Monday, January 10th, 2005


  • “Medi-Cal redesign” would impact the care of hundreds of thousands
  • Plan would add premiums, restrict dental benefits, and shift many into managed care

Governor Arnold Schwarzenegger announced his 2005-06 budget today, and along with it several changes to the Medi-Cal program that provides health coverage to 6.6 million California children, parents, seniors, and people with disabilities. The full budget is available online, both in hypertext and Adobe Acrobat format, at:

The Governor’s budget would increase the cost and restrict the care of hundreds of thousands of Californians, making policy changes not just for a bad budget year but into the future. After several years of cuts to services, the Governor did not seek to balance those cuts with additional revenues. By taking taxes and other budget solutions off the table, the Governor forced a budget that made cuts to health care and other vital services on which Californians rely. The California Health and Human Services Agency has a more specific write-up of the budget cuts and changes in health care, at:

Most of the major health cuts are part of a proposed “Medi-Cal redesign,” which would be phased in over several years, and which part of would require a federal waiver. When fully implemented in the “out years,” such as 2008-09, the proposal is expected to yield an annual savings of $287.1 million dollars overall, and be equal to a $144.9 million general fund cut. A full description on the Medi-Cal redesign in available online at:

The Medi-Cal redesign cuts to health care include:

  • Imposing premiums on 550,000 children, parents, seniors, and people with disabilities with Medi-Cal coverage, which would cause 110,000 Californians to fall off coverage ($22.1 million general fund cut in out years). The premiums would be imposed on those on Medi-Cal over the federal poverty level, including 460,000 children and parents. The premiums would be $4/month for each child under 21, and $10/month for adults, up to $27/month per family. Beneficiaries will be disenrolled if they do not pay premiums for two consecutive months.
  • Limiting dental benefits to three million adults with Medi-Cal coverage, and meaning that 125,000 will face out-of-pocket expenses for severe dental treatment ($25.3 million general fund cut in out years). Dental coverage would be limited to $1,000 in a twelve-month period.
  • Forcing hundreds of thousands of seniors, people with disabilities and families into managed care plans that may restrict access to needed care, including the ability to see their current doctors and specialists ($85.4 million general fund cut in out years). The proposal would geographically expand Medi-Cal managed care plans into 13 counties now without such plans, and force this shift for 262,000 children and parents in El Dorado, Placer, Imperial, Madera, Merced, Marin, Mendocino, San Benito, San Luis Obispo, Sonoma, Ventura, and possibly Kings and Lake counties. The proposals would also mandatorily enroll intop managed care 554,000 seniors and people with disabilities in 27 counties who are now in fee-for-service plans.
  • The redesign package also includes a “hospital financing” restructuring, where the details are not fully fleshed out, but will have significant impacts on the viability of public and other safety-net hospitals. The plan also includes a change to eligibility processing for children, relying more on a statewide vendor rather than counties, and would also increase monitoring of counties with regard to processing Medi-Cal eligibility and redeterminations.

Finally, advocates continue to be concerned about the specific content of the proposed federal waiver, the process in its negotiation, and any agreement that might serve to cap or “block grant” federal Medicaid funding, as had been proposed by the Bush Administration.

Good things in small packages: The few positive program increases in health care are all small–under $6 million–but of note to health advocates. They include new efforts around obesity prevention ($6 million general fund), the restoration of application assistance fees for Medi-Cal and Healthy Families enrollment ($5.9 million general fund), and an initiative to keep children enrolled in the “bridge” transition from Medi-Cal to Healthy Families ($2.1 million general fund). Also included is the implementation of a prescription drug discount card program announced last week that will attempt to secure voluntary discounts from pharmaceutical companies for some low-income uninsured ($4 million general fund).

Other concerns: In addition to the real impact of the cuts, health advocates are also concerned about the Governor’s proposed “budget reforms,” that would institute across-the-board cuts when spending would outpace revenues. Such a proposal could be devastating to health care programs, which are roughly a third of the budget, and which require more spending during times of economic recession–when revenues go down. This proposal, as well as other “spending cap” proposals that are being circulated for the ballot, raise issues about future cuts.

What is not in the budget at this point are many other proposals that have been rejected in the past several years by the Legislature, including direct cuts to eligibility, benefits, and provider rate reimbursements. Governor Schwarzenegger withdrew those proposals after protest and legislative opposition last year. The proposed Medi-Cal redesign cuts still have the impact of restricting and denying access to needed care for hundreds of thousands of Californians.

Next steps: Health advocates, legislative staff, and other analysts will be reviewing the budget in the next few days, weeks and months to flesh out the details and the impacts. What is clear is that the cuts to education, social services, and other programs will affect some of the same vulnerable people and populations as are impacted by the health cuts.The next step is the budget process, including a series of hearing in budget subcommittees in March, April and May. Health policy committees are also expected to review the Medi-Cal redesign proposals as well.

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