• Extra $7.5 billion over 2 years flows to state coffers, directed to deficit and education
  • No health cuts; No significant health care expansions; Missed health opportunities
  • National Update: Enzi bill defeated that would have negated state protections

There’s nothing like an extra $7.5 billion over two years that won’t boost anyone’s spirits – or popularity. A grinning Gov. Arnold Schwarzenegger glowed as he unveiled his $131.1 billion May Budget Revision. Two-thirds of the extra money will be used to pay down debt and put in a rainy day account. Education will also get significant funding restored. The full budget proposal is available on the Department of Finance’s website, at:

As a rule, the Governor stressed that he was “committed to fiscal discipline.” In spite of the happy turn in economic news, little of the largesse will be falling to issues important to health advocates. The chapter of the budget summary on health issues is available at:

Most of the focus of the budget was on education, infrastructure, and non-health related items. In the health budget, the county children’s coverage was highlighted, along with emergency preparedness, and other issues.

What is most noteworthy is what isn’t in the health budget. With no major expansions, Health Access California and other advocates noted the opportunities missed to make relatively small investments in health that would have a big impact on children, seniors, and the health system as a whole. The budget does not include proposals for covering all children, helping low-income seniors with newly-imposed co-payments under Medicare Part D, or raising Medi-Cal provider rates.


As Secretary Kim Belshe announced Thursday, Schwarzenegger’s May revision includes $23 million to cover 24,000 children–which is approximately 3 percent of the currently 800,000 uninsured children in the state. The money would flow to 18 county “Healthy Kids” programs which have waiting lists through the 2006-07 year, with no guarantee that the funding would be continued the following year.

This $23 million is on top of $35 million (general fund) that Schwarzenegger dedicated in January for Healthy Families and Medi-Cal outreach and retention efforts. At his budget press conference today, the Governor was asked about the tobacco tax measure pending for the November ballot that would cover children’s coverage, he stated, “I don’t support any initiatives to increase taxes.” He did express pride in the “public/private partnership” effort to outreach to more children. “We want to make sure every child is eventually insured; we are working toward that goal.”

However, the governor’s efforts fall short of his 2003 campaign promise to “cover all children’’ in the state. As Schwarzenegger seeks re-election this year, Democrats in both houses pounced on that promise.

Sen. Wes Chesbro, chairman of the Senate Budget Committee, juxtaposed the priority given to an avian flu pandemic–$400 million–with the amount being spent on the basic need to increase children’s coverage.

Assembly Democratic Caucus leader Dario Frommer said Democrats were “disappointed that this governor has still not fulfilled his campaign promise to provide health insurance for every child.’’ Frommer added that health care for children “should be a priority…. We look forward to working with the governor to helping him fulfill his campaign promise.”

For their part, Assembly Democrats have proposed a plan that would put the state on track to cover all children by July 2008. Earlier this week, the Assembly Budget Committee on health approved $50 million – twice the amount that Schwarzenegger has proposed. About $40 million would go to the counties’ Healthy Kids programs and another $5 million would begin the administrative process of expanding overage to the remaining 800,000 uninsured children in Healthy Families and Medi-cal programs.

The Democrats’ plan would increase the income ceiling for Healthy Families from 250 percent of poverty to 300 percent. It would also expand Medi-Cal’s income ceiling to 133 percent. Currently, children older than 5 were not eligible for Medi-Cal if their families earned above 100 percent of poverty. In effect, the changes would allow for universal coverage of ALL under 300 percent of the federal poverty level, which is $60,000 for a family of four.


The May Revision also contains $33 million (general fund) to eliminate a previous 5 percent provider rate reduction on Medi-Cal managed care plans, starting January 1, 2007. This would allow continued access to care for 3.2 million California in such Medi-Cal managed care plans.

Specific rate increases, totalling $30 million (general fund), will be granted in for plans in specific counties, including: Central Coast Alliance for Health, Community Health Group, Contra Costa Health Plan, Health Plan of San Mateo, Partnership Health Plan of California, and Santa Barbara Regional Health Authority.

So while there are some increases for Medi-Cal managed care plans, the budget does not include any increases in Medi-Cal provider rates. Such provider rates have not been increased since 2000, and are among the worst in the nation. Adjusted for inflation, the value of the Medi-Cal reimbursement rate has declined by 54 percent since 1985. Low reimbursement rates affect access to care, with fewer doctors willing and able to afford to care for the state’s poorest patients, including children, seniors, and people with disabilities.


The budget does not include help dual-eligible seniors and people with disabilities – who previously did not have co-pays –cover their newly-imposed costs for prescription drugs under Medicare Part D. These seniors and people with disabilities who survive on less than $825 a month, who qualify for both Medi-Cal and Medicare. These “dual-eligibles” were made worse off this year in the implementation of Medicare Part D, which forced them to pay co-pays for the many needed prescription drugs they take monthly.

Even though Schwarzenegger does not mention this item in his May Revision, advocates are attempting to keep the issue alive in budget negotiations and legislation. Assemblywoman Wilma Chan made a presentation before the budget subcommittee on health this week.


In other news, S. 1955 (Enzi), which would have jeopardized over twenty of California’s consumer health insurance protections, was stopped in the U.S. Senate Thursday evening. Supporters needed 60 votes to bring the measure to a vote, but only got 55 votes in support, mostly from Republicans; 43 Senators voted against it, including both California Sens. Dianne Feinstein and Barbara Boxer.

The bill, by Wyoming Republican Sen. Michael Enzi, would have evicerated state insurance consumer oversight, under the guise of allowing small businesses to pool with other businesses across state lines and negotiate for lower insurance rates. The bill would have required standardizing state insurance regulations, including consumer protections that states have passed, and preventing future state efforts. By eliminating community rating laws, it would have also had the effect of increasing rates for businesses that employ an older workforce or women of child bearing age.

For information on the budget, federal health legislation, or other issues, please contact Hanh Kim Quach, Policy Coordinator, Health Access, at, or (916) 497-0923 x 206.

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