LAO: Federal Health Reform Law To Take Toll on State Budget

On Thursday, the Legislative Analyst's Office released a report finding that as many as two million more Californians could become eligible for Medi-Cal coverage after the federal health reform law takes effect, Sacramento Bee's "Capitol Alert" reports. Medi-Cal is California's Medicaid program.

Although the federal government initially will cover costs for newly eligible enrollees, the program's overall expansion still could take a toll on California's budget, the LAO report found.

The report states that the increased enrollment "will put significant fiscal pressure" on the state, particularly after the federal government starts to scale back its contribution to state health programs (Walters, "Capitol Alert," Sacramento Bee, 5/13).

Budget Slated for Release Today

This afternoon, Gov. Arnold Schwarzenegger (R) is expected to release his updated budget plan. Schwarzenegger also could announce that California now faces a deficit of up to $22 billion because of lower-than-expected tax revenue.

The governor's updated plan is likely to include the elimination of California's In-Home Supportive Services program for elderly and disabled residents. The budget also might include cuts to Healthy Families, California's Children's Health Insurance Program (Theriault, San Jose Mercury News, 5/13).

Editorial

Although major spending cuts are "inevitable," Schwarzenegger "still can be a leader in implementing national reform by maximizing California's ability to collect federal health care dollars and by protecting the state's core health care programs as best he can," a San Jose Mercury News editorial states.

The editorial continues that it "would be crazy" for Schwarzenegger to eliminate Healthy Families, partially because the move would cost California $26 billion in federal Medicaid funds. It adds, "The governor and the Legislature must work together to balance the budget without destroying the foundation needed to implement federal reforms" (San Jose Mercury News, 5/13).

Broadcast Coverage

Headlines and links for broadcast coverage of Schwarzenegger's upcoming budget proposal are provided below.

"Gov. Schwarzenegger To Submit Final Budget Plan" (Myers/Montagne, "Morning Edition," NPR, 5/14); and
"Governor May Cut Home Health Care" (Horwich, "Marketplace," American Public Media, 5/13).

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.