Thursday, July 7th, 2005


  • Budget Includes Some Cuts to Health & Human Services, Continued Deficit; No Taxes
  • November Vote Could Give Governor Unilateral Power to Make Cuts
  • Legislative Update: Health Expansion Bills Pass Key Committees

More than a week into the new budget year, the Assembly and Senate has agreed to a $116 billion budget for the state of California for the 2005-2006 budget year that started July 1st. The budget does contain some cuts, including to human services for low-income Californians, but does not include any new taxes or revenues, and as a result, will leave a significant budget deficit for future years.

MEDI-CAL REDESIGN LARGELY REJECTED: While much of the approved budget was similar to what Governor Arnold Schwarzenegger had proposed, the Legislature largely rejected the Governor’s “Medi-Cal redesign” reforms, such as the imposing of premiums on a half-million adults, and the privatizing of processing of some applications. A list of the proposed “Medi-Cal redesign” proposals are at the Health Access website, at:

SOME HEALTH CAPS AND CUTS: Modifying another of the Governor’s proposal, the legislature did impose a $1800 cap on dental benefits for the three million adults (parents, seniors, and people with disabilities) with Medi-Cal coverage.

On the controversial proposal to force more Medi-Cal patients into managed care plans, the legislature did allow for expanded managed care in more counties. However, the legislature did reject some of the specific proposals for mandatory managed care for seniors and people with disabilities.

The final part of the “Medi-Cal redesign,” a change in the way hospital financing has been funded from the federal government for the last 25 years, is not included in the budget and will be debated in the legislature this summer.

THE REAL FIGHT: THE NOVEMBER BALLOT: Even with the cuts—especially to human services—the passage of the budget leaves a budget deficit for the next year, yet does not raise the revenues to prevent more cuts in the future.

At many levels, this budget is a stop-gap measure, which leaves the philosophical battles to future years. In many ways, the real fight is this November, where the Governor has called a special election so voters can consider his change to the budget process, named the “Live Within Our Means Act.”

THE GOVERNOR’S PROPOSED “SPENDING CAP”: This proposal, just numbered Proposition 76, would give the Governor, and all future Governors, unilateral power to make cuts to health, education, and other vital services. The proposal would also institute a new “spending cap” to restrict spending and the state’s ability to confront issues like the number of uninsured in California. Finally, the proposal would reduce the required level of spending for education under voter-passed Proposition 98; and while education may be the main focus of the discussion around this measure in the fall, health care programs also would be at significant risk.

Just in the past few years, the current and previous Governors made proposals to deny health coverage and benefits to hundreds of thousands of children, parents, seniors, and people with disabilities. While the Legislature appropriately rejected these cuts as too severe, these Governors would have been able to make these devastating cuts under these new powers. For a list of these cuts, go to the Health Access website, at:

SPECIAL ELECTION: This “spending cap” proposal would be one of eight ballot measures during the special election this fall. The Secretary of State recently released the ballot numbers of the various propositions:

Proposition 73: Parental Notification for Abortion
Proposition 74: Changes to Teacher Tenure
Proposition 75: Union Dues Checkoff
Proposition 76: Unilateral Power to Cut Health and Education
Proposition 77: Redistricting Change
Proposition 78: Prescription Drug Discounts (Pharmaceutical Industry Proposal)
Proposition 79: Prescription Drug Discounts (Consumer Group Proposal)
Proposition 80: Electric Re-regulation

Health Access California, the statewide health care consumer advocacy group, and many other consumer, low-income, community, and constituency organizations, will be working to oppose Proposition 76 as a major threat to the health care programs that all Californians rely on. For a list of the current titles and summaries of these measures, visit the Health Access website, at:

DRUG DISCOUNT MEASURES: Another health care ballot measure would use the purchasing power of the state of California to negotiate significant discounts for prescription drugs for millions of Californians that now pay retail for these medications. This measure, sponsored by Health Access California and other consumer groups, is Proposition 79, and would provide affordable prescription drugs for up to ten million Californians. To sign up to support the consumer group-backed prescription drug measure, visit the Health Access website:

This measure is opposed by the prescription drug industry, which has also sponsored a counter-measure, Proposition 78. The industry proposal would provide discounts to fewer people, and lacks any enforcement to ensure the drug companies provide the promised discounts. The drug companies have already raised over $35 million dollars, including checks by Glaxo and Merck of over $8 million, which are considered among the largest single political contributions in California history. See the Sacramento Bee story at:

LEGISLATIVE UPDATE: HEALTH EXPANSION BILLS PASS COMMITTEES: The Legislature has also been busy in the last few weks before summer recess in considering bills in policy committees. Of particular note is the successful passage of key bills to expand access to health care. This includes SB840 (Kuehl), the California Health Insurance Reliability Act, to establish a universal health care system in the state, which passed the Assembly Health Committee on Tuesday. It also includes AB774 (Chan/Frommer) and SB 437 (Escutia/Alquist), which would expand coverage to all children in California, and AB1199 (Frommer), a companion bill, which all passed key policy committees in the last week.

However, many other important health bills, including consumer protection bills on prescription drugs, hospital overcharging, and other issues, were held for next year’s session. A full legislative update on health consumer bills and their status will be forthcoming in a future E-mail report.

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