Schwarzenegger Introduces Budget Containing Proposed Cuts to Health Programs
Gov. Arnold Schwarzenegger (R) on Friday introduced a $99.1 billion budget proposal for fiscal year 2004-2005 that does not include a tax increase but calls for "significant" spending reductions for various health care programs, the San Diego Union-Tribune reports (Mendel, San Diego Union-Tribune, 1/10). The plan would reduce state funding for health care programs by more than $900 million, with about $880 million in spending cuts to Medi-Cal, the San Jose Mercury News reports. The budget proposal also includes an additional $536 million in funding reductions for other health and human services provided by the state, but on Friday it was "unclear" how much of that amount would affect health services, according to the Mercury News (Feder Ostrov, San Jose Mercury News, 1/10). Health-related proposals included in Schwarzenegger's budget would:
- Reduce by 10% Medi-Cal reimbursements to providers, in addition to a 5% reduction proposed by former Gov. Gray Davis (D), for a savings of $462 million (Mendel, San Diego Union-Tribune, 1/10);
- Limit enrollment for a program that treats about 37,600 children who are ineligible for Medi-Cal but have severe medical needs for a savings of about $40.7 million;
- Cap enrollment in Healthy Families at its current level of about 732,000 children for a savings of about $31.5 million (Trounson et al., Los Angeles Times, 1/10);
- Increase monthly premiums from $9 to $15 per child for some Healthy Families beneficiaries;
- Cut by 17% spending for children's medical services programs, including aid for children with disabilities and those who have genetic diseases, for a savings of about $40 million;
- Cut by 10% payments to community and rural health care clinics for a savings of about $32 million;
- Limit enrollment for other health programs, such as prenatal care for immigrants and AIDS drug assistance (San Jose Mercury News, 1/10);
- Require beneficiaries of the Genetically Handicapped Persons Program pay for some health coverage for a savings of $576,000 (Los Angeles Times, 1/10); and
- Eliminate domestic services for people with disabilities and elderly residents, reduce in-home workers' wages to minimum wage and eliminate subsidies for people whose spouses have disabilities and live at home (Seligman/DelVecchio, San Francisco Chronicle, 1/10).
In addition, the budget proposal includes measures to implement a new, tiered Healthy Families program that would require beneficiaries to choose between a "no frills benefits package" and one that would include higher fees for expanded health benefits such as dental and vision coverage. The proposed tiered program would not take effect until FY 2005-2006 (San Jose Mercury News, 1/10). Schwarzenegger also proposed redesigning Medi-Cal to possibly include different benefit programs, higher premiums for some people with higher incomes and reduced benefits that federal law does not require the state to provide, the Contra Costa Times reports. The proposed changes would take effect in FY 2005-2006 (Kleffman, Contra Costa Times, 1/10).
The San Jose Mercury News reports that the budget proposal depends on voter approval in March of a $15 billion bond and also "hinges on a number of economic assumptions that may not materialize." For instance, the budget assumes a projected $2.9 billion increase in tax revenue; 25% and 10% increases in capital gains revenue for 2003 and 2004, respectively; a $500 million increase in income from American Indian gaming; and $350 million in additional federal funding (Marimow/Gladstone, San Jose Mercury News, 1/10). Although Schwarzenegger has proposed a "major restructuring" of the Medi-Cal program, including efforts to combat fraud, the proposed reduction to provider reimbursement rates has "generated the most controversy," the Contra Costa Times reports. California Medical Association CEO Jack Lewin has said the organization will challenge the proposed rate cuts (Kleffman, Contra Costa Times, 1/11). The CMA and 11 other plaintiffs representing Medi-Cal providers in November filed a lawsuit to halt the implementation of the 5% reimbursement rate cut, which was approved by the Legislature as part of the fiscal year 2003-2004 budget. Chief U.S. District Judge David Levi last month issued a preliminary injunction preventing the implementation of the cuts (California Healthline, 1/5).
