Expansion Hearing Highlights County-State Struggle

California health officials and legislators yesterday had a lively discussion over the two proposed choices for the optional Medi-Cal expansion.

At the onset, yesterday’s discussion in the Budget Subcommittee on Health and Human Services centered on the Brown Administration’s choices for a state-based or county-based approach to implementing expansion of Medi-Cal to adults up to 138% of federal poverty level, which is expected to open eligibility to as many as 1.4 million Californians.

But the meat of the conversation evolved into something else. Since counties have pretty firmly asserted they’re in favor of the state-based plan, and state officials have not stated a preference for either option, choosing one approach over another was not really the main issue during yesterday’s hearing.

The sharing of money from the optional expansion became the central topic.

“We want to move forward with the expansion, but we believe it’s important to look at how we implement that expansion,” said Toby Douglas, director of the Department of Health Care Services. “It’s important to have a conversation about how the responsibilities of the state and counties change. … That’s the conversation we want to have. What does [the expansion] look like, come 2014?”

Mari Cantwell, deputy director of health care financing at DHCS described two Medi-Cal expansions both starting in 2014 — the mandatory expansion, which will cost the state about $189 million in the first year, and the optional expansion.

The cost of mandatory expansion is shared 50-50 — half state and half federal money. The cost of optional expansion is borne by federal dollars for the first three years. By 2020, federal funding will cover 90% of the cost for those covered in optional expansion.

The infusion of federal money to optionally expand Medi-Cal to people up to 138% of poverty level is going to save counties a ton of money, particularly in those first three years. According to Cantwell, it’s not fair that the state bears the high cost of mandatory expansion while the counties save substantial amounts in the optional expansion.

“Since the expansion will shift responsibilities and risks to the counties,” Cantwell said, “the funding should shift, as well.”

Mitchell Katz, director of the Los Angeles County Department of Health Services, said the optional expansion is an opportunity that shouldn’t be missed.

“Many of my patients have waited their whole lives to have insurance. This is a true opportunity,” Katz said. “My greatest fear is that we won’t hit that Jan. 1 deadline.”

Letters need to go out in October to people in the Low Income Health Program, in order to seamlessly move them into Medi-Cal by the start of 2014, Katz said.

Katz argued against spending time debating the state share of the optional expansion money.

“It is now March. We never thought we’d be debating in March these two programmatic models. Now, if it would replace the current bureaucracy, maybe I could see that, but … it would be a new bureaucracy. … We want to go with the single Medicaid system. So I hope we can move off that,” Katz said.

According to Beth Capell, legislative advocate for Health Access California, the state has temporarily suspended its LIHP transition — presumably until the two-option optional expansion issues get worked out.

“However troubled you currently are by the [looming timeline], I am alarmed,” Capell said. “We recently found out … that the department has ceased any work on the LIHP transition.”

In a written response to questions from California Healthline, Norman Williams, deputy director of public affairs for DHCS said:

“DHCS is continuing with LIHP transition planning, notably in areas that would remain consistent whether the county option or state option is chosen.”

Katz said it makes sense to work out some kind of deal with the state, but that can be done over time, as the transition and expansion are implemented.

Douglas disagreed.

“The conversation is about two pieces, the model and the financing,” Douglas said. “[Even if there is] consensus on the model, … we need to look at the change in obligation, at the change in funding, and then we can move forward. … It’s time to restructure the financing.”

“I don’t think we have two months more to debate the model,” Katz said. “It’ll be hard if we’re being held hostage on the other costs, which is what it’s beginning to sound like.”

Assembly member Roger Dickinson (D-Sacramento) took exception to the idea that the state should get anything extra from counties, given the many state cuts to county services over the years.

“Why should counties be penalized for the state finally implementing simplification?” he asked. “That’s a state responsibility.”

“We don’t see this as a penalty,” Douglas said. “We believe we can have a strong safety net, and [also have] a discussion about the funding.”

At one point, Dickinson pressed Douglas about why counties should agree to restructure financing. 

“I understand your perspective, but we believe now is the time…” Douglas started to say.

“I’m not asking you what you believe,” Dickinson said. “I’m asking you why you believe it.”

Douglas said he thought the state and counties could have a fair and reasonable discussion of how to handle the funding stream from optional expansion.

“We want to work with the state,” Katz said. “I mean, there are savings for the state, and I know you’re not suggesting you share that with us. But

I think … we can help the state with actual costs.”

“I think there’s a mixed message we’re getting from the Administration,” said committee chair Holly Mitchell (D-Los Angeles), “in terms of whether there is a no-strings-attached attitude or not. I hope this won’t be used as a leverage point, in terms of passage of the budget. That is my deep concern.”

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