Economy

Study: California must prepare for health care law costs

California will spend $2 billion more per year on Medi-Cal when federal health care reform goes into full effect in 2016 and $4 billion more annually by 2020, according to a Rand Corp. study released this week.

The law will add coverage for about 6 million Californians, raising the percentage of those covered to 96 percent from today's 80 percent.

But the study's authors and sponsors say California and other states need to prepare for the costs and challenges that lie ahead in expanding coverage to more residents.

"We believe this information will help all states to be better prepared to respond to the challenges posed by the Patient Protection and Affordable Health Care Act," said Chris Whatley, a director of the Council of State Governments, which sponsored the study.

Rising Medi-Cal costs will drive an overall 7 percent hike in state health care spending in 2016, said Rand researchers, who expect enrollment in the program to increase by 58 percent, or 3.6 million residents, when reform begins.

About 17 percent of residents are expected to buy insurance through a state insurance exchange created by the health law, the report said.

The Rand study predicts that the percentage of California workers offered health insurance by employers will drop slightly by 2016. More large companies will offer coverage, Rand said, but fewer small businesses will provide insurance.

On Wednesday, California Association of Health Plans President Patrick Johnston said reining in rising health care costs remains a key element to achieving real reform.

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