January 10, 2003


* Additional Benefits & Provider Rate Cuts, Shift to Counties a Concern

Governor Gray Davis announced his proposed 2003-04 budget today. Modeled on what Governor Wilson did in the early 1990s crisis, the proposal would increase the sales tax by one cent, and the income tax for high-wage earners (families with over $260,000 of taxable income). The budget also includes a significant tobacco tax increase.

It also includes signficant cuts, on top of those cuts proposed in December for mid-year reductions. That mid-year package would deny basic health coverage to a half-million Californians by June 2004, and hundreds of thousands more in later years.

At first glance, the significant cuts in health care in the 2003-04 proposed budget include:

* SHIFTING COSTS TO COUNTIES: The proposal would shift a significant share of the cost of health care and other programs to counties, providing counties the incentive to deny care and coverage to patients. The shift includes a 15% county share of Medi-Cal costs ($1,620 million general fund shift), as well as the funding of programs, for example Expanded Access to Primary Care ($24 million general fund shift), that fund safety-net institutions like community health clinics. While counties will be directed the revenue from the proposed tax increases to meet these new obligations, they will also experience cuts in other areas. The only way they will have to control costs in Medi-Cal is to find ways to limit coverage and care.

* ADDITIONAL MEDI-CAL BENEFITS: The proposal would cut another ten medically-necessary benefits for the 2.8 million adults in Medi-Cal, including non-emergency medical transportation, optical lab services, hospice care, durable medical equipment, optometry, hearing aids, prosthetics, speech and audiology services, orthotics, and physical therapy. ($87 million general fund cut) These California would not longer have coverage for such basic items as wheelchairs and artificial limbs. This is on top of the proposed mid-year reductions that would cut dental services, medical supplies, podiatry, acupuncture, chiropractic services, psychology, independent rehabilition centers, and occupational therapy.

* ADDITIONAL PROVIDER RATE CUTS: The proposal would cut Medi-Cal rates to a full range of health care providers by another 5%. ($241.9 million general fund cut) This is on top of the 10% cut proposed as a mid-year reduction. As a result of this proposal, providers will be less able to care for all of their patients, and many may decide not to take Medi-Cal patients at all.


* The proposal would impose share-of-cost burdens on approximately 26,000 seniors and people with disabilities, by reducing the eligibility for full coverage in the aged and disabled Medi-Cal program.

* The proposal would eliminate the state-only program that provides a second year of transitional Medi-Cal for persons 19 years old or older, denying coverage to around 1,830 beneficiaries.

The Governor made a strong emphasis that this budget preserved children’s health insurance, budgeting for increases in child enrollment in the Medi-Cal and Healthy Families programs. Some funding was given for accelerated enrollment, the CHDP gateway, and express lane eligibility. Yet the overall impact of these budget proposals is to deny health care to parents, which will seriously undermine the ability to enroll new children.

More information to come. The chapter of the budget on health care services is available at the Department of Finance web site at:


Tonight at 9pm ET on PBS (check local listings at, the PBS public affairs series NOW with Bill Moyers profiles the California State Budget and examines how government cuts around the country will leave many paying the price. With state budget deficits skyrocketing, cuts in many popular government programs – including healthcare, education, childcare and transportation – are on their way. NOW goes to California to see what may be ahead for other states. California faces an unprecedented deficit estimated as high as $34.8 billion over the next 18 months, and Governor Gray Davis has already proposed cuts to state programs, including California’s Medicaid program, Medi-Cal. If implemented, cuts to Medi-Cal would leave hundreds of thousands of the state’s most vulnerable population without health insurance. The Harbor – UCLA Medical Center in Los Angeles’ Dr. Fleischman says, “It’s real lives, it’s real families, it’s real people. And as you sit down with each one, and you see what they need, these are needs that don’t go away just because suddenly we don’t have the money to pay for them. And I wonder what will become of people.”

The program will include Jean Ross of the California Budget Project, and a patient referred by Western Center on Law and Poverty.

Anthony E. Wright

Health Access

1127 11th St., #234, Sacramento, CA 95814

Ph: 916-442-2308, Fx: 916-497-0921

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