Davis Asks Federal Government To Let State Use Medicaid Funds ‘More Creatively’

Gov. Gray Davis (D) on Wednesday formally asked the federal government for additional financial assistance to help "stabilize" the Los Angeles County public health system, the Los Angeles Times reports. The state is seeking a federal waiver to allow officials to use federal Medicaid funds "more creatively." The waiver asks for federal approval to contract with certain hospitals that provide services to beneficiaries in Medi-Cal. The application also asks the federal government to maintain funding levels for the state's disproportionate-share hospitals even as those hospitals' patient volume decreases as a result of the state trying to shift more patients from inpatient care to less expensive outpatient treatment. Although the waiver application does not include a specific dollar figure, state officials hope it could give the state at least $300 million over the next three years (Rabin, Los Angeles Times, 11/28).

Los Angeles' health system faces an estimated $750 million budget deficit by 2005, partly as a result of treating many uninsured patients, and county officials are considering whether to close Harbor-UCLA and Olive View-UCLA medical centers, as well as dozens of public health clinics, to balance the budget. The county received a $1.2 billion federal bailout in 1995 and an extension of the funds in 2000, but the bailout funds will expire in 2005. As a partial solution, county voters in November approved a measure to raise property taxes to cover about 40% of the projected shortfall. Federal health officials also recently proposed giving the county $150 million in aid, but county officials say the amount "falls far short" of the $1.4 billion they requested to "avert massive cuts." According to a Nov. 1 memorandum from the county health department to county supervisors, the proposed $150 million would not be enough to prevent the closing of the two UCLA medical centers. Federal health officials have said that no official agreement had been reached and that "negotiations are not over" (California Healthline, 11/22). Davis said that federal officials "cannot walk away from a big metropolitan area without there being disastrous consequences, and I'm confident they will not walk away." He added, "There is no Plan B." Thomas Garthwaite, director and chief medical officer for the Los Angeles County Department of Health Services said, "What this [proposed waiver] would allow, if the feds approve it, is to (keep) all those pieces and not to have the significant service cuts that would otherwise be necessary" (Talev, Sacramento Bee, 11/28).