Schwarzenegger Expected To Address Prescription Drug Costs, Reform Proposals in State of the State Speech

Gov. Arnold Schwarzenegger (R) on Wednesday in his State of the State speech will ask legislators to support his plan to address prescription drug costs, sources familiar with the plan said, the Contra Costa Times reports. In the speech, Schwarzenegger also is expected to announce his plans for reducing state spending to address an estimated $8 billion state budget deficit and reorganizing the state government as well as call for a special legislative session that could lead to a special election this fall if his proposals meet opposition from Democrats (Nissenbaum, Contra Costa Times, 1/5).

The California Rx program, which the administration proposed in August, would provide prescription drug discounts for state residents with annual incomes that do not exceed 300% of the federal poverty level. The program would provide cards that participants could present to pharmacists, who would seek the lowest prices for medications through state or pharmaceutical company programs (California Healthline, 8/20/04). According to the Times, about four million state residents would be eligible for prescription drug discounts under Schwarzenegger's proposal (Contra Costa Times, 1/5).

The Schwarzenegger administration proposed the program in response to its opposition to a series of bills that would have made it easier to purchase prescription drugs from Canada (California Healthline, 8/20/04). Schwarzenegger later vetoed the bills (Contra Costa Times, 1/5).

Assembly Democrats this week released eight bills addressing prescription drug costs. Democrats said the bills would save the state money on prescription drug purchases for prison inmates; help residents find low-cost medications in other countries; provide drug discounts for low-income residents; and require pharmaceutical companies to disclose drug safety information to the state (California Healthline, 1/4).

Assembly Majority Leader Dario Frommer (D-Glendale) called Schwarzenegger's prescription drug proposal a "low-carb version of our plan" (Contra Costa Times, 1/5).

Schwarzenegger also will use Wednesday's speech to discuss reform proposals recommended by the California Performance Review, the Los Angeles Daily News reports (Drucker, Los Angeles Daily News, 1/5). In its August report, the review group said the state could save $5 billion over five years if it consolidated several programs into a single Department of Health and Human Services and followed 108 other recommendations concerning the Health and Human Services Agency. The review estimated total savings for all reforms at $32 billion. However, in October, that estimate was lowered to $15 billion.

The CPR Commission, a panel appointed by Schwarzenegger to examine the report, in October also recommended abandoning, rewriting or delaying major health care, education and regulatory reforms (California Healthline, 10/21/04).

The State of the State speech will be followed on Monday by the governor's fiscal year 2005-2006 state budget proposal, in which he is "expected to propose no new taxes and painful cuts to social programs," the Times reports (Contra Costa Times, 1/5).

Although officials declined to comment on specific funding reductions in advance of Schwarzenegger's speech, the Daily News reports that the administration has identified some formulas within the state finance system that could be changed. According to finance experts, funding changes could be made to public health care programs and public education, the Daily News reports.

Steve Frates, a senior fellow at the Rose Institute of State and Local Government, said, "California has developed a complex social services and health care system. We provide more benefits than many other states do" (Los Angeles Daily News, 1/5).

In related news, groups with connections to the Schwarzenegger administration this week are filing initiative campaigns in advance of a possible special election this fall, the Sacramento Bee reports. Schwarzenegger to date has not endorsed any of at least six initiatives filed Tuesday.

According to the Bee, the initiatives supported by groups with ties to the administration "embrace its goals of curbing state spending, reorganizing government and reducing California lawmakers' powers."

For example, Joel Fox, president of the Small Business Action Committee and a member of the CPR Commission, has proposed an initiative that would make it more difficult for the Legislature to reject a government reorganization plan in 2006 if such a plan is not approved this year. The proposed initiative would require two-thirds of legislators in both the Senate and Assembly to reject a reorganization plan, rather than a simple majority in either chamber of the Legislature as currently allowed.

Democrats also are considering several ballot initiatives, including a measure to address reimportation of prescription drugs, the Bee reports (Talev, Sacramento Bee, 1/5).