Rosier State Budget Report Prompts Talk About Restoring Health Care Cuts

The Legislative Analyst’s Office yesterday released its annual report on the state’s fiscal outlook and the picture was a brighter one than past years.

“A restrained budget … has produced a promising budget situation for 2014-15,” the report summary said. “Our forecast indicates that … the state would end 2014-15 with a multibillion-dollar reserve.”

Now that the general fund crisis seems to have eased, lawmakers may want to revisit some of the cuts they were forced to make in recent years, according to Scott Graves, a senior policy analyst at the California Budget Project, a not-for-profit based in Sacramento that conducts nonpartisan fiscal reviews.

“This really is a critical opportunity to look again at all that we’ve been cutting the last few years,” Graves said.

Since many budget cuts were health care-related, that’s one of the areas that could see some restoration of funds, Graves said.

“We have been saying for a long time for the Legislature to revisit the 10% cut in Medi-Cal provider payments,” he said.

That cut passed in 2011, but was held up in court for two years. Recently, the courts ruled that the state should be allowed to make that cut, and it has started to go into effect, in phases.

“The irony of this cut is it was made two years ago, when the state had to make that kind of cut,” Graves said. “And it’s now being implemented at a time when we need Medi-Cal providers more than ever, to serve those in the Medi-Cal expansion — and at a time when the state has an improved fiscal condition.”

Last legislative session, two bills to reverse the Medi-Cal cut sailed through committees but stalled before coming to floor votes. .

“That 10% cut adds to concerns about whether we’ll have enough providers seeing Medi-Cal patients,” Graves said. “It raises legitimate questions about access.”

The other major concern is the shift of about $1 billion in safety-net dollars from the counties. The idea is that the counties will be helped financially by Medi-Cal expansion, and so some of their safety-net money should shift to the state.

“From a green visor, state budgeting point of view, that works,” Graves said. “But with the millions of Californians who will remain uninsured, I don’t know if the state will leave enough dollars to counties to care for the uninsured.”

One important factor is evaluating the effects of the 10% provider cut and the $1 billion shift in funding, Graves said.

“One of the roles of the Legislature is oversight,” he said. “They made a policy decision, it’s now being executed. But you have to know what is actually happening on the ground. Good policy decisions are made with good data. We won’t really know till we see it, what the impact of this cut will be, the cut we’ve been talking about for the past two years. How do providers react when they’re confronted with even lower reimbursement rates? Time will tell.”

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Capitol Desk Medi-Cal