May Budget Revise Hits Health, Human Services

Governor Jerry Brown’s May revision of the state budget released this morning includes about $2.5 billion in cost-saving measures to health care programs.

“They’re pretty serious cuts,” Brown said today. “Cuts to Medi-Cal, to hospitals, to nursing homes, to CalWORKS, this is all very real. But California has been living beyond its means, and it has to be balanced at the day of reckoning. This is the day of reckoning.”

According to the Democratic governor’s proposed budget, $1.2 billion in cost-reduction will come from Medi-Cal, about $880 million from CalWORKS, $225 million from In-Home Supportive Services and about $161 million from other health care programs, such as the AIDS Drug Assistance Program.

Revenue estimates in the May budget revision have fallen about $15.7 billion short of what was expected, so something had to go, Brown said. Overall, his budget revision calls for $8.3 billion in spending cuts.

“Right now, we’re asking for some painful cuts,” Brown said. “Takeaways are never pleasant. Once you have it, it’s much more painful to give it up. It’s the cliff effect — and no one wants to be pushed off.”

The new budget revision proposal hits several areas:

  • Hospitals: Reduces supplemental payments to private hospitals, along with elimination of public hospital grants and stopping increases to managed care plans for some supplemental public hospital payments. Savings over two years: $225 million.
  • Nursing homes: Rescinds an earlier-proposed 2.4% rate increase to nursing homes and keeps the 1% set-aside for supplemental payments. Savings: $71 million.
  • Medi-Cal: As seniors and persons with disabilities move into Medi-Cal managed care, officials predict the state will save $900 million over two years.
  • CalWORKS: Changes include eliminating retroactive counting of exempt or sanctioned months in the state’s welfare-to-work program for about $880 million in cost savings.
  • In-Home Supportive Services: A 7% across-the-board cut in IHSS hours cuts about $99.2 million. Elimination of household services, such as shopping and meal preparation, would be cut from shared living arrangements, for savings of another $125 million.
  • Public health. Increasing the client’s share of cost in the Aids Drug Assistance Program would save $14.5 million.

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