LOS ANGELES — California counties will not experience significant savings from healthcare insurance expansion under the Affordable Care Act, even though the expansion will lessen their burden of providing healthcare to the uninsured, according to a report from Moody's Investors Service.
"Counties won't save much in the end because the state of California will offset most of their savings by reducing the funds they provide counties for other human service programs," analysts said in a report.
The healthcare expansion under the ACA takes effect on Jan. 1, after which enrollment in California's Medicaid program is expected to increase 14.5% by 2017, according to the California Legislative Analyst's Office.
Medi-Cal expansion will be funded entirely by the federal government through 2016. After that, the federal government will pay 90% of expansion costs, and the state will pay 10%.
Such expansion will reduce healthcare costs of counties because they pay the healthcare costs of medically needy residents.
The LAO estimates that gross savings from the expansion will be $800 million to $1.2 billion in 2017. Moody's said this number is relatively small in comparison to the total $17.7 billion that the 27 counties it rates spent on healthcare in fiscal 2012.
"Though California counties will reap gross savings from Medi-Cal expansion, the state will in turn offset much of these savings by reducing other funding to the counties," Moody's said. "This will significantly reduce their net savings, in some cases possibly to zero."
Seven of the 14 counties that responded to a survey from Moody's expect zero or very little net savings from the expansion. Five counties have not yet estimated their net savings, and only two expect small net savings.