Reaction Mixed to Health-Related Provisions of Schwarzenegger Budget Proposal

He didn’t have a lot to say about health care at the microphone when he unveiled his budget for the state last month — in fact Gov. Arnold Schwarzenegger (R) devoted only two sentences to health care.

But he couldn’t be quite as concise in the ledger books where health care spending accounts for about one-third of California’s $111.7 billion budget. The governor’s health spending proposals include major changes in Medi-Cal, reduced state funding for some health and human services programs such as in-home support services for seniors and people with disabilities, a new prescription drug discount plan, increased funding for breast and cervical cancer screenings, more money for the AIDS Drug Assistance Program and seed money for a new obesity-prevention program. Overall, Schwarzenegger’s budget proposal would increase spending for health and human services programs by 4.6% to $26.7 billion.

Changes promising the biggest fiscal and social impact are included in a major overhaul of Medi-Cal. The plan calls for implementing monthly premiums for some Medi-Cal beneficiaries and transferring more Medi-Cal beneficiaries into managed care plans.

Counties’ Reaction Mixed

Reaction has been varied, ranging from cautious approval from some camps to outright opposition from others.
Somewhere in between are the counties, which is probably an appropriate place for them because of the mixed effects Schwarzenegger’s budget proposals would have for them.

“We appreciate the governor’s concern with balancing the budget, but we continue to be concerned with decisions that erode health care for Californians,” Kelly Brooks, legislative representative for health policy at the California State Association of Counties, said.

“Some of the details are still a little murky, but no matter how the details shake out, the whole Medi-Cal proposal is huge and it could have a big impact on county governments which are, when it comes down to it, the entities legally required to provide health care to those who can’t afford it some other way,” Brooks said.

Schwarzenegger proposes, for the first time, to require some Medi-Cal beneficiaries to pay monthly premiums of $4 per child and $10 per adult with a cap of $27 per family. Those payments would be handled by county governments.

“And we understand that if those monthly payments are not paid for two months in a row, people are to be dropped from the Medi-Cal program, creating more uninsured for the state,” Brooks said. “And there will probably be administrative nightmares that will arise that we haven’t even thought of yet.”

“And then there’s the question of whether it’s legal for a state — or a county — to turn people away. Medi-Cal is federal money. It might be more than just a technicality to deny coverage to somebody. We’re raising a whole lot of safety net questions here that have to be answered,” Brooks said.

County officials also are concerned about Schwarzenegger’s plan to withdraw state help in paying wages for in-home supportive service workers, a policy change that could require counties to come up with $194 million this year. Part of the governor’s proposal includes moving more senior Medi-Cal beneficiaries into managed care programs, a move supported by the California Legislative Analyst’s Office.

“We think there is good logic in moving more of the aged into managed care,” Dan Carson in the health policy division of the analyst’s office said. “It’s potentially a win-win — the state will save money and seniors get better care.”

Health Care Providers Receptive to Proposals

Three camps fairly happy with the governor’s plan are AARP, the California Pharmacists Association and the California Medical Association.

“I think overall, we’re pleased primarily because there are no physician reimbursement cuts in the Medi-Cal redesign,” CMA spokesman Ron Lopp said. “California’s reimbursement rates are already among the lowest, if not the lowest, in the country,” Lopp said.

“We are concerned, and we plan to take a close look at the proposal for Medi-Cal premiums,” Lopp added. “They aren’t very high — $4 for kids and $10 for adults — but for some people it might be too much. Are we going to be driving people out of the program?”

CMA is particularly pleased with the governor’s proposal for $6 million in funding for a new obesity-prevention program. “It’s an important issue, and we’re glad to see it’s being addressed,” Lopp said.

AARP and the pharmacists association applaud the governor’s attempts to address rising prescription drug costs. Schwarzenegger predicts his proposed new prescription drug program, called Cal Rx, will save more than $1 billion on prescription drugs through better negotiations with drug companies and pharmacists at a time when more and more California residents, especially seniors on limited incomes, are turning to mail-order drug companies in Canada and Mexico to avoid high costs in the U.S., a decision that bypasses California pharmacists.

“We believe the best, safest way to deliver health care is through a triad of patient, physician and pharmacist,” Lynn Rolston, CEO of the state pharmacists group, said. “We think Cal Rx can help keep that triad in place for Californians.”

Some Democrats Remain Skeptical

Among those most opposed to the governor’s health care proposals are Democratic leaders in the Legislature who criticized the governor’s proposals and plan to offer an alternate budget plan in the next few weeks. Assembly Speaker Fabian Nunez (D-Los Angles) and Senate President Pro Tempore Don Perata (D-Oakland) plan a series of budget hearings across the state, as well as in the Legislature.

Nunez, who called the proposed budget an “attack on middle-class values,” and Perata both objected to Schwarzenegger’s characterization of state government as an overfed “monster.”

Perata, in a Capitol press conference, said, “You know, the beast in this case includes the newly born, people who are disabled and people who for no fault of their own are unable to function like the people in this room.”

If recent history is any indication, California’s budget is at least half a year from taking shape. It’s due by the end of the fiscal year on June 30, but the state hasn’t made the deadline in so many years, it would come as a surprise if it happens this year.

Related Topics

Health Care Costs Insight Insurance Medi-Cal