How Budget Cuts Hit the Health System

A number of health care budget items are expected to be decided this week in talks between legislators and the governor:

• Medi-Cal provider reimbursement rates are among the lowest Medicaid payments in the nation. Some legislators are pushing to restore the 10% cut made three years ago.
• California Senate President pro Tempore Darrell Steinberg (D-Sacramento) and other Democratic state lawmakers have introduced a package of proposals aimed at increasing mental health training for law enforcement officers and reducing recidivism among inmates with mental illnesses.
• Home health care workers receiving In-Home Supportive Services payments are facing a cap on hours at 40 a week; advocates want to avoid that, as well as restore a 7% cut in IHSS hours.
• The fate of several children’s programs and benefits hang in the budget negotiations. Those include the Black Infant Health Program, the possibility of including Applied Behavior Analysis treatment (ABA therapy) for autism as a Medi-Cal benefit, the Early Mental Health Initiative and the state Children’s Dental Disease Prevention Program.

Assembly member Richard Pan (D-Sacramento), chair of the Assembly Committee on Health and a practicing physician in Sacramento, spoke last week about how short-term savings in health care have long-term repercussions. His initial point was aimed directly at IHSS reductions, but then he expanded the conversation to other cuts.

“I’m going to draw a parallel [with IHSS reductions] to cuts in Medi-Cal provider rates,” Pan said. “You make a cut and you say, ‘Well how bad is it going to be? Will it make this many physicians drop out? Will we lose this many providers?’ “

Cutting health care programs or reimbursements, he said, is not like other budget cuts.

“As a physician, or as a home care worker, you hate to drop people you’re taking care of. It’s not like, the price is now this, I’m not going to buy it. It doesn’t work that way,” he said.

“What you’re seeing on the Medi-Cal side is that they’re not dropping patients, but they just don’t take more,” Pan said. “When one person drops off, for one reason or another, they don’t pick up another one.”

The same is true in the home health care field. The immediate effect may not be disastrous, because home care workers will make do for now. But that could change, he said.  

“The existing home care worker will find a way to hang in there [even with overtime hours cut and IHSS hours cut], but what will happen is, you’ll have this erosion over time,” Pan said. “It’s going to be harder and harder to replace a home care worker, and then you’re in a position where you just can’t find anyone.”

If IHSS beneficiaries can’t find home health workers, the margin for decisions becomes thin, Pan said.

“At that point, in home health care, the alternative is institutions,” he said. “And I just don’t see how that saves money, because institutions are much more expensive.”

Pan said he’s all for saving money and cutting health care costs, but the proposed reductions or non-funding of programs end up costing in terms of quality of care as wells actual dollars spent, he said.

“When you’re talking about fields of care, you don’t drop people over a 7% cut,” Pan said. “But once you lose those people, you’re paying the price over time.”