Wednesday, February 9th, 2005


  • Deep Cuts to Medicaid: $4.6 Billion in Cuts to Medi-Cal in Next 10 Years
  • Potential Medicaid Changes Could Cap Program
  • Action Needed: Congress to Make Initial Decision in the Next Several Weeks

President George W. Bush released his 2006 budget this past Monday, February 7th. Of note to California health advocates, the budget proposes deep cuts to Medicaid, totaling $60 billion over ten years. This major reduction in funding would shift a huge financial burden to states like California, which are already struggling to pay their share of Medicaid costs, and proposing additional cuts in turn. The budget proposes to spend $15 billion on new proposals related to Medicaid and SCHIP, bringing the net cut to Medicaid at around $45 billion. The budget on health issues is available at the website of the U.S. Department of Health and Human Services, at:

According to Families USA, the cut to Med-Cal, California’s Medicaid program that now covers over 6.7 million children, parents, seniors, and people with disabilities, is estimated to be $4.659 billion over 10 years. This proposal comes at a time when Governor Arnold Schwarzenegger has been looking to cut the Medi-Cal program through a “redesign.” For more details on the budget, go to the websites of federal advocacy groups, at: FamiliesUSA:

Center for Budget and Policy Priorities:

POTENTIAL CUTS AND CAPS: According to the Center for Budget and Policy Priorities, the Administration’s proposal has two distinct parts. The first part sets forth proposals for deep cuts primarily resulting from changes in the way states finance their share of Medicaid expenditures.

The second part is a plan to “modernize” Medicaid and SCHIP. There is little detail on the Administration’s plans, but the budget documents repeatedly refer to restructuring coverage “among low-income individuals and families without creating additional costs for the federal Government.” The proposal, with its emphasis on “budget neutrality” for the federal government, implies that funding will be capped, even though the budget doesn’t specify this. The budget also states that the Administration will seek reauthorization of the SCHIP program this year, instead of waiting until 2007 when the program’s authorization expires. However, the Administration did not propose to increase SCHIP funding levels beyond the $5.0 billion already planned for FY 2007.

The bottom line of the Bush budget is that it proposes very deep cuts in Medicaid and potentially introduces a cap on federal funding for the program. Moreover, it is possible that Congress will use the $60 billion figure as a starting point, and make even larger cuts. If cuts of this size are included in the Congressional budget resolution, and authorizing committees are instructed to cut $60 billion or more from the program, these cuts may end up being made through a block grant, caps on funding, or other structural changes to the program.

The Administration also proposes significant changes the process by which Congress develops and passes the federal budget. The Administration proposal includes changes that would make it extremely difficult to improve entitlement programs, including Medicaid and SCHIP. Many of the proposals would make it easier to pass tax cuts rather than improve health programs. For example, one proposal would prevent any improvements in Medicare or Medicaid unless a dedicated revenue source was found (not a general fund increase) or cuts could be made in another entitlement program that would provide equivalent savings for the next 75 years.

ACTION NEEDED: The budget is expected to be considered during the week of March 7, we have less than a month to influence the reconciliation instructions that will be given to the Finance Committee. These instructions will dictate the size of the cuts that Finance will have to make.

All California political leaders need to rally against Medicaid cuts and caps. California has the most to lose from changes in Medicaid. Of any state, California has the most number of people on Medicaid, already spends the least per person on the Medicaid program, and has almost the biggest percentage of uninsured people. Any cut or cap on Medicaid would cause disproportionate harm to California, its state budget, its health, and its economy.

Call or write the two Senators from California, and your U.S. Congressional Representative, to urge them to reject Medicaid cuts and caps.

  • Senator Barbara Boxer: 202-224-3553
  • Senator Diane Feinstein: 202-224-3841

Advocates also need to contact Governor Arnold Schwarzenegger, as the most prominent Republican governor in the nation, to use his influence to prevent Medicaid cuts and caps. Medicaid is a central method for states to collect federal funds, but his efforts to increase California’s share of dollars from DC will be hampered by this federal budget.

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