Governor’s Budget Places Health Programs on the Chopping Block
On Friday, Gov. Arnold Schwarzenegger (R) unveiled a budget plan that attempts to close a $19.9 billion deficit by imposing deep cuts to health care and social services, the Sacramento Bee reports.
The governor also declared an emergency session of the Legislature to address the $8.9 billion shortfall remaining in the current fiscal year. The emergency declaration gives lawmakers 45 days to agree on budget proposals.
Much of Schwarzenegger's proposals rely on a demand for $6.9 billion in increased federal funding (Yamamura, Sacramento Bee, 1/9).
If California fails to secure the federal funds, the governor's budget would deploy a trigger mechanism that would backfill the loss of every federal dollar with tax adjustments or deeper cuts to state programs (Sacramento Business Journal, 1/8).
Budget Plan #1: If California Secures Federal Aid
Even if Schwarzenegger succeeds in obtaining the federal funds, his budget plan would cut $2.9 billion in funding from health and human services programs (Theriault/Harmon, San Jose Mercury News, 1/8).
Health care programs slated for cuts under the governor's proposal include:
- Adult day health care services: Schwarzenegger's plan aims to reduce state spending by $104 million by eliminating adult day health care services (Halper/Goldmacher, Los Angeles Times, 1/9).
- First 5: The governor also is seeking to siphon funds from Proposition 10 early childhood health and education funding (Wilson/Kisken, Ventura County Star, 1/9).
- Healthy Families: In addition, the budget plan would tighten eligibility requirements for Healthy Families, California's Children's Health Insurance Program. The proposal also would raise family contributions and end vision coverage under the program (Los Angeles Times, 1/9). Officials say the changes would end services for 200,000 children statewide (Small/Stoltze, "KPCC News," KPCC, 1/11).
- In-Home Supportive Services: The governor's proposal also would cut $950 million from the state's IHSS program (Gardner/Marelius, San Diego Union-Tribune, 1/9). The change would restrict IHSS eligibility and reduce caregivers' pay to the minimum wage (Halper/Goldmacher, Los Angeles Times, 1/9).
- Medi-Cal: Under the governor's plan, copayments and premiums would rise for beneficiaries of Medi-Cal, the state's Medicaid program. The plan also would eliminate Medi-Cal coverage for documented immigrants who have lived in the U.S. for less than five years (Ventura County Star, 1/9). In addition, the proposal would reduce Medi-Cal eligibility to the minimum required by federal law ("KPCC News," KPCC, 1/11).
- Mental health care: Schwarzenegger also called for a move that would divert $450 million from the proceeds of the Proposition 63 tax for mental health funding. Voters rejected a similar proposal last year (Ventura County Star, 1/9).
In a slight gain for state health services, Schwarzenegger announced a proposal to recruit 107 new investigators to oversee the discipline of nurses and other health care workers. Health care board budgets and licensing fees would fund the $12.8 million program (Ornstein/Weber, Los Angeles Times, 1/9).
In other funding reductions, the governor's budget plan would cut $1.4 billion from state worker compensation packages. The plan would end the furlough program, cut 5% from state worker paychecks and redirect an additional 5% of wages to employee pension costs.
In addition, Schwarzenegger's budget would reduce prison spending by $1.2 billion (Sacramento Business Journal, 1/8). Most of the prison spending reductions would come from cuts to health care expenditures (San Diego Union-Tribune, 1/9).
Budget Plan #2: If Federal Funds Do Not Arrive
If the federal government does not send funds to California, the governor's trigger mechanism would impose up to $4.6 billion in program cuts and $2.4 billion in tax adjustments.
Under this scenario, the budget would cut:
- $847 million by redirecting Proposition 63 funds to finance existing mental health services;
- $532 million by reducing Medi-Cal eligibility to minimum federal requirements and eliminating most remaining optional benefits;
- $495 million by eliminating the IHSS program;
- $126 million by eliminating Healthy Families; and
- $115 million by eliminating various health services funded by Proposition 99 (Sacramento Business Journal, 1/8).
If the state does not secure federal funds, the governor also proposed eliminating the state's CalWORKS welfare program and imposing deeper cuts to state worker compensation (Sacramento Bee, 1/9).
Governor Criticizes Health Reform on "Meet the Press"
During a Sunday appearance on NBC's "Meet the Press," Schwarzenegger reiterated his opposition to national health care reform and called for California's congressional delegation to vote against the legislation (Rothfeld/Simon, Los Angeles Times, 1/11).
The governor previously was one of a few Republicans to express support for a national health care overhaul (AP/San Francisco Chronicle, 1/9).
In his recent criticism, Schwarzenegger said the Senate health reform bill would compel California to pay out an additional $3 billion to $4 billion to cover the costs of a proposed Medicaid expansion.
The governor also took issue with a provision secured by Sen. Ben Nelson (D-Neb.) that would fully cover the cost of a Medicaid expansion in Nebraska.
On Friday, Sen. Barbara Boxer (D-Calif.) released a report finding that California receives more federal funding than it pays in taxes.
The finding calls into question Schwarzenegger's recent assertions that California receives 78 cents for every dollar it sends to the federal government. The governor's figure is based on a 2005 study by the Tax Foundation (Yamamura, Sacramento Bee, 1/11).
In contrast, Boxer's report found that California received about $1.02 in federal funds for every $1 it sent in federal taxes in 2008. It also found that the state received $1.45 in federal funds for every $1 it sent in 2009.
The 2009 federal economic stimulus package could account for some of the federal spending changes, the report noted (Doyle, McClatchy/Sacramento Bee, 1/9).
"There's a measure of truth" to Schwarzenegger's claim that federal and state restrictions compelled him to propose deep cuts to health care and social services in his new budget package, a Sacramento Bee editorial states.However, it continues that "this excuse overlooks some of the alternatives he chose not to pursue," such as new fees and taxes. The editorial concludes, "The time has come to decide which core functions the state must protect, and which are expendable" (Sacramento Bee, 1/9). 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.