You’ve Got to Be Kidding…

HEALTH ACCESS UPDATE
Friday, January 8, 2010

GOVERNOR ANNOUNCES BUDGET FOR MORE “MONSTER” FY10-11 CUTS
* Gov. Schwarzenegger Has Budget Proposal Similar–but More Severe–Than Last Year
* Millions of Californians Could Lose Coverage and Care; Dramatic Impacts
* Details Below on $2.9 Billion in Health and Human Services Cuts
* An Additional $3.5 Billion of HHS Cuts Would Be Triggered Without Federal Funds

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With California bogged down by a $19.9 billion deficit for the next 18 months, Gov. Arnold Schwarzenegger on Friday once again proposed balancing the state’s budget not with new revenues back with devastating cuts to the state’s least-fortunate — including up to 6.4 billion dollars of cuts in health and human services. Under the cuts, over 1.5 million Californians, and likely many more, would have their coverage eliminated, other key services would be scaled back, and California would lose jobs and federal matching funds.

As he has in last year’s budget cycles, Schwarzenegger proposed severe cuts to health and human service programs, the kinds of safety-net services Californians expect their government to extend to the public in times of deep need, that provide help in getting the state and its people back to work.

In some of the governor’s harshest budget scenarios threatened to shut down altogether a range of existing essential health and human services if the federal government did not respond favorably to his demand for $6.9 billion in federal tax dollars.

“Tough times still lie ahead,” Schwarzenegger proclaimed in announcing a package of budget proposals that included some “monster” cuts that would either lead to “real reform” or a continuation of “the budget roller coaster.” Schwarzenegger said he would declare a fiscal emergency and call a special session of the Legislature so lawmakers would be forced to focus on solutions to the deficit.

Afterwards, Democratic Assembly Speaker Karen Bass succinctly said of the governor’s proposals: “I call this budget a big pile of denial.” Bass said the governor’s budget plan was simply and plainly “a non-starter” because “it’s calling for the virtual elimination of the safety net.” Besides Bass’ comments, early indications were that Schwarzenegger’s plan had fallen flat with the Legislature’s Democratic leadership, whose cooperation the governor will need to adopt the state’s annual budget.

Senate President Pro Tempore Darrell Steinberg opened his statements to reporters with a blunt: “You’ve got to be kidding me.” He later noted that the governor’s budget solutions lacked “creativity.” Senator Denise Ducheny, chair of the Senate Budget Committee, said she saw in the budget “a recycling of exactly the same proposals he’s had before.” The main difference, Ducheny said, was that previously Schwarzenegger tended to blame the Legislature for a lack of fiscal solutions and, on Friday, the governor focused on blaming Washington D.C.

Indeed, Schwarzenegger did everything but identify the federal government as a foe, leaning heavily on the theme of fiscal fairness. This lead Bass to note that the governor struck a nearly inappropriate tone: “Typically he threatens the Legislature. Now he’s threatening the president of the United States.”

The governor pledged to fly to Washington D.C. with all four partisan legislative leaders to demand the $6.9 billion he said the federal government owes California. Schwarzenegger made the case that, for every $1 Californians pay in federal taxes, the state only gets an average of 78 cents back. (Ironically, his cuts would cause California to lose even more in federal matching funds.)

The governor is also seeking more reimbursement funds for Medi-Cal expenses, saying California receives only 50 cents on the dollar, while the average for states is 57 cents.
Chief among the governor’s deep cuts are those that would eliminate coverage and care to millions of Californians, ironically forgoing substantial matching federal fund dollars as a result.

The Governor plans to ask for a $2.9 billion cut in health and human services (including $1.1 billion in Medi-Cal), and an additional $3.5 billion cut in health and human services if California does not get the federal money he seeks.

But even with a massive infusion of federal funds, the Governor would still propose to eliminate coverage to hundreds of thousands of Californians, including children. Health experts say these devastating cuts would further unravel the health care system that we all rely on, where we have already seen services scaled back and full clinics close. Health Access recently released an assessment of the health cuts in the 2009-10 budget, six months in.

