SACRAMENTO — As Democratic lawmakers speed to implement President Obama’s healthcare overhaul in California, they are finding themselves at odds with the leader of their own party: Gov. Jerry Brown.

The governor and legislators disagree over how the state should expand Medicaid to more than 1 million low-income Californians, a critical component of the federal Affordable Care Act.


Under proposals passed by both houses of the Legislature last week on mostly party-line votes, individuals earning up to 138% of the federal poverty level — or $15,415 a year — would be newly eligible for Medi-Cal, the state’s version of Medicaid.

Concerned about new costs, Brown wants to scale back some of the benefits the Legislature has proposed. Long-term care for the disabled would not be part of the package under the governor’s plan.


Also under Brown’s plan, groups that are now covered by Medi-Cal, including certain AIDS and cancer patients and recent legal immigrants, would be shifted into a state-run insurance exchange where they would receive partial coverage but pay premiums for the first time. Democratic lawmakers want those groups to remain in Medi-Cal.

Brown also wants to reduce the roughly $2 billion the state gives to counties each year to care for the uninsured — whose numbers will fall — to offset new administrative costs.


“Now is not the time, when we are trying to put our fiscal house in order, to go farther” than minimum requirements under the federal law, Toby Douglas, director of the California Department of Health Care Services, said in an interview.

Having heeded the governor’s calls to slash billions of dollars in services in recent years to help balance the state budget, the Democrats who dominate the Legislature are pushing back, seeing an opportunity to patch holes in public aid programs. They note that Washington picks up the whole cost of Medi-Cal expansion for the first three years and then phases down to 90%.


Most Republicans oppose the healthcare expansion, saying it exposes the state to unacceptable financial risk if the federal government reduces or withdraws funding. Just one GOP lawmaker has voted for the Medi-Cal legislation so far. Each house has passed its own version, and lawmakers must now iron out the differences and send one bill to the governor.

At a legislative hearing last week, Democrats questioned Brown’s commitment to the healthcare overhaul, saying he had applied less scrutiny to one of his top priorities: the state’s costly bullet-train project.


“I’d love to hear from the administration where we find the additional billions of dollars for high-speed rail,” said Assemblywoman Holly Mitchell (D-Los Angeles), “when the ability to provide healthcare to California’s most vulnerable population is in question.”

Assemblyman Wesley Chesbro (D-Arcata) noted that the state has repeatedly cut Medi-Cal reimbursement rates, shrinking the pool of healthcare providers who participate in the program. And now demand is expected to swell dramatically.


“Is the governor really committed to implementing this portion of the Affordable Care Act?” he asked administration officials. “Words are one thing. Actions are another.”

Brown has sounded a note of caution even as he has said he embraces the federal law. Echoing the concerns of Republican lawmakers, he has said the long-term costs of the healthcare expansion could undermine California’s tenuous fiscal stability.


“The ultimate costs of expanding our healthcare system under the Affordable Care Act are unknown,” he told the Legislature in his January State of the State address. “Ignoring such known unknowns would be folly.”

According to the nonpartisan Legislative Analyst’s Office, the state could be on the hook for between $300 million and $1.3 billion a year starting in 2020, depending on how many people sign up for coverage, how much healthcare they use and what services the federal government will cover.


Brown has proposed a “trigger” that would cancel Medi-Cal expansion if the federal government stopped paying at least 90% of the cost. He is also pushing a proposal supported by the insurance industry that would eliminate certain requirements in California, such as coverage for residents with preexisting conditions, if those requirements are repealed in Washington.

Democrats oppose those triggers, preferring to give the Legislature up to a year to reevaluate and amend state laws if federal law is changed.


One of the most significant sticking points is whether the state or the counties will administer the healthcare expansion. Although Brown has not endorsed either option, Democrats and local officials are pushing for a state-run program, enshrined in legislation that would be passed quickly and enacted within 90 days.

Brown wants to take more time as he builds the new costs into his proposed budget, which he will reissue in May.


The legislative analyst has estimated that the Medi-Cal expansion could save counties between $800 million and $1.2 billion a year and recommended that the state take control of some of those funds. Brown has also suggested shifting some state responsibilities, such as child care, to the local level to help offset new state costs.

Democrats have bristled at the notions of delaying the expansion debate and cutting funds for counties.


Echoing the concerns of healthcare advocates and county officials, they said counties have been struggling with resources since 2001 and will still have to pay to treat millions of Californians who are likely to remain uninsured.

With years of federal subsidies ahead, Mitchell said she was puzzled as to “why we would be so conservative, so non-visionary, to not take advantage of this opportunity.”


“It’s not a question about the commitment to move forward,” Douglas countered at the legislative hearing. “But we have to move forward in a way that is responsible and sustainable over the long haul.”

michael.mishak@latimes.com