• Line-Item Vetoes on Trauma Care Funding, Reduction of Funds for Medi-Cal Managed Care

On Friday, Governor Arnold Schwarzenegger signed AB 1801, the Budget Act of 2006 by Assemblymember John Laird (D-Santa Cruz). The 2006-07 budget’s general fund is $101.3 billion, and total is $131.4 billion. The full budget, and supporting documents, are available at:

A summary of the full budget is at:

Details of the Health and Human Services budget are at:

The enacted budget did not include major additions to health care beyond what Governor Schwarzenegger proposed, and so there was not much for the Governor to use his line-item veto power. In fact, the most notable change in the health budget from the Governor’s May Revise proposal was the deletion, in the legislative process, of $22 million of funding for county “Healthy Kids” programs to fund children’s health coverage.

The Governor’s budget did include some line item vetoes regarding health care. Of note to health advocates, the Governor:

  • deleted a $10 million line item to augment funding for trauma care;
  • reduced by $9 million the funding for Medi-Cal managed care plans in the event of financial distress (although it sustains some additional money for these Medi-Cal managed care plans–see below);
  • reduced by $2.5 million rate reimbursement increases for non-emergent transport for Medi-Cal patients;
  • eliminated a $300,000 study with regard to the impact of the Deficit Reduction Act on pharmacy rate reimbursements.

For a listing of all the Governor’s line-item vetoes, go to:

In his signing press materials, the Governor spotlighted the $22.6 million for counties to perform outreach and enrollment activities for children’s coverage, as well as the budgeting of enrollment growth in the Healthy Families program for 78,200 additional children.

Both the Medi-Cal and Healthy Families programs have been growing in enrollment, due to outreach efforts, growing population, and the gradual erosion of private family coverage.

  • The Budget includes total Medi-Cal expenditures of $35.1 billion ($13.8 billion General Fund), which the Governor’s office indicates is an increase of $1.8 billion ($946 million General Fund) over the revised 2005 Budget Act level. The average monthly Medi-Cal caseload is expected to be 6,664,700 beneficiaries in 2006-07.
  • The Healthy Families Program (HFP) is budgeted at $1 billion ($368 million General Fund), an increase of $129.4 million ($47.4 million General Fund) above the revised 2005 Budget Act level. Year-end caseload is expected to reach 858,900 children, an increase of 78,200 children over 2005-06.

The Governor’s summary of the budget indicates other items of note to health advocates, regarding the policy changes reflected in this budget:

* MEDI-CAL AND HEALTHY FAMILIES OUTREACH: While the budget does not include any money for the expansion of eligibility for children’s health care, there is a $22.6 million ($9.3 million General Fund) increase for counties to perform outreach and enrollment activities targeted at the children who are eligible but not enrolled for public programs. There is also$9.6 million ($3.5 million General Fund) to simplify the enrollment of children into the HFP, including encouraging the use of the electronic application (known as “Health-e-App”). Another$2.2 million ($843,000 General Fund) will provide incentive payments to Certified Application Assistants to encourage the enrollment of more children in Medi-Cal and HFP.

* RATE REIMBURSEMENTS: Medi-Cal managed care plans are getting their rate reimbursements restored in January 2007 by $65.4 million ($32.7 million General Fund), the budget eliminating the 5 percent provider payment reductions passed in 2003. (Medi-Cal doctors and other providers had this same reduction restored earlier in the year through legislation; however, these Medi-Cal providers were disappointed in not getting an additional increase in Medi-Cal reimbursement rates for which they and others advocated.) Certain county-based Medi-Cal managed care plans will get$78.1 million ($39 million General Fund) in rate increases, 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. Finally, the budget does include $4.5 million ($2.2 million General Fund) to change the methodology that is used to reimburse for custom wheelchair equipment, custom rehabilitation equipment and oxygen.

* OTHER MEDI-CAL POLICY CHANGES: The budget takes into acount some caseload growth due to a simplified Medi-Cal redetermination form. Also, the budget includes $1.6 million ($768,000 General Fund) and 5 positions for Department of Health Services (DHS) to phase in expanded voluntary enrollment of seniors and persons with disabilities in mangaed care. It also includes a pilot project for “a coordinated care management project.” Finally, the budget includes more than five positions to further implement the Hospital Financing Waiver from last year.

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