Gross, a health economist at Boston University. His reasoning is that hospitals are generally already charging insurers close to the ceiling of what the market will bear, leaving little room to shift additional costs onto private plans. In some instances, he said, a rise in unpaid care can even push hospitals to lower prices for insurers in hopes of attracting more paying patients.
Bacchi disputes that theory. He argues that in many parts of California, hospital competition is limited, giving providers leverage to charge insurers steep rates, since insurers are legally obligated to keep certain hospitals in their networks.
“Any place that does burns, transplants, any of those high-cost services, has absolute control,” Bacchi said.
Somewhere between those two positions lies a rough consensus: Kenneth Thorpe, a health policy professor at Emory University, estimates federal cuts alone could push premiums up by 1% to 2%, or roughly $500 a year for the average family. On top of that, California lawmakers passed a new tax on health plans meant to help offset Medi-Cal’s federal funding losses — a move insurers say will tack on an additional $100 per person annually.
“That all hurts compared to what’s happening with wages, which is pretty stagnant,” Thorpe said. “It’s a bad time right now.”
The bigger picture
Wright, of Families USA, said the human cost of losing coverage extends well beyond individual patients, rippling through entire communities. The same dynamics that turned King-Harbor’s 2007 closure into a regional healthcare crisis — a surge of uninsured patients and overwhelmed emergency rooms — could resurface again, this time with the potential to strain hospitals across much of the state.
“It means people live sicker, die younger and are one medical emergency away from financial ruin,” Wright said.
Original source: CalMatters
