Health, Human Services Cuts Hit $3.4 Billion in California Budget

On Wednesday, Gov. Arnold Schwarzenegger (R) unveiled his revised budget proposal for the next fiscal year, which includes a total of $3.4 billion in cuts to health and human services to help reduce the state budget deficit, the San Francisco Chronicle reports.

Schwarzenegger added $1.1 billion in cuts to health and human services from his initial budget proposal in January (Fernandez, San Francisco Chronicle, 5/15).

The new budget would reduce the income eligibility for Medi-Cal for two-parent households to 61% of the federal poverty level. Medi-Cal is the state's Medicaid program.

The budget proposal also calls for reinstating a rule that limits Medi-Cal eligibility to families in which the primary wage earner does not work more than 100 hours per month (Harrison, Eureka Reporter, 5/14).

A single parent whose income exceeds $8,540 annually also would no longer be eligible for Medi-Cal (Halper/McGreevy, Los Angeles Times, 5/15).

Anthony Wright of Health Access California said the decrease in Medi-Cal eligibility levels would reduce state spending on the program by about $343 million (Mendel, San Diego Union-Tribune, 5/15).

The budget also would eliminate nonemergency services -- other than prenatal care, nursing facility care, and breast and cervical cancer treatment -- for recent documented immigrants and undocumented immigrants (Eureka Reporter, 5/15).

Full in-home support services for about 84,000 seniors and disabled residents would be restricted, and pay for those service workers also would be cut.

In-home medical assistance would continue, but only the most severely impaired would receive aides for household tasks (Los Angeles Times, 5/15).

In addition, some types of medications would be eliminated from the state AIDS Drug Assistance Program (San Francisco Chronicle, 5/15).

The focal point of Schwarzenegger's budget plan is to get the Legislature to place a measure on the November ballot asking voters to approve a loan against future lottery income.

David Crane, an adviser to Schwarzenegger, said the plan would let the state borrow $15 billion over three years from a Wall Street bank in exchange for "the right but not the guarantee" of future net incomes from expanded state lottery revenue. Crane also said that under the plan the bank would "take all the risk" and that the state would never have to repay the bank if lottery revenue fell short of expectations.

Crane said that in order for the plan to work, the lottery would need to be altered so that it could double its performance and create higher payouts than are currently allowed under state law (Steinhauer, New York Times, 5/15).

The governor's plan calls for an immediate one-cent sales tax increase if voters reject the loan against lottery revenue on the November ballot.

Schwarzenegger also wants legislators to put a "budget stabilization" measure on the November ballot. The measure would grant future governors expanded powers to cut programs and build state financial reserves (Yamamura, Sacramento Bee, 5/15).

Schwarzenegger said the plan is designed to limit cuts to education and other services that previously had been slated for reductions (Zapler, San Jose Mercury News, 5/14).

The budget also would borrow $574 million from various special funds, including funds under the:

• Office of Statewide Health Planning and Development;
• Department of Health Care Services; and
• Department of Public Health.

Referring to the cuts to health care and social services, Schwarzenegger said, "I know this is going to be very difficult and very painful. But the bottom line is we can't spend money we don't have" (San Jose Mercury News, 5/14).

Kim Belshé, secretary of the Health and Human Services Agency, said that the governor attempted to cut services for the needy in areas where they would have the least impact but that with such a deep budget shortage, costly programs like Medi-Cal have to be cut (Wilson, Ventura County Star, 5/15).

Belshé also said that by rolling back an expansion of Medi-Cal in 2000, the state could save $30 million in 2009 and as much as $342 million in 2011-2012 (Eureka Reporter, 5/15).

Carmella Castellano-Garcia, president of the California Primary Care Association, said some of the health care cuts "are anti-immigration provisions."

Richard Frankenstein -- president of the California Medical Association, which has filed a lawsuit to block the Medi-Cal cuts -- said the cuts will "shut doctors' offices, hospitals, pharmacies and clinics ... across California" (San Francisco Chronicle, 5/15).

Republican legislators objected to the plan because of the potential for a tax increase if voters do not approve the state lottery lease, and Democrats said the lottery plan was speculative and risky (San Diego Union-Tribune, 5/15).

Four broadcast programs recently reported on health care-related provisions of the budget proposal. Summaries appear below.

• KPBS' "KPBS News": The segment includes comments from Angela Gilliard of the Western Center on Law and Poverty (Goldberg, "KPBS News," KPBS, 5/14).
• KCRW's "Which Way L.A.?": The segment includes a discussion with Sacramento Bee columnist Dan Walters about the budget proposal and his recent column on the subject (Onley, "Which Way, L.A.?," KCRW, 5/14).
• KPCC's "KPCC News": The segment includes a discussion with KPCC Sacramento correspondent Julie Small about the budget proposal, including the impact on health care programs (Jahad, "KPCC News," KPCC, 5/14).
• KQED's "Forum": The program on Thursday is scheduled to include a discussion about how the budget will affect health care and other programs. Scheduled guests included John Ellwood, a professor of public policy at the Goldman School of Public Policy at UC-Berkeley; John Myers, Sacramento bureau chief for KQED; and Mike Genest, director of the state Department of Finance ("Forum" Web site, 5/15).