When Martin Luther King Jr.-Harbor Hospital shut down in 2007, the ripple effects hit far beyond its own patients. Emergency rooms at nearby Los Angeles hospitals were suddenly overwhelmed, with wait times stretching past 11 hours, trauma cases piling up, and a surge of uninsured patients seeking care wherever they could find it. Researchers later found that the closure didn’t just strain the safety net — it made health outcomes worse across the entire region, driving up death rates and cutting off access to care even for people who had insurance of their own.
Health policy experts now warn that Southern California could see similar chain reactions play out again, and on a larger scale, as hospitals brace for a wave of newly uninsured patients. Recent federal and state cuts to Medicaid are expected to roughly double California’s uninsured rate, leaving an estimated 2.2 million residents without coverage by 2030. Low-income patients who rely on Medi-Cal will bear the brunt of the fallout, but those with private insurance won’t be immune either.
“The feeling that everyone experiences is the inability to access the health care they need when they need it,” said Carmela Coyle, president and CEO of the California Hospital Association.
Because the health care system is so tightly interconnected, researchers say nearly everyone could feel some version of the squeeze — fewer services, lower quality of care, and potentially higher premiums.
What triggered the crisis
President Trump’s tax legislation last year slashed nearly $1 trillion from Medicaid, the federal insurance program for low-income Americans, over the next decade. California officials estimate Medi-Cal alone could lose roughly $30 billion a year as a result.
Many low-income adults will now face new work requirements and shorter eligibility windows — rules that research shows tend to knock people off public assistance programs not because they’re ineligible, but because of bureaucratic paperwork errors. State lawmakers also trimmed benefits for undocumented immigrants and refugees enrolled in California’s programs.
Bukola Olusanya, who provides street medicine through St. John’s Community Health in South Los Angeles, said most homeless patients won’t be able to meet work requirements even when they qualify for an exemption, such as a disability. The result, she said, will be massive coverage losses among some of the most vulnerable residents.
“We’re talking about people who don’t have access to a cellphone,” Olusanya said. “They don’t have access to the internet. They don’t have access to a printer, paper or anything to complete the eligibility process.”
Taken together, these changes threaten to unravel much of the progress California made expanding health coverage over the past decade, said Anthony Wright, executive director of Families USA, a health care consumer advocacy group.
“From a purely economic standpoint, this is the largest cut to coverage in history,” Wright said.
Hospitals caught in the middle
Hospitals are where the financial strain lands hardest. By law, emergency rooms cannot turn anyone away, so when more patients arrive without insurance, someone still has to cover the cost of their care. The California Hospital Association projects that uncompensated care statewide will climb from roughly $2 billion to $4 billion a year because of the cuts — a serious concern, Coyle said, given that more than half of California’s hospitals are already operating in the red.
When hospitals are forced to cut costs, those cuts tend to affect everyone, regardless of insurance status. Facilities may reduce staff, cut wages, or eliminate costly services such as labor and delivery units. Some may shutter emergency departments rather than continue absorbing losses from uninsured patients. Quality of care can suffer, and hospitals already struggling financially become more likely to close for good.
“If you don’t have as many paying patients, your revenue as an organization goes down,” said Nadereh Pourat, associate director of the UCLA Center for Health Policy Research. “These are nonprofit institutions, so that revenue is what funds the delivery of care.”
Coyle noted that the Affordable Care Act had served as a financial lifeline for hospitals by extending Medi-Cal to millions of low-income Californians who previously lacked coverage, while also creating an insurance marketplace for middle-income residents. In the decade before that expansion, 26 California hospitals closed entirely, and another 22 shut down their emergency rooms.
Anticipating the federal and state cuts, California hospitals have already laid off more than 3,000 workers.
Covered California already feeling the pinch
Nearly 2 million Californians with private insurance have already felt some of these effects. Last year, Congress declined to renew roughly $3 billion in subsidies that helped middle-income families afford coverage through Covered California, the state’s Affordable Care Act marketplace. Without those subsidies, prices jumped sharply in January, pushing many enrollees into cheaper, less comprehensive plans.
About 140,000 people have already dropped their Covered California coverage since the start of the year, and researchers at UC Berkeley and UCLA project another 176,000 will follow. State officials have also announced that premiums will rise by nearly 10% next year.
When costs spike, healthier people are often the first to walk away from coverage, said Charles Bacchi, president and CEO of the California Association of Health Plans.
“They’re the first to drop coverage because they start questioning whether it’s worth it financially. Why am I buying this? The price keeps going up and I don’t use it much, so I cancel,” Bacchi said.
That exodus drives prices even higher, since the people who remain insured tend to have more expensive medical needs. Without healthier enrollees helping spread out the cost, insurers struggle to keep premiums from climbing further.
Will your own premium actually rise?
For people who get insurance through their employer, economists and insurers disagree on how directly these added costs will translate into higher premiums. Some studies suggest hospitals absorb roughly 80% of increased costs tied to uninsured patients rather than passing them along.
“I don’t know if patients with private insurance really end up worse off, and I think that’s part of why Americans seem comfortable with the pretty unequal system we have,” said Tal Gross, a health economist at Boston University.
His reasoning: hospitals are typically already charging insurers close to the maximum they can, leaving little room to shift costs further. In some cases, a rise in unpaid care can even push hospitals to lower prices for private insurers in order to attract more paying patients.
Bacchi dismissed that theory. In many parts of California, he said, there’s so little competition among hospitals that they can charge insurers almost whatever they want, since insurers are legally required to keep certain facilities in their network.
“Any facility that does burn treatment, transplants, or any of those high-cost services has all the leverage,” Bacchi said.
Broad estimates suggest premiums could rise by 1% to 2% — roughly $500 a year for the average family — from the federal cuts alone, according to Kenneth Thorpe, a health policy professor at Emory University. Separately, state lawmakers approved a new tax on health plans meant to help offset Medi-Cal’s federal funding losses, which commercial insurers say will add another $100 per person annually.
“All of that hurts compared to what’s happening with wages, which are pretty stagnant,” Thorpe said. “It’s a bad time.”
The bigger picture
Wright, of Families USA, said losing health coverage is painful for individuals and damaging for entire communities. The same dynamic that turned King-Harbor’s 2007 closure into a regional crisis — a sudden spike in uninsured patients overwhelming emergency rooms — could resurface, only this time affecting far more hospitals across the state.
“It means people live with worse illnesses, die younger, and are one medical emergency away from financial ruin,” he said.
Original source: CalMatters
