Schwarzenegger Medicaid Proposal Draws Criticism From Some Public, Private Hospital Administrators

Hospital and health care advocates say that a proposed agreement on Medicaid funding between Gov. Arnold Schwarzenegger (R) and the federal government "could place new financial burdens" on counties facing budget issues, the Los Angeles Times reports. Schwarzenegger's five-year plan must receive federal approval to replace the existing arrangement, which expires at the end of the month.

Federal officials have tightened rules that have allowed California and other states for years to obtain additional federal funds through accounting techniques. Under the current system, the state last year distributed an additional $2 billion in federal funds to public and private hospitals based upon the number of Medicaid beneficiaries and indigent people each hospital treats.

Health and Human Services Agency Secretary Kim Belshe said the proposed agreement would provide an additional $671 million annually to California and would not subject the state to $281 million in Medicaid cuts.

In addition, the state would continue to receive the $368 million it spends on indigent care. Under the proposal, California would not receive funding increases in the later years of the arrangement

Under the plan, counties and the University of California, which operates major medical centers, would be required to submit specific details on the care they give to patients who qualify for matching funds.

Belshe said, "The deal on the table is a very good deal, particularly in light of where the federal government is on this matter. It is a better deal than any other state has received that is in any similar situation" (Rau, Los Angeles Times, 6/10).

Administrators in counties with public hospitals "are desperately lobbying" DHS to negotiate for a better deal, the Monterey County Herald reports. Administrators have said the distribution of funding would be more complicated under the plan, likely resulting in fewer funds for hospitals (Livernois, Monterey County Herald, 6/9).

If Medicaid funds were insufficient, public hospitals likely will seek financial assistance from county governments, according to the Times.

Hospital officials said the plan also would affect private hospitals' finances because such facilities would have to rely on the state general fund for annual allotments, instead of being entitled to a certain amount of funding from the federal government.

The California Hospital Association in a June 1 letter wrote, "We are certain that some public and private safety net hospitals would close" under the Schwarzenegger plan. CHA said that, without changes, the organization would "have no choice but to oppose" the proposal (Los Angeles Times, 6/10).