STATE BUDGET: LAO Finds Flaws in Home Care Tax Credits, Calls for Medi-Cal Expansion
California Gov. Gray Davis'(D) proposed health care budget "contains a number of ambiguities and potential flaws" that the state Legislature should address, according to an analysis conducted by the Legislative Analyst's Office. The California Health Law Monitor reports that "one area of particular concern" is Davis' Aging with Dignity Initiative, in which he will propose $272 million -- $140 million from the General Fund -- to develop programs and activities to improve nursing home care and to cultivate community based alternatives to nursing homes. Regarding home care, the LAO notes that Davis' proposal is also flawed. It calls for a $500 tax credit for people who provide or pay for care at home for seniors or disabled residents. The LAO charges that the tax credit is "unlikely to be a means of effectively targeting a significant subsidy to many taxpayers who currently provide in-home long term care or to provide a significant incentive for many families or individuals to provide this type of care." Because the credit would be nonrefundable, taxpayers would receive it only if they have tax liabilities. Low-income taxpayers would "benefit only partially, if at all, because of their lower tax liabilities." The LAO notes that the tax credit also has an "inherent potential for higher-than-intended cost and abuse" because its eligibility requirements will be difficult to enforce. The report states: "While a doctor's certificate will be required, assessing the physical or mental limitations of an individual involves a degree of judgement that is likely to get stretched over time by the natural desire of physicians to accommodate patients and their families."
Expand Medi-Cal for Seniors
The LAO recommends that instead of approving the tax credit, California lawmakers should expand Medi-Cal coverage for seniors and the disabled. Medi-Cal "has the potential" to provide assistance to the needy and would allow the state to "leverage federal funds," LAO argues, noting that Davis' "proposal for expansion is quite limited." Davis' expansion would not be offered to couples initially because the Medi-Cal Medically Needy (MN) limit for couples currently exceeds the federal poverty level. The LAO writes, "The Governor's proposal would assist some poor elderly or disabled person at a very modest state cost. However, it would provide only limited benefits to a relatively small group of individuals." To ensure coverage for this population, LAO argues that the Legislature should raise the asset limit, increase the income limit and expand the caps placed on drug coverage, preventive care and outpatient management of chronic disease through waivers (California Health Law Monitor, 3/6).