Proposals To Cut Health Spending in California Face Opposition

Health care advocates are gearing up to fight Gov. Arnold Schwarzenegger's (R) proposals to cut state funding for health care programs, which a legislative committee will consider in a series of public legislative hearings beginning today, the Los Angeles Times reports (Bailey/McGreevy, Los Angeles Times, 5/23). 

The suggested cuts to health care programs are part of the governor's proposal to address the state's projected $24.3 billion budget deficit for fiscal year 2009-2010 (Wiegand, Sacramento Bee, 5/23).

To date, the governor has not issued a formal proposal for the cuts, but his aides told state legislators the administration is considering eliminating Healthy Families, California's version of the Children's Health Insurance Program.  Healthy Families covers more than 900,000 California children.

The Ventura County Star reports that ending the program would eliminate about $388 million in state spending but also would result in an annual loss of more than $700 million in federal matching funds.

Before floating the idea of eliminating the program, Schwarzenegger formally proposed reducing eligibility for Healthy Families to children from households with incomes that do not exceed 200% of the federal poverty level.  The program currently is open to kids from households with incomes that do not exceed 250% of the federal poverty level.

Schwarzenegger also has proposed cutting state funding for Medi-Cal, California's Medicaid program.

Opposition

Health care advocates estimate that the governor's proposals would result in two million Californians losing health insurance coverage.

Anthony Wright, executive director of Health Access California, said the proposed cuts "could very well be the straw that broke the camel's back and push some hospitals and clinics over the brink."

California Medical Association President Dev GnanaDev said the proposed cuts to Medi-Cal "would further reduce primary and preventive care and result in more people ending up in overcrowded and expensive emergency rooms -- at an increased cost to taxpayers" (Herdt, Ventura County Star, 5/24).

In addition, the Los Angeles Commission on HIV is objecting to a proposal that would eliminate a $96 million program that provides services to about 35,000 HIV-positive Californians.

More than a dozen scientists and groups such as the American Lung Association are raising concerns about proposed cuts to a state office that evaluates the health risks of chemicals found in products and the environment.

Administration Response

Aaron McLear, a spokesperson for the governor, said the administration expected such opposition to its proposals.  "The governor fully understands that each one of these cuts affects real people," McLear said, adding that "there is simply not an easy way" to address the state budget deficit (Los Angeles Times, 5/23).

Cash Crunch?

At a legislative hearing Friday, Controller John Chiang (D), Treasurer Bill Lockyer (D) and officials from the Department of Finance and Legislative Analyst's Office told lawmakers that the state "almost certainly" will have to delay some payments because it lacks sufficient cash (Wiegand, Sacramento Bee, 5/23).

State finance officials said the state will not have sufficient cash to make all payments within two months if a budget agreement is not approved quickly (Lin, AP/San Diego Union-Tribune, 5/22).

Layoffs

As part of his budget plan, the governor is proceeding with efforts to lay off 5,000 state workers.  Layoff notices were issued on May 15.

The Health and Human Services Agency delivered 503 notices to workers (Ortiz, Sacramento Bee, 5/23).

Tobacco Tax

California legislators are set to consider a proposal to increase the state tobacco tax by $1.50 per pack as they work to balance the state budget.

Forty-five states have increased tobacco taxes in the past decade, but similar proposals have failed in California.

For example, voters rejected a 2006 ballot measure that would have increased the state tobacco tax by $2.60 per pack to help fund health care programs. 

Tobacco companies spent $66 million in the campaign against the measure (McGreevy, Los Angeles Times, 5/25).

Editorial, Opinion Piece

• San Jose Mercury News : The governor's Healthy Families and Medi-Cal proposals are "both so pound-foolish that we can't even call them penny-wise," a Mercury News editorial states, adding that Schwarzenegger should consider strategies that would channel more federal funds to the state (San Jose Mercury News, 5/23).
• Former Rep. Tom Campbell (R-Calif.), San Francisco Chronicle: As legislators work to balance the state budget, Campbell recommends cutting $15.4 billion in state spending on Medi-Cal and welfare programs.  Campbell is seeking the Republican gubernatorial nomination for 2010 (Campbell, San Francisco Chronicle, 5/24).

Other Coverage

On Saturday, the Times featured stories on how the governor's budget proposals would affect California families, including a family whose children have Healthy Families coverage (Chong et al., Los Angeles Times, 5/23).

On Sunday, the Times published recommendations for addressing the state budget deficit from leaders of various stakeholder groups, including:

• Robert Ross, president of the California Endowment;
• Susan Love, a professor of medicine; and
• Jim O'Connell, chief operating officer of Social Model Recovery Systems, which provides mental health and substance use treatment (Los Angeles Times, 5/24).