Budget Report Raises Doubts on Governor’s Health Care Plan

Legislative Analyst Elizabeth Hill on Wednesday warned that Gov. Arnold Schwarzenegger's (R) health care reform proposal could leave the state with $3.2 billion in unanticipated costs, the Los Angeles Times reports.

Hill, in a report on the governor's budget proposal for fiscal year 2007-2008, questioned the administration's assurance that the health proposal would not require state spending, highlighting "a number of fiscal risks and uncertainties which could exceed $3.2 billion" (Halper, Los Angeles Times, 2/22). Almost half of the unexpected costs would result from lower-than-expected federal matching funds (Lucas/Chorneau, San Francisco Chronicle, 2/22).

Schwarzenegger has said that he would seek $3.7 billion in additional federal funds to cover the estimated $12 billion cost of the California proposal in the first year. California officials maintain that the state should receive almost all of the additional federal funds under current rules for Medicaid and the State Children's Health Insurance Program (California Healthline, 1/30).

The governor says only about $200 million in federal funds would be in question under his plan (San Francisco Chronicle, 2/22).

Hill says the governor's overall budget proposal would drain the state's reserve fund and result in a $726 million deficit.

H.D. Palmer, Department of Finance spokesperson, said the administration still is optimistic that the budget proposal would leave the state with a $2.1 billion surplus (Los Angeles Times, 2/22). He declined to identify potential funding cuts or strategies to increase revenue if the budget proposal does not pan out (Zapler, MediaNews/San Jose Mercury News, 2/22).