Brown Unveils Revised Budget Plan; Health Advocates React

On Thursday, Gov. Jerry Brown (D) released the revised version of his fiscal year 2015-2016 budget plan, which includes several health care proposals, the Los Angeles Times reports.

The revised $169 billion budget is more than $4 billion larger than the original proposal unveiled in January (Megerian, Los Angeles Times, 5/14). The revised plan would increase health and social services spending by about $1.7 billion (Richman, San Jose Mercury News, 5/14).

The final budget, which would take effect July 1, is due June 15 (Los Angeles Times, 5/14).

For more on provisions of Brown's revised budget proposal related to the Children's Health Insurance Program, see today's "Capitol Desk" post.

Medi-Cal Provisions

According to the Sacramento Business Journal, Medi-Cal -- California's Medicaid program -- accounts for the largest health care-related item in the budget proposal.

Under the budget plan, total Medi-Cal spending for FY 2015-2016 would be $91.8 billion, down by $18.6 billion in the January proposal.

The revised spending plan includes $125 million for rate increases to Medi-Cal managed care plans. However, it does not include funding to increase provider reimbursements (Robertson, Sacramento Business Journal, 5/14).

According to Michael Cohen, Brown's finance director, the governor's administration did not want to propose a blanket rate increase for providers without assurance that more beneficiaries would be treated (Los Angeles Times, 5/14).

The revised budget plan also includes:

• $341 million to increase Medi-Cal's mental health and substance misuse benefits; and
• $150 million -- including $48.8 million from the general fund -- for county Medi-Cal eligibility offices (Sacramento Business Journal, 5/14).

The proposal allocates $62 million to expand Medi-Cal coverage to undocumented immigrants who would be protected under President Obama's executive action on immigration (San Jose Mercury News, 5/14). Under the executive action, up to five million undocumented immigrants who have lived in the U.S. for at least five years and who have no record of felony offenses or serious misdemeanors would be able to apply for a program to avoid deportation (California Healthline, 11/21/14).

State Worker Health Benefits Provisions

Under the revised budget plan, compensation costs for state employees are projected to increase by $57 million in FY 2015-2016, in large part because of higher premiums and enrollment. In addition, the state estimates that unfunded liability in state retiree health care programs over the next 30 years is about $72 billion.

To offset the higher costs and unfunded liability, Brown's plan calls for state workers to contribute to their retiree health benefits. The advanced contributions then would be collected in a trust fund that would be drawn from in 30 years.

According to the Brown administration, the employee contribution plan could save California about $240 billion over the next 50 years.

In addition, under the plan, future state workers would have to be employed longer than 10 years -- the current requirement -- to qualify for partial post-employment medical benefits (Ortiz, "The State Worker," Sacramento Bee, 5/14).

Other Health Care Provisions

The revised spending plan also includes:

• $228 million to help pay for costly specialty prescription drugs, down from $300 million in the original proposal; and
• $326.7 million for pay increases over two years for the In-Home Supportive Services program (Sacramento Business Journal, 5/14).

In addition, the plan proposes that CalPERS:

• Offer less expensive policy options;
• Submit additional reports; and
• Undergo increased oversight of its medical insurance business ("The State Worker," Sacramento Bee, 5/14).

Reaction to Revised Budget Plan

In a statement, State Sen. Tony Mendoza (D-Artesia) applauded the revised budget plan, noting that it "includes increased funding for education, public safety and implementing health care reform while" repaying debt and investing in the state's rainy day fund (Mendoza release, 5/14).

Meanwhile, Mark Diel, executive director of California Coverage & Health Initiatives, praised the spending plan for including tax credit provisions that are a "step in the right direction for the health and well-being of California children" in low-income families (California Coverage & Health Initiatives release, 5/14).

However, other advocates said they wanted Brown's proposal to do more to restore cuts made to health care and social services during the economic recession.

Anthony Wright, executive director of Health Access, said, "We should remember that any surplus was created in part out of $15 billion in cuts to health and human services -- cuts that continue today and into the future without some reinvestment."

Luther Cobb, president of the California Medical Association, voiced concerns about the lasting effects of 2011 reductions in Medi-Cal's reimbursement rates. He said the cuts "are now impacting the millions of children and seniors who rely on Medi-Cal for essential health services" (San Jose Mercury News, 5/14).

California Hospital Association President and CEO C. Duane Dauner agreed, noting that Medi-Cal cuts have "plac[ed] health care providers and their patients in a precarious situation" (Sacramento Business Journal, 5/14).

Meanwhile, Paul Song -- executive chair of the Courage Campaign -- said California should restore "the devastating cuts to the [California HHS] budget and fun[d] programs that welcome immigrants out of the shadows" (Courage Campaign release, 5/14).