Tuesday, April 5th, 2005


  • Senate Budget Subcommittee Votes Against Medi-Cal Premiums
  • Consumer Bills Up Next Tuesday on Drugs, Hospital Overcharging, Etc.
  • New Bill to Provide Oversight on Deductibles, Out-of-Pocket Costs
  • Sacramento Briefing Thursday on Health Coverage Bills


Yesterday, a Senate budget subcommittee voted to reject key parts of Governor Arnold Schwarzenegger’s “Medi-Cal redesign” package, including a controversial proposal to impose premiums on over a half-million Californians in near poverty that get Medi-Cal coverage.

The Senate Budget and Fiscal Review Subcommittee #3 on Health and Human Services, chaired by Senator Denise Ducheny (D-San Diego), considered several health budget issues yesterday. After a few months of informational hearings, the three-member subcommittee did start making some preliminary decisions, with the votes of Senator Ducheny and Tom Torlakson (D-Antioch) carrying the majority, often over the vote of George Runner (R-Antelope Valley). Of particular interest to health advocates, the issues raised included:

* PREMIUMS: The subcommittee voted to reject the Administration’s proposal to impose permiums on nearly 550,000 Californians on Medi-Cal, including 90,000 seniors and people with disabilities, and 460,000 families with children, all between 100% and 155% of the federal poverty level. The proposal would have set these premiums at $4/month for children, $10/month for adults, with a $27/month maximum for a family.

Among the issues discussed was the projection that 95,000 Californians would drop off coverage as a result, and the cost shifts to county and safety-net providers as a result. Many questions were raised about the details of the proposal, including the significant administrative costs of imposing these premiums. After testimony by a full range of consumer, provider, and county represetatives, Chair Ducheny called to “just get this one over with” and the subcommittee voted to reject the proposal, which would actually provide $6.2 million savings in the budget year, recouping the administrative costs.

* MAXIMUS CONTRACTING: The subcommittee also voted to reject the proposal to change the existing “single point of entry” process for joint Medi-Cal and Healthy Families applications, contracting out a specific piece of processing of applications to the Healthy Families vendor, currently Maximus. There was considerable confusion about the proposal, and debate about whether the proposal was workable, or whether it actually streamlined the process for the state or the applicants. With Senator Ducheny commenting that “well, this is messy,” the committee rejected it, for a budget year savings of $5.7 million to recoup the implementation costs.

* CAP ON ADULT DENTAL: The subcommittee did not take action on the Governor’s proposal to place an annual $1,000 cap on Medi-Cal dental coverage for nearly 3 million seniors, parents, and adults with disabilities. It would be anticipated that 94,900 Californians would be impacted by the cap, and would have to pay out-of-pocket for medically necessary treatments. There also would be a cost shift to other parts of the state budget, as regional centers would have to pick up the full cost of the dental care for developmental disabilities, without the benefit of a federal match from Medi-Cal. The subcommittee discussed many options, including excluding certain services from the cap, raising the cap level, and rejecting it altogether. The subcommittee decided to hold the issue open and revisit the issue.

Health advocates should note that these decisions on premiums and application contracting are important, but nothing is final: the Assembly also has its budget process, the Governor can change his proposals in the May Revision of the budget, and items can be reinserted as the budget moves through the legislature in June.


The Assembly Health Committee, chaired by Assemblywoman Wilma Chan (D-Oakland), is set to hear many key bills of interest to health consumer advocates, on issues including prescription drugs, hospital overcharging, and out-of-pocket costs.

A range of prescription drug bills will be heard during a “special order.” A range of senior and consumer organizations are supporting many of these bills. A list of this “OuRx” package is at:

Another bill to be heard seeks to prevent hospital overcharging and other unfair billing practices. A fact sheet, sample letter and bill description is available at:

These and other bills are set to be heard next Tuesday, April 12th, at 1:30pm in Assembly Health Committee at the State Capitol. Health advocates that wish to support these bills NEED TO SEND LETTERS ASAP to the Assembly Health Committee. In order to be listed in the bill analyses, organizational letter need to be received by tomorrow, Wednesday, April 6th.


Also up for a vote next Tuesday in Assembly Health Committee is a measure to provide oversight over high deductible plans and other rising out-of-pocket costs. AB 977, as introduced by Assembly Member Pedro Nava and sponsored by Health Access California, would create a public process for review and approval of co-pays, deductibles and other out of pocket costs and would provide guidelines against which these must be reviewed by the Dept. of Managed Health Care and the Dept. of Insurance. AB 977 would create a mechanism for limiting out of pocket costs, which have increased dramatically in recent years.

In recent years, the share of health care costs paid by consumers, even those with health insurance on the job, has climbed as employers have shifted a greater share of health insurance costs to employees and their families. For family coverage, California employees now pay an average of $2580, 27% of the cost of the health insurance premium. Similarly co-payments, deductibles and other out of pocket costs have increased. Many employees have no cap on the out of pocket maximum to be paid for health benefits. Half of employees now face co-payments for prescription drugs, as well as hospital care. Deductibles of $1000, $1500 or even $5000 per person exist. Out of pocket costs may be capped at several thousand dollars – or not at all.

Under existing law, the Dept. of Managed Health Care and the Dept. of Insurance approve changes in out of pocket costs without any public input or public review. Consumers have no voice in designing health benefits. There is literally no way for consumer groups to affect what benefits are being provided – what the deductibles are, what the co-payments are, or what the out of pocket maximum is. These decisions are made in secret by the Department of Managed Health Care and the Department of Insurance.

AB 977 (Nava) would create a public process for reviewing changes in out of pocket costs for health insurance. It would set standards for review of out of pocket costs by DMHC and DOI that include affordability, accessibility of care, and impact on clinical outcomes. Health advocates wanting to support this measure should send letters ASAP to Assemblymember Nava and Health Committee Chair Chan.


Health Access invites health advocates and legislative staff to a briefing entitled: “THE NEW HEALTH COVERAGE EXPANSION DANCE: TWO STEPS FORWARD, ONE STEP BACK: A Health Consumer View of Current Legislative Proposals to Cover Uninsured Californians.”

The briefing is this Thursday, April 7th, 1:30pm-3:00pm at the State Capitol, Room 2040 in Sacramento. Please RSVP to Louise Jones, Health Access, 916-497-0923; An agenda and list of speakers will be sent out shortly to those who RSVP.

This quick briefing, led by experts from key consumer and community organizations, will provide briefings and answer questions on the substance of the legislative proposals to expand coverage, as well as those bills they oppose on this topic. This month, both Senate and Assembly committees will be actively considering several health reform proposals, from building on the Healthy Families program to provide coverage to all California children, to an ambitious proposal for single-payer, universal health coverage. Health Access California and other health consumer advocates actively support the multiple proposals to expand coverage. At the same time, they are alarmed by “individual mandate” and other proposals to shift the cost and burden of health care onto consumers.

Health advocates will provide their organization’s principles and issues as we enter this new discussion about health reform. Handouts will also include a more extensive list of pending legislation, good and bad, on coverage.

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