Health Care Not Spared in Schwarzenegger Budget Proposal
On Thursday, Gov. Arnold Schwarzenegger (R) proposed a $101 billion general fund budget for fiscal year 2008-2009 that cuts funding for health care programs and other services in an effort to close a projected $14.5 billion budget shortfall, the San Jose Mercury News reports (Zapler, San Jose Mercury News, 1/11).
The plan's across-the-board spending cut of 10% would affect almost every state department. The cuts would generate about $9 billion in savings next year and $217 million for the rest of the current fiscal year (Yamamura/Lin, Sacramento Bee, 1/11).
Schwarzenegger also declared a fiscal emergency, giving lawmakers until Feb. 23 to begin reducing a $3.3 billion deficit for the current year before they can move to other issues or adjourn.
Under the proposed spending plan, Medi-Cal would receive $13.6 billion from the state general fund, a decrease of nearly $1 billion from this year (Mendel, San Diego Union-Tribune, 1/11). However, the actual cut in Medi-Cal funding could be closer to $2 billion because the federal government matches state funds for the program, according to the Mercury News (San Jose Mercury News, 1/11).
Medi-Cal is California's Medicaid program.
The proposed budget would cut Medi-Cal reimbursement rates by 10% to doctors and hospitals that treat beneficiaries (Fernandez, San Francisco Chronicle, 1/11). The rates, which already are among the lowest in the nation, could prompt many physicians to refuse treating Medi-Cal recipients (Los Angeles Times, 1/11).
The proposal also calls for eliminating some Medi-Cal benefits, including:
- Most dental services for the three million adult Medi-Cal recipients;
- Optometry services;
- Psychology services;
- Speech therapy;
- Acupuncture; and
- Incontinence creams.
Schwarzenegger's plan would require Medi-Cal beneficiaries to file income reports every three months, and if their income or assets exceeded a maximum level, they would lose coverage (Fernandez, San Francisco Chronicle, 1/11).
The governor also proposed immediate cuts to Medi-Cal of about $33 million (Chorneau/Wildermuth, San Francisco Chronicle, 1/11).
The proposed budget would cut about $11 million from programs for HIV/AIDS patients, according to AIDS Project Los Angeles (Sheppard, Los Angeles Daily News, 1/10). Those services include drug assistance and counseling (Fernandez, San Francisco Chronicle, 1/11).
Assembly Speaker Fabian Núñez (D-Los Angeles) said he favors an alternative spending plan that would close tax loopholes and eliminate tax subsidies for the wealthy. He added, "Cuts alone will not work" (Herdt, Ventura County Star, 1/11).
Schwarzenegger said, "I do not believe in tax increases," but there is speculation that his proposed budget cuts are intended to reduce opposition to raising taxes, a move that would allow the governor to break his pledge not to raise them, the Los Angeles Times reports.
Schwarzenegger denied having such motivations.
Meanwhile, the Times reports that Democratic lawmakers already are crafting an alternative plan that would raise taxes on wealthy residents, oil companies, alcoholic beverages and other large sources of revenue.
However, Republican lawmakers, whose votes are necessary to approve a tax increase, remain opposed to new taxes, according to the Times (Halper, Los Angeles Times, 1/11).
The proposed Medi-Cal cuts "would leave millions of low-income people with less access to health care and could trash the governor's goal of universal health care for Californians," a Mercury News editorial states. Schwarzenegger's "demand that hospitals take a 10% cut" in Medi-Cal reimbursements "may cause them to drop crucial support for Schwarzenegger's reforms," according to the editorial (San Jose Mercury News, 1/11).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.