California to Lose $400M Under Revisions to Medicaid Reimbursement Formula
Under planned revisions to the formula that sets levels for federal and state contributions to Medicaid and other health programs for the poor, in fiscal year 2003 California will receive $400 million less from the federal government for Medi-Cal, the Los Angeles Times reports. The federal government is revising the formula -- based on a state's average income rather than the number of low-income residents -- to include income changes over the last three years. Although other states stand to lose a total of $200 million under the revised formula, California will be the "biggest loser" -- with a $400 million loss in federal money. Using the old formula this year, California and the federal government had split the $26 billion cost of running Medi-Cal and other public health programs. California is expected to lose the most money because it has "relatively large numbers of people at both ends of the income scale." The state has 12% of the nation's population and 14% of U.S. residents who live in poverty, but now receives only 11% of total federal funds for Medicaid because it has a "relatively high average income." In the last three years, the state's per capita income increased 8%, compared with a 5% national increase. Some states are expected to "come out ... ahead" under the new formula and will gain the $600 million "relinquished by California and the other losers."
California officials received notice of the formula changes shortly after the Bush administration announced plans last week to close the Medicaid loophole by the end of the decade. That move is expected to cost California's safety-net hospitals more than $300 million; the state already faces a large budget deficit. Department of Health and Human Services Undersecretary Glen Rosselli said, "We really need the money." He added that state officials are concerned "that the federal government is becoming consistently unreliable. They promise help and they don't deliver" (Rosenblatt, Los Angeles Times, 11/24).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.