More on the Governor’s letter and budget threats…

This morning numerous media stories featured the threat by Governor Schwarzenegger to eliminate the IHSS program unless California is given “flexibility” to cut Medi-Cal eligibility from 106%FPL for parents to 70% (about $850 a month for a single mom with one child), to cut provider rates (already 51st in the nation), and to reduce other benefits.

The Governor blames restrictive federal rules and the cost of health reform. He alleges that the federal health reform will force California to spend $3 billion annually on Medi-Cal.

Creative arithmetic: The Governor says that federal health reform includes “required spending” that would increase Medi-Cal outpatient provider rates to 80% of Medicare. While Health Access supports improving Medi-Cal provider rates, nowhere in any of the federal proposals is California required to increase all outpatient rates to 80% of Medicare. The federal proposals do require an increase in reimbursement for primary care but provide enhanced federal reimbursement for that purpose.

The Governor also assumes that 100% of those eligible for Medi-Cal will sign up. In contrast, the Congressional Budget Office assumes that only half of those eligible for Medicaid will sign up. Health Access hopes we could get closer to 80% enrollment or take-up but that would take lots of changes in our Medi-Cal program (more on that over the next few months).

What happens when? The Governor is correct that both the House and Senate versions of health reform impose a “maintenance of effort” requirement on Medicaid/Medi-Cal and CHIP/Healthy Families. This “MOE” requirement would preclude California from reducing eligibility for these programs from now until full reform kicks.

But the Governor in his rhetoric ignores that the expansions of Medicaid do not occur until 2013 (the House) or 2014 (the Senate) and that for the first two or three years, the feds pick up the entire cost of the expansion.

And then in 2018 or 2019, California would be on the hook for 9% (yes nine percent) of the cost of the expansion (under the House bill) or 18% (the Senate bill). So instead of the 1:1 match we usually get, California would get either a 9:1 match or a 4:1 match for the newly eligible. And that would be almost a decade from now!

Health Access estimates: Health Access has taken an analysis done by UC Berkeley of how many Californians would be eligible and using data from CHIS/UCLA estimated the cost to the state budget of implementation of national health reform in 2019:
http://www.health-access.org/files/expanding/Health%20Reform%20State%20Costs%2012-22-09.pdf

What did we find? Under the House bill, if half of those eligible for Medi-Cal enroll, then California actually saves $200 million and covers about 840,000 of the 2 million eligible for Medi-Cal under the House bill. Under the Senate bill, if 80% of those eligible enroll, then Californian needs to commit about $700 million to cover 1.3 million of the 1.7 eligible for Medi-Cal. And that is in 2019.

Better deal for California: We agree with the Governor that the existing federal matching formula for Medicaid, known as the FMAP, should be revised to reflect more accurately the need of Californians for an adequately funded Medicaid program that serves 7 million Californians and that should be expanded to serve more. However, we bet the Governor would get further with this idea if he was willing to step up and increase revenues to close California’s budget gap instead of making the budget gap worse by sponsoring bond measure after bond measure that imposes additional debt obligations on the General Fund.

Health Access California promotes quality, affordable health care for all Californians.

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