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Can California Afford to Keep Obamacare?

Nobody knows what is going to happen to Obamacare under the Trump administration. The GOP has promised to repeal and replace, but have stalled due to the fact that they have so far been unable to decide on how to replace Obamacare. One proposal generated by the GOP would allow states that want to keep Obamacare to do so for a price. If this option were made available, it would mean that California voters would be forced to decide whether they would be willing to continue paying more taxes so that some five million residents of the state could keep their subsidized insurance coverage.

The main question as to whether California will keep Obamacare is how much it will cost its residents and how many people will be covered. According to a senior economist at the RAND Corporation, the main issue is the federal in-flow of dollars. Around $22 billion in federal funds is provided to California every year for Obamacare, over $17 billion of which is used to add millions of low-income adults without insurance to Medi-Cal, which is California’s health program for the poor and disabled. The rest of those federal funds is given to subsidies that help lower the costs of healthcare plans for the majority of the 1.3 million residents who purchase their health insurance via California’s health exchange.

The GOP’s proposal to allow states to keep Obamacare comes with a price – states will receive five percent less in federal funds. To fill that gap, California would need to make a state investment. This five percent reduction would result in higher costs for consumers unless California residents would be willing to pay higher taxes. Some experts believe that keeping Obamacare will be worth the cost as this way insurance in California will continue to include a ban on lifetime and annual limits, prevent discrimination against pre-existing conditions, and continue providing anyone under the age of 26 with coverage.

One GOP proposed plan may allow California to keep Obamacare, but it would come at a higher cost. For more health-related news, visit us at The Benefits Store.


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