Budget Shortfall Could Shape Outcome of Health Care Reform
With California's budget shortfall looming next year, Democratic legislative leaders are splitting over the best course of action for negotiating a health care reform plan with Gov. Arnold Schwarzenegger (R), the San Jose Mercury News reports (Zapler, San Jose Mercury News, 12/14).
The Department of Finance this week projected a state budget deficit of $14 billion over the next 18 months, higher than the $9.8 billion estimate by the Legislative Analyst's Office in November (Yamamura/Rojas, Sacramento Bee, 12/14).
H.D. Palmer, spokesperson for the department, said officials based their estimate on several factors, including a poor housing market, drops in property tax revenues and increased spending from the wildfires in Southern California (California Healthline, 12/13).
After meeting with Schwarzenegger and Assembly Speaker Fabian Núñez (D-Los Angeles), Senate President Pro Tempore Don Perata (D-Oakland) said, "It would be imprudent and impolitic to support an expansion of health care coverage without knowing how we're going to pay for vital health programs the state now provides for poor children, their families and the aged, blind and disabled" (Rau, Los Angeles Times, 12/14).
The governor opposes raising taxes to reduce the budget shortfall and instead plans to ask the Legislature for 10% across-the-board spending cuts, according to the Bee (Sacramento Bee, 12/14).
However, Perata said that state law bars funding cuts to education and some other services, forcing health and human services programs to see deeper spending cuts (Los Angeles Times, 12/14).
Perata added, "It's hard to explain to people how you can be talking about expanding a health care program at the same time you're making deep cuts in the present health care program" (Kurtzman/Davis, AP/Ventura County Star, 12/14).
Anthony Wright, director of Health Access, said, "When health care is a third of the budget, you expect that in a budget deficit like this, health care is going to be hit at least proportionally and maybe more so because other parts of the budget are protected" (Sacramento Bee, 12/14).
Schwarzenegger maintains that adopting his health care reform plan would create new revenue and not depend on the general fund.
However, some health care analysts and Republican legislators contend that efforts to expand health care coverage would eventually run short of funding as medical inflation outpaces the growth of revenue for the program (AP/Ventura County Star, 12/14).
According to the Times, Schwarzenegger wants to finalize a deal on health care reform before shifting gears to the budget shortfall and outlining his spending proposal for next fiscal year on Jan. 10 (Los Angeles Times, 12/14).
Meanwhile, Núñez has scheduled an Assembly session on Monday to vote on a health care reform compromise, saying, "That's how strongly I feel that we're going to get to the finish line" (AP/Ventura County Star, 12/14).
Núñez said the Legislature must approve the plan by Dec. 21 to qualify its funding mechanism for the November 2008 ballot (Myers, KQED, "Capitol Notes," 12/13).
Perata, however, said the Senate would not return to Sacramento until after Jan. 1 (Los Angeles Times, 12/14). He added that he would not ask Senate lawmakers to vote on an overhaul plan until Schwarzenegger outlines spending cuts for services such as Medi-Cal, California's Medicaid program (San Jose Mercury News, 12/14).
California's "looming deficit is an argument for health care reform now," a San Francisco Chronicle editorial states.
The governor and lawmakers need to reach an agreement by Dec. 21 or "California's hopes for health care reform this year -- probably for the next several years -- will implode," according to the Chronicle (San Francisco Chronicle, 12/13).