Tuesday, November 25, 2003


* Cuts to Medi-Cal Providers; Cap on Enrollments to Healthy Families & other


* Senate Discussion on Spending Cap & Deficit Financing

* Also: Medicare Bill Passes

* Also: Have You Been Misled on SB 2 Referendum Signature Petition

Donna Arduin, the director of finance for Governor Arnold Schwarzenegger,

proposed today a list of $1.9 billion in cuts to the current year budget.

This includes $440 million cut to health and human services in the current

year, and $1.163 billion in next year’s budget. Both Assembly adn Senate

Budget committees heard Director Arduin’s presentation on the cuts, as well

as the pending proposals for spending limits and deficit financing.

The total cuts still amount to roughly half of the state revenue lost with

the repeal of the car tax. There has yet to be any proposal to make up all

the money from the repeal of the car tax, or how to otherwise meet the rest

of the budget shortfall.


These health cuts, namely a provider rate cut and enrollment caps on

numerous health programs, would deny basic health care to California

children, seniors, and people with disabilities.

* MEDI-CAL RATE CUT: The biggest health cuts is “an additional 10 percent

rate reduction for specified Medi-Cal providers, including physicians,

medical transportation, home health, and other medical providers and

services,” such as California Childrens Services and FamilyPACT.

Such a provider cut has been rejected by both parties in the Legislature

repeatedly over the past two years, because of the impact. Already,

California has one of the worst reimbursement rates in the nation, and as a

result, half of doctors in California do not accept the 6.4 million

children, seniors, and people with disabilities on Medi-Cal. A further cut

will mean that those on Medi-Cal will have a far harder time getting

medically-necessary care.

* CAP ON ENROLLMENT: The proposal would also “cap various health and human

services programs at the January 1, 2004 estimated level of caseloads.

Waiting lists would be established, and as attrition occurs, new enrollments

would be permitted up to the capped level.” The programs would include:

* the Healthy Families program that insures low-income children,

* “regional centers,

* AIDS Drug Assistance Program,

* state hospitals,

* rehabilitation programs,

* the Genetically Handicapped Persons Program, and

* the California Children’s Services state-only program.”

Other programs include a range of state-only programs for immigrants,


* “Medi-Cal non-emergency services for documented and undocumented


* Healthy Families program for documented immigrants,

* CalWORKs for documented immigrants,

* California Food Assistance Program,

* Cash Assistance Program for immigrants

The cap on the Healthy Families program will directly deny health care to

well over 100,000 children in the next year, and hundreds of thousands more

afterwards. Like Medi-Cal, Healthy Families is undersubscribed, with around

500,000 children eligible for the program but unenrolled (CHIS, UCLA Center

for Health Policy Research, 2001), and who then would be barred from

entering the program. Enrollment efforts have proven successful in getting

more children to be enrolled recently, although thought most of those

efforts have been recently defunded.

Healthy Families application data from the MRMIB website shows they get

about 12,000 applications per month on average. In less than six months,

since June 2003, Florida’s cap on their State Child Health Insurance Program

generated a waiting list of nearly 50,000 children. We project that the

state would easily build up a waiting list of more than 100,000 children in

less than a year. (Center for Budget and Policy Priorities)

LOS ANGELES ACTION ON CUTS: Los Angeles advocates are organizing a press

event tentatively scheduled for Tuesday, December 2nd, at 11:00am to

demonstrate the impact of the cuts to health and other vital services.

Groups include ACORN, Alliance for Children’s Rights, Asian Pacific American

Legal Center, CA Immigrant Welfare Collaborative, Children’s Defense Fund,

LA Coalition to End Hunger and Homelessness, Maternal Child Health Access,

and SEIU. To get involved or for more information, contact Idabelle Fosse,

Health Access, at 213-748-5287, or


During testimony by Administration officials, the Senate Budget Committee

discussed the Governor’s proposed spending cap & debt financing proposals.

Governor Schwarzenegger has proposed a spending cap that would take state

government spending at what may be its lowest point (04-05) and limit

increases to cost of living and increase in population. This formulation

incorrectly assumes that health care spending is currently adequate, and

that health care costs won’t increase at greater the rate of inflation. It

also would impede any effort to restore any of the billions of dollars of

cuts made during this budget crisis.

PROP 98 INTERACTION: Legislators raised many questions about the proposal

and its interaction with Proposition 98, the constitutional provision that

assures funding of education. The proposal does alter Proposition 98 in

fundamental ways. For example, in a good year, when revenues exceeded

projected expenditures, the revenues would be swept into a rainy day fund

(the Budget Stabilization Fund) and not counted against the Prop. 98

guarantee unless spent for education. Spending for tax cuts and for state

deficit bonds could be made without increasing funding for education: this

undermines the existing provisions of Prop. 98.

Significantly for health care, Prop. 98 grows at the rate of increase in

personal income while this spending cap is limited to increases in the cost

of living, which historically has grown more slowly than personal income.

This means that Prop. 98 would take a greater and greater share of the

budget, further “compressing” revenues available for health, social services

and other programs, according to Legislative Analyst Elizabeth Hill. Verbal

testimony by Deputy Finance Director Michael Genest suggested that the

written document tying the rate of increase to the cost of living might not

reflect the intent of the Administration. Further clarification is awaited

on this point.

THE POWER OF A KING: The proposal also effectively gives the Governor

complete control over spending cuts by allowing not only mid-year cuts of

unlimited magnitude but also allowing the Governor to change existing laws

without legislative action. The Legislature could act in 30 days to stop the

Governor’s action but if the Legislature failed to act, the cuts and the

changes in law would take effect immediately.

What do these changes mean for health care? Let’s look back a year when

Governor Davis proposed throwing hundreds of thousands of people off

Medi-Cal, cutting benefits such as wheelchairs and dental coverage, and

cutting provider rates by as much as 15%. Davis could have proposed these

changes on say, the day before Thanksgiving and dared the Legislature to act

by Christmas. Legislators who had been elected only a few weeks before, who

had not even been sworn into office, who had literally not moved into their

offices, would be forced to make decisions about whether hundreds of

thousands of Californians had health coverage.

The Magna Carta established that the legislature has the power of the purse:

this is the power to decide what is spent and how by the executive. Whether

it is financing the adventures of kings or the health care of Californians,

the power of the purse remains the most fundamental power of a legislature

in the American system of government. This proposal undermines the

separation of powers by giving the Governor astonishing powers to cut

spending to health and other vital services.


Earlier today, the U.S. Senate passed the Medicare privatization bill by a

vote of 54-44. The bill will soon be headed to the President’s desk, and he

is expected to sign it. The narrowness of the vote, in both the House and

Senate, suggests the real concerns about the privatization provisions and

the inadequacy of the prescription drug benefit. It will be up to advocates

to push to undo the damage, while appropriately expanding the benefit so

that seniors truly have the basic coverage they need.


Health Access has received numerous reports that petition circulators who

have been soliciting signatures to repeal SB 2 (Burton) on the ballot have

mischaracterized the nature and purpose of the petition. Misrepresenting a

petition is a misdemeanor.

If you have had an experience with a petition gatherer, please let us know.

Contact Jessica Rothhaar in Northern California, at 510-873-8787, or, or Idabelle Fosse in Southern California, at

213-748-5287, or

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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