Tuesday, September 6th, 2005


  • Hearing on SB 1100 (Perata/Ducheny) Wednesday to Implement Medi-Cal Waiver
  • Other Legislative News: Children’s Coverage, Dependent Coverage Expansions Pass Senate
  • Consumer Protections on the Governor’s Desk; Prescription Drug Bills Up in Next Two Days


The California state Senate voted this evening to pass AB772 (Chan) by a vote of 25-12, to expand existing public insurance programs to cover all California children. Health and child advocates are hoping for a signature from Governor Arnold Schwarzenegger, who has called for covering all children during his election campaign and after becoming Governor. For more information on both active and stalled bills of interest to health advocates, go to the legislative section fo the Health Access website, at:

The Senate also passed, by a vote of 23-13, AB1968 (Nunez), supported by Health Access California, to expand dependent coverage to include unmarried dependent young adults up to age 26. On prescription drug issues, the Senate passed AB78 (Pavley), to provide oversight to pharmacy benefit managers, and AB76 (Frommer), to allow the state to pool its prescription drug purchasing power. Along with AB 73 (Frommer), to create a website to assist Californisns in purchasing cheaper drugs from other countries, these bills need one more vote before going to Governor Schwarzenegger for a signature or veto. For a one-page list of the over a dozen bills supported by consumer health advocates heading to Governor Schwarzenegger, including those awaiting a final vote or those already on his desk, visit the Health Access website at:


Some of the contentious issues around hospital financing have been resolved for this year, three days prior to the anticipated adjournment of the Legislature on Thursday, September 8th. Some issues, including the forcing of seniors and people with disabilities in Medi-Cal into mandatory managed care plans, have not been fully resolved, and will be not be dealt with in the bill. SB1100 (Perata and Ducheny) will be introduced and the subject of a hearing tomorrow, Wednesday, September 7th. Below is a report by Beth Capell, Health Access policy advocate:

HOSPITAL FUNDING: The protracted and difficult negotiations over the Medi-Cal hospital waiver have reached a conclusion for this year. Agreement has been reached about the allocation of the capped funds for public hospitals, as well as a formula for the private safety net hospitals. The exact amount of per-hospital funding is still not known. Some key provisions include:

  • All safety net hospitals, public and private, will be “held harmless” both individually and collectively, to provide some guarantee that each hospital will not lose money. (While important, this does not provide assurances of keeping up with the medical inflation in the future.)
  • Key elements of the hospital financing deal are in place only through 2006.
  • Public hospitals and private safety net hospitals will see some funding growth in 2005-06, but then funding is largely capped.
  • Thus, funding growth in 2006-07 is less certain.
  • Funding in 2007-08 and thereafter is not adequate. Efforts are already underway to investigate other means of drawing down additional federal funds for these future years.

For an overview of the main concerns about the hospital financing Medicaid waiver, refer to earlier Health Access testimony, at:

MANDATORY MANAGED CARE: To the relief of many health care advocates and providers, the Legislature and the Administration were unable to reach agreement on how to implement the provision of the waiver that would force hundreds of thousands of seniors and people with disabilities into Medi-Cal HMOs.

Since part of the federal financing was contingent on the passage of legislation to adopt mandatory managed care for the “aged, blind, and disabled,” this lack of action costs the safety net hospitals up to $90 million in new funding. If the Legislature and the Governor can reach agreement early next year, another $90 million will be available for safety net hospitals in 2006-07.

IMPACT ON MEDI-CAL PATIENTS: The seniors and people with disabilities who were at risk of being forced into HMOs are the most vulnerable of this population covered by Medi-Cal: the “Aged, Blind and Disabled” who are not eligible for Medicare, either because they are newly disabled or because they never accumulated enough work experience to be eligible for Medicare, usually because of severe disability. It is estimated that 90% of those who would have been forced into HMOs were persons with disabilities, many of them with severe disabilities. Every single one of these Medi-Cal beneficiaries has multiple relationships with physicians, specialized therapists, and other providers on whom these Californians depend for their ability to function in the community.

Key issues for Health Access and other advocates with respect to the impact of the managed care expansion on people with disabilities and seniors included:

  • Adequate protections for seniors and persons with disabilities.
  • Adequate provider networks of specialists, sub-specialists, and highly specialized care required by this population.
  • Caps on HMO overhead and profits.
  • Physical and communications access, such as the ability of people using wheelchairs to get to the doctor and get the full range of care, including care that used other means of communication such as sign language, if needed.
  • Continuity of care so that Medi-Cal beneficiaries can safely transition their care from multiple providers to other doctors and specialists.

For a more comprehensive review of the concerns of health advocates, refer to earlier Health Access testimony, at the Health Access website:

IMPACT ON UNINSURED PATIENTS: The impact of the managed care expansion on access to care for the uninsured was one of the issues that could not be resolved prior to the Legislature’s adjournment. Health Access and other consumer advocates argued vigorously that no managed care expansions should be undertaken unless the access of the uninsured to health care was protected. The implementation of mandatory managed care would have not only had an impact on care to Medi-Cal patients, but would further destabilize funding to the public hospitals that provide significant care for the uninsured. Many estimates had the negative impact for county hospitals to be far more than the $90 million that may have been lost. When Medi-Cal managed care for children and families was implemented in the early 1990s, there were thirty county hospitals: now there are twenty.

Since private safety net hospitals continue to overcharge the uninsured and to oppose statutory protections against hospital overcharging, assuring continued access to county hospitals is important for protecting the ability of the uninsured to receive what little care they receive. As we have learned, while hospitals have an obligation to stabilize an emergency patient, these hospitals have no obligation to care for a non-emergent patient, even an urgent one and the hospitals have no obligation to protect the uninsured from financial ruin. For these reasons, Health Access made protection of the uninsured one of its top priorities in its advocacy on the managed care expansion.

THE FUTURE DISCUSSION: The Schwarzenegger Administrations remains committed to moving seniors and people with disabilities into HMOs. From Chief of Staff Pat Clarey, a former senior executive with a major HMO through DHS Director Sandra Shewry, this Administration has spoken out loud and clear in favor of HMOs. They unfairly compare Medi-Cal with commercial coverage, even though Medi-Cal is funded at half the level of commercial coverage, on a per member per month basis, and Medi-Cal funding on a per capita basis has grown at half the rate of commercial insurance for the last decade. This is rather like a weight lifting contest between a victim of starvation and someone who is overfed and pumped up on steroid analogues.

Considerable efforts have been made to make the best of a bad deal for California. Advocates expect to work with the Administration and the Legislature over the fall to determine whether to pursue the managed care expansion and if so, how. Patient advocates also expect to work with the stakeholders including hospitals, providers, unions, the Administration, and the Legislature on improving hospital funding in future years.

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