Governor’s Budget Plans Hit Health Care Programs Hard
On Thursday, Gov. Arnold Schwarzenegger (R) presented two budget plans that would direct the state to seek a federal waiver to permit $750 million in cuts to Medi-Cal, California's Medicaid program, the Los Angeles Times reports (Rothfeld, Los Angeles Times, 5/15).
The governor's proposal would cut eligibility, benefit levels and reimbursement rates (Yamamura, Sacramento Bee, 5/15). The San Diego Union-Tribune reports that a federal waiver would be needed for the Medi-Cal cuts to avoid violating provisions of the federal economic stimulus package that would make the state ineligible for some funds (Gardner, San Diego Union-Tribune, 5/15).
Department of Finance Director Mike Genest said, "We're asking for some flexibility" (Miller, Riverside Press-Enterprise, 5/14).
The Times reports that Schwarzenegger's health care-related proposals include:
- Requiring the state to review prescriptions for antipsychotic drugs before they could be dispensed;
- Creating a task force to investigate Medi-Cal fraud;
- Cutting Medi-Cal reimbursements to private hospitals by 10%; and
- Going back to pre-2008 payment rates for family planning services (Los Angeles Times, 5/15).
In addition, the governor proposed eliminating eligibility for non-emergency Medi-Cal benefits for documented immigrants (Colliver, San Francisco Chronicle, 5/15).
Spending for centers that provide services to people with developmental disabilities would be cut by $234 million (Zapler, San Jose Mercury News, 5/14).
The proposals outlined above would help the state deal with a $15.4 billion budget deficit, the financial situation the state would find itself in if voters approve propositions 1C, 1D and 1E in the May 19 special election (Sacramento Bee, 5/15).
Proposition 1C would let the state borrow $5 billion against future state lottery revenue.
Proposition 1D would shift funds from First 5, which was created in 1998 when voters approved Proposition 10 to increase the state tobacco tax to fund early childhood health care and education programs.
In fiscal year 2009-2010, the measure would shift as much as $608 million in Proposition 10 revenue to the state general fund for other state health and human services programs for children who are not older than age five.Â The measure would shift as much as $268 million to the state general fund in each of the next four fiscal years.
The measure also would eliminate funds for statewide media campaigns and permit First 5 to allocate funding only for direct health and human services.
Proposition 1E would shift $226.7 million from mental health care programs that Proposition 63 funds to the existing Early Periodic Screening, Diagnosis and Treatment Program for low-income children for two years.Â
In 2004, voters approved Proposition 63, which increased the state income tax on high-income Californians to fund mental health services.
Schwarzenegger and the Legislature placed the measures -- and three others -- on the ballot as part of a February budget agreement (California Healthline, 5/14).
If propositions 1C, 1D and 1E fail, the budget deficit would jump to $21.3 billion (Sacramento Bee, 5/15).
Both estimates of the budget deficit -- $15.4 billion and $21.3 billion -- include $2 billion to be held in reserve (California Healthline, 5/14).
Rejection Triggers More Cuts
In the event that voters do not approve the three measures, Schwarzenegger outlined $800 million in cuts to health and human services programs, including a proposal to eliminate Healthy Families coverage for about 225,000 children.Â Healthy Families is California's version of the Children's Health Insurance Program (Yi et al., San Francisco Chronicle, 5/15).
The governor also proposed:
- Redirecting tobacco tax money from county health programs to Medi-Cal;
- Ending a program that aims to prevent dental disease in kids in 31 counties;
- Eliminating state funding for locally administered programs that aim to improve the health of mothers, children and families; and
- Cutting funding for local health care groups that provide HIV education and prevention services (Los Angeles Times, 5/15).
The governor's budget proposals also called for $6 billion in short-term borrowing, cutting education funding, laying off 5,000 state workers, reducing the prison population through various approaches, selling some state assets, consolidating some state agencies and eliminating some state boards (Rothfeld, Los Angeles Times, 5/15).
Schwarzenegger did not call for tax increases but did propose increasing some state fees (San Diego Union-Tribune, 5/15).
The Bee reports that Democratic legislators did not dispute the governor's projections and pledged to begin considering his budget proposals as early as next week.Â They did not commit to approving the cuts (Sacramento Bee, 5/15).
Senate Minority Leader Dennis Hollingsworth (R-Murietta) said he supports many of the governor's proposed spending cuts (Riverside Press-Enterprise, 5/14).
Anthony Wright, executive director of Health Access California, said the cuts would cause more Californians to become uninsured (Yi et al., San Francisco Chronicle, 5/15).Â Wright also said the cuts would cost the state hundreds of millions of dollars in matching federal funds (San Diego Union-Tribune, 5/15).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.