Schwarzenegger said, "It is difficult. It is painful. There are no two ways about it because we have to make savings in so many different areas and programs. But it is the only way we can do it because we don't have the money" (Los Angeles Times, 1/10). Kim Belshe, secretary of the Health and Human Services Agency, said reductions in health services "represent difficult choices," but she added that the budget is a "responsible middle ground" between maintaining programs and implementing deeper, across-the-board cuts. However, health advocates called the proposed budget cuts "a death sentence for kids needing life-saving care," the Chronicle reports. Lewin said beneficiaries "will end up sicker and resort to already overcrowded emergency rooms where the costs of care will be much higher, and there won't be enough beds or enough physicians to serve them" (San Francisco Chronicle, 1/10). Carmella Castellano, president and CEO of the California Primary Care Association, said the budget "represents the single largest health center-specific reduction ever proposed and is a direct attack on our health centers and the vulnerable populations that we serve" (Torres, Contra Costa Times, 1/11).
The following broadcast programs reported on Schwarzenegger's budget announcement:
- KPCC's "AirTalk": Guests on the program included Sacramento Bee columnist Dan Weintraub and political science professor Raphael Sonenshein (Mantle, "AirTalk," KPCC, 1/9). The complete segment is available online in RealPlayer.
- KPCC's "Talk of the City": Guests on the program included Colleen Bentley Adler, spokesperson for the California State University Board of Trustees; Dr. Jonathan Fielding, Los Angeles County director of public health; Assembly Budget Committee vice chair Rick Keene (R-Chico); Thomas Nussbaum, chancellor of California Community Colleges; Assembly Budget Committee Chair Jenny Oropeza (D-Los Angeles); Bev Perry, president of the Southern California Association of Governments; Santa Ana Mayor Miguel Pulido (D); Alan Slater, CEO of the Superior Court of California, Orange County; and Los Angeles County Supervisor Zev Yaroslavsky (Felde, "Talk of the City," KPCC, 1/9). The complete segment is available online in RealPlayer.
- KQED's "California Report Magazine": Guests on the program included Anne Campbell, superintendent of the Portola Valley School District; Jack Kyser, chief economist for the Los Angeles County Economic Development Corporation; and Pat Leery, legislative representative for revenue and taxation for the California Association of Counties (Baron, "California Report Magazine," KQED, 1/9). The complete segment is available online in RealPlayer.
- KQED's "Forum": Guests on the program will include Andrew Lamarr of the Contra Costa Times; Sen. Bruce McPherson (R-Santa Cruz); H.D. Palmer, Governor's office finance department spokesperson; Sen. Don Perata (D-Oakland); Jean Ross, executive director of the California Budget Project (Krasny, "Forum," KQED, 1/12). The complete segment will be available online in RealPlayer after the broadcast.
- NPR's "All Things Considered": KQED's John Myers discusses the proposed budget cuts (Myers, "All Things Considered," NPR, 1/9). The complete segment is available online in RealPlayer.
- NPR's "Weekend Edition Saturday": The segment includes comments from State Treasurer Phil Angelides (D); John Ellwood, a professor of public policy at the University of California-Berkeley; Schwarzenegger; and Yaroslavsky (Jaffe, "Weekend Edition Saturday," NPR, 1/10). The complete segment is available online in RealPlayer.
Links to additional coverage of Schwarzenegger's budget proposal are provided below.
- "State Treasurer Takes Tough Stance Against Budget" (Finnegan, Contra Costa Times, 1/12).
- "Arnold To Cut From Schools, Medi-Cal" (Drucker, Los Angeles Daily News, 1/8).
- "Governor Seeks Big Cuts in California's Spending" (Broder, New York Times, 1/10).
- "Prognosis Poor for Health Care in Budget" (Vesely, Oakland Tribune, 1/10).
- "California Governor Outlines Proposed Budget Cuts" (Hinch, Orange County Register, 1/10).
- "California Governor Asks Almost All State Residents To Bear Budget Burden" (Quach, Orange County Register, 1/10).
- "Budget Prompts Sense of Deja Vu" (Hill, Sacramento Bee, 1/11).
- "California's New Governor Uses Old Methods to Balance State's Tottering Budget" (Nissenbaum, San Jose Mercury News, 1/10).
- "Plan Could Be Blow to Hospitals, Clinics" (Rose, Santa Rosa Press Democrat, 1/10).
- "Schwarzenegger Lays Out Plan To Balance California's Budget" (Carlton, Wall Street Journal, 1/12).
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