California Lawmakers Clear the Way for Stimulus Money

Two stimulus decisions down, one big one to go.

California lawmakers, not always known for their speed, broke out of character this spring, rapidly passing legislation to clear the way for federal stimulus money.

First, they rescinded a new Medi-Cal eligibility rule they had established last year, and then the Assembly went on to approve changes to state law that will let more Californians get federal subsidies for COBRA coverage. The bill now moves to the Senate, where it is expected to be approved.

Action on both Medi-Cal and COBRA came in response to the American Recovery and Reinvestment Act. The federal stimulus bill includes stipulations on how states can receive and use the new money, and California, like most states, is lining up its ducks.

There was some urgency involved in the first two changes, but the next duck, perhaps the biggest and most elusive, is not so time-sensitive.

Health IT Funding the Next Challenge

The stimulus package includes money to help states promote the adoption and use of health information technology, especially electronic health records. 

“There’s not the same sense of urgency with that one as there was with the other two,” said Assembly member Dave Jones (D-Sacramento), chair of the Assembly Health Committee and co-author of the COBRA bill.

“We want to move as quickly as the federal government will allow us to — there are significant benefits from using health IT. But there’s no firm deadline or timeline yet,” Jones said.

To qualify for part of the $19.1 billion specified for health IT in the HITECH portion of the bill, states must designate one entity to oversee health information exchange.

Jones and Sen. Elaine Alquist (D-San Jose), chair of the Senate Health Committee, will spearhead the Legislature’s efforts to deal with health IT portions of the stimulus bill.

“One of the main questions — one that’s not yet been answered on any level — is whether it makes more sense to go with an existing agency or whether it makes more sense to create a new entity that could incorporate public and private interests and have a broad sphere of influence,” Jones said.

Jones said legislative staffs and state Health and Human Services Agency officials are working on it, but they are constrained because all the federal guidelines are not yet clearly defined.

“We’re waiting for additional guidance from the feds,” Jones said. “There are still a lot of questions, a lot of details to be nailed down,” Jones added.

Last month, state officials and lawmakers convened for an informational hearing to determine the best ways for California to qualify to receive as much as $3 billion to $4 billion in federal stimulus money for health IT development and implementation.

Alquist said the state’s health care system needs all the help it can get.

“California’s problem is not that we don’t have world-class physicians, hospitals and health care workers. It’s simply the scope of the state’s need. California has 6.5 million uninsured people,” Alquist said in a release. “The combination of health care and hi-tech is the logical 21st-century solution for improved access, quality care, and cost control. This is an investment long overdue.”

Medi-Cal, COBRA Changes

The stimulus package bars states from receiving additional federal Medicaid funds if the programs’ eligibility rules are more restrictive than they were on July 1, 2008.  As part of the fiscal year 2008-2009 state budget, California lawmakers increased eligibility verification requirements from once per year to twice annually for children covered by Medi-Cal.

Bills authored by Sen. Alquist changed the requirement back to once-a-year verification of eligibility.

Then, earlier this month the Assembly unanimously approved a bill (AB 23) aimed at winning federal subsidies for COBRA for more recently laid-off California workers. 

The COBRA bill would change state law to let workers at firms with fewer than 20 employees qualify for federal subsidies for COBRA coverage. It also requires health plans to alert people to the availability of the subsidy.

A provision in the federal economic stimulus package would subsidize 65% of the cost of COBRA coverage for some laid-off workers for up to nine months.

The Assembly Appropriations Committee estimates the bill could allow as many as 100,000 unemployed Californians and their family members to be eligible for the federal subsidy, accounting for about $400 million from the stimulus package.

 “With the federal government dangling this money out there and so many Californians falling off the insurance rolls every day, this COBRA bill clearly was the right thing to do,” Assembly member Nathan Fletcher (R-San Diego), who co-wrote the COBRA bill, said.

Swift Action Surprises Some

Medi-Cal funding, COBRA eligibility and health IT are the three main health-related areas the state legislature can play a role in winning federal stimulus funding, according to Republican and Democratic legislators.

 “We have to wait to see what else the federal government is going to do in some circumstances so we’re sort of in a holding pattern with those, but we made good, rapid decisions in the areas we could,” Fletcher said.

After two protracted delays on the state budget in recent months, the speed of the bipartisan response to the stimulus package came as a bit of a surprise to some veterans of capital politics.

The COBRA bill was refined, passed through committees and brought to the Assembly floor in a matter of days rather than weeks or months.

“It shows that when the need is there, and the legislation is right, bipartisan cooperation can happen — and happen quickly,” Fletcher said.

Busy Year Ahead

State legislators will deal with other health-related issues in the federal economic stimulus package, but two of the three main issues are essentially handled.

Lawmakers from both sides of the aisle as well as state health officials predict the health IT portions of the stimulus could potentially be more contentious and take longer than the changes related to Medi-Cal and COBRA.

“There are other parts of the recovery act that will touch on health care — such as funding mechanisms for clinics and safe drinking water — but those are the three biggest ones, and I’d say health IT is going to be the most challenging,” Jones predicted.

Fletcher agreed.

“I suspect this will be a busy year for health policy in California,” Fletcher said.

Related Topics

Health Industry Insight Insurance Medi-Cal