THE GOVERNOR’S PROPOSED “TRIGGER” CUTS

The following is a list of proposed cuts and eliminations that the governor proposes to be “triggered” if additional federal funds are not forthcoming:

* Eliminate coverage and benefits for millions in Medi-Cal ($532 million), including:
* Reduce Medi-Cal eligibility to the minimum allowed under current federal law (about 72% of the Federal Poverty Level for most adults and 133% FPL for children and pregnant women). For example, this would reduce eligibility for low-income parents from an income of up to $18,310 for a family of three to around $13,000. While this tightening of eligibility standards would not be allowed under the stimulus package until January 1, 2011, it would eliminate coverage for 250,000 Californians in the first six months, coverage for 450,000 in the year after that, and hundreds of thousands more in future years.
* Eliminate many Medi-Cal programs (including the Family PACT program for family planning services, the CHDP Gateway for transitional children’s coverage, Breast and Cervical Cancer Treatment Program, and the Medically Indigent long-term care program).
* Eliminate many remaining optional benefits (including medical supplies like diabetic test strips, prosthetic limbs, orthotics, wheelchairs and other durable medical equipment, hearing aids and other benefits).

* Eliminate the Healthy Families Program, affecting all 874,762 children currently enrolled ($126 million);
* Eliminate various health services programs, (including Access for Infants and Mothers, MRMIP’s high-risk pools for those denied coverage for pre-existing conditions, Every Women Counts, Asthma control program, and Expanded Access to Care Program), funded by Proposition 99 (tobacco tax) funds, subject to voter approval ($115 million);
* Eliminate mental health services funded by Proposition 63 (Mental Health Services Act), shifting the $847 million to fund existing mental health services;
* Eliminate CalWORKS, the state’s welfare-to-work program ($1.044 billion); and
* Eliminate the In-Home Supportive Services programs that provides home care to those not able to assist themselves. ($495 million)

BASE BUDGET PROPOSAL
(REGARDLESS OF WHETHER FEDERAL DOLLARS ARE FORTHCOMING)

Specifically, as described below, the budget proposal makes a number of cuts to health and human services programs, redirects funding from other sources to health care programs, and relies on significant receipt of federal funds.

Cuts to Medi-Cal:
· $750 million in cuts to Medi-Cal by placing limits on services and applying utilization controls, increasing cost-sharing for Medi-Cal beneficiaries, and making “other programmatic changes,” potentially affecting the 7 million Californians on Medi-Cal;
· $118 million to eliminate Medi-Cal coverage for recent legal immigrants, effective March 1, 2010, affecting about 90,000 legal immigrants;
· $104 million to eliminate the Medi-Cal adult day health care benefit, effective March 1, 2010, affecting about 35,000 frail adults;
· $55 million to delay payment to Medi-Cal institutional providers, requiring doctors and hospitals to “float” the state;
· $26.4 million from aggressive elimination of fraud in Medi-Cal; and
· $28.7 million to rescind a rate increase for Medi-Cal family planning services.

Cuts to the Healthy Families Program:
· $85.3 million (including $10.5 million for the current fiscal year) by tightening eligibility requirements for the Healthy Families Program from 250% of the federal poverty level (FPL) to 200% of the FPL, effective May 1, 2010, affecting roughly 225,000 children, plus an additional corresponding $3.9 million cut to the California Children’s Services program for Healthy Families-eligible children;
· $21.7 million by eliminating vision coverage from the HFP benefit package and increasing monthly premiums in families 151-200% of the FPL, effective July 1, 2010, affecting 167,000 children.

Other cuts to Health and Human Services programs:
· $950.5 million in reducing eligibility, payments and services in the In-Home Support Services (IHSS) program;
· $146.1 million by reducing benefits for CalWORKS recipients;
· $306.9 million by reducing benefits for recipients of SSI/SSP;
· $60 million by eliminating the California Food Assistance Program;
· $200 million by reducing support for Regional Centers;
· $18 million by eliminating the Substance Abuse Offender Treatment Program.

A redirection of funding to avoid more health care cuts:
· Reduce $240 million from children’s health coverage to be replaced by newly enacted hospital fees;
· Reduce $36 million from Medi-Cal to be replaced by one-time Proposition 99 (tobacco tax) reserve funds;
· Reduce $25 million from the Access for Infants and Mothers (AIM) program to be replaced by one-time use Proposition 99 (tobacco tax) reserve funds;
· Reduce $550 million in General Fund expenditures on high-priority health and social programs serving children to be replaced by state and local Proposition 10 (California Children and Families Act) funding, subject to voter approval; and
· Reduce $452.3 million in General Fund expenditures on EPSDT services for children and mental health managed cared to be replaced by Prop 63 (Mental Health Services Act) funding, subject to voter approval.

A reliance on federal funding to avoid more health care cuts:
· $1 billion from federal funds owed to the state for disabled Medicare-eligible individuals and the rate of Medicare Part D coverage
· $1.8 billion from increasing the standard federal matching assistance percentage (FMAP) for Medi-Cal from 50 to 57 percent;
· $1.5 billion from continuation of an increased FMAP (through June 30, 2011) as part of ARRA, the economic recovery act.

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

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