Governor’s Spending Plan Would Cut Into Federal Matching Funds
Gov. Arnold Schwarzenegger's (R) budget proposal for fiscal year 2008-2009 would result in a loss of about $1.5 billion in federal matching funds for health care services and other programs, according to an analysis by the Assembly Budget Committee, the Sacramento Bee reports (Whitney, Sacramento Bee, 1/15).
In the proposal, the governor advocates cutting about $1.1 billion in state funds from Medi-Cal, California's Medicaid program, partly by cutting reimbursements to health care providers by 10%. The proposal also would eliminate Medi-Cal coverage of:
- Chiropractic care;
- Dental services for adults;
- Podiatry; and
- Vision and other services (California Healthline, 1/14).
Medi-Cal likely would experience a larger funding cut because less matching federal funding would be awarded to the program.
Schwarzenegger's proposal also calls for cutting state funding for Healthy Families by $49.1 million. Healthy Families is California's version of the State Children's Health Insurance Program.
However, the governor's proposed funding reduction would translate to a corresponding loss of $76.1 million in matching federal money.
Under the governor's budget, dental coverage for Healthy Families beneficiaries would be limited to $1,000 per child, and premiums for families would increase by $3 per child to avoid tightening eligibility requirements for the programs.
Kim Belshé, secretary of the Health and Human Services Agency, said there will be enough funding in the proposed spending plan to accommodate a projected increase of 65,000 children covered by the program.
Jean Ross of the California Budget Project said, "Every dollar of state savings takes $2 out of the doctors' offices and hospitals," adding, "The impact on the state's economy is double."
Richard Frankenstein, president of the California Medical Association, said, "Slashing payments that go towards providing health care to the poor will only exacerbate the health care crisis in California."
He contended that the cuts will force doctors to stop treating Medi-Cal beneficiaries, "will force hospitals and clinics to close their doors, and will force tens of thousands of patients to get their care" in emergency departments (Sacramento Bee, 1/15).
On Monday, the nonpartisan Legislative Analyst criticized Schwarzenegger's decision to order across-the-board spending cuts in an effort to rein in the state's $14.5 billion budget deficit, the Ventura County Star reports.
Elizabeth Hill told lawmakers that the governor's spending plan "fails to differentiate between the importance of various state programs." She added, "All state programs are not equally valuable."
Hill advised the Legislature to "collectively attempt to determine which programs are most important" and consider revenue-generating options, such as eliminating tax credits and raising user fees for some state services (Herdt, Ventura County Star, 1/15).
Links to additional coverage of Hill's budget assessment appear below.
- "Budget Analyst Criticizes Schwarzenegger's Plan" (Halper, Los Angeles Times, 1/15)
- "State Analyst Questions Governor's Plan To Cut $14.5 Billion Deficit" (Yi, San Francisco Chronicle, 1/15)
- "Budget Analyst Calls Spending Cuts Misguided" (Zapler, San Jose Mercury News, 1/15)
"From a fiscal standpoint, there will never be a perfect time to reform health care," Leif Wellington Haase, director of the California Program of the New America Foundation, and Peter Harbage, senior program associate with the New America Foundation and president of Harbage Consulting, write in a San Francisco Chronicle opinion piece.
Nonetheless, Haase and Harbage question whether California can afford not to approve a health care reform plan this year, maintaining that "it actually costs more to let California continue to have one of the highest rates of un-insurance in the country than it would cost to cover everyone."
They conclude, "If European countries ... could rebuild their health care systems to provide universal coverage out of the rubble of World War II, certainly California can strengthen our private health care system now" (Haase/Harbage, San Francisco Chronicle, 1/15).
KPCC's "KPCC News" on Monday reported on how the budget could affect funding for Healthy Families. The segment includes comments from:
- Lynn Kersey, executive director of Maternal and Child Health Access in Los Angeles;
- Ron Spingarn, a spokesperson for Managed Risk Medical Insurance Board, which oversees Healthy Families; and
- Healthy Families beneficiaries (Nazario, "KPCC News," 1/14).
Audio and a transcript of the segment are available online. 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.