Health state budget. But wait for the feds…

Wednesday, January 10, 2007

* Health budget escapes unscathed, though social services get cuts
* Health reform plan not included in budget
* New prescription drug & child enrollment efforts get funding for implementation
* Looking ahead to SCHIP reauthorization in Congress and Healthy Families funding
* Visit the
Health Access WeBlog: Governor’s Q&A, Health Plan Fallout, Media Reaction

Gov. Arnold Schwarzenegger on Wednesday released his fourth state budget, in which he says he eliminates the annual operating deficit, where the state spends more than it takes in. For the budget year, Schwarzenegger has proposed a $143 billion budget that is only 1 percent larger than this year, even though revenues are 7 percent higher.

To view the budget online, visit:


The Health and Human Services Agency budget will total $76 billion in 07-08 (both state and federal funds). Thats an increase of 3.5 percent over the current year. But that increase isnt felt agencywide. A full summary is available at the Department of Finance website, starting on Page 137, at:

The Governor’s budget proposal does NOT reflect any of the proposals in the Governor’s health proposal, such as the expansion of coverage for all children, as well as adults in poverty, or the shifting of funds away from counties and public hospitals.

Health programs, such as Medi-Cal, Healthy Families and ADAP will see modest increases reflecting standard program growth, but no policy changes are proposed to either cut or expand eligibility. Yet other programs such as CalWORKS and food stamps will suffer cuts, which could cause problems for the same populations served by the public health programs.

Medi-Cal is budgeted at $37.4 billion ($14.6 billion general fund), an increase of $1.9 billion from 2006-07, not reflecting any policy change but increases in caseload and cost per eligible person. The average monthly caseload for Medi-Cal is forecast to be 6.7 million, an increase of 1.6%–but less than the growth of the state as a whole.

Under the Managed Risk Medical Insurance Board, Healthy Families is budgeted at $1.1 billion, ($392 million general fund), an increase of $32 million general fund. The enrollment is expected to rise by 73,900 children, or 8.8 percent, to 915,600. Access for Infants and Mothers (AIM) is expected to increase by 1,815 to 13,912 uninsured pregnant women.

The Governor’s Budget includes $40 million for the Managed Risk Medical Insurance Program (MRMIP), which provides coverage for 8,700 “uninsurable” people who have been rejected for coverage by insurers due to “pre-existing conditions.” Since the program is capped to the funding provided, there is a waiting list of 80 people. This program and related issues have been the subject of legislative bills for reform last year and this year, and they are addressed in the Governor’s health reform proposal.


The governors write-up on health care spending gives particular focus on legislation passed last year, namely, prescription drugs, and Healthy Families enrollment.

* AB2911 (Nunez/Perata) The California Discount Prescription Drug Program. The governor allotted $8.8 million and 15.2 positions to implement this program next year. This program is expected to allow uninsured Californians to obtain a discount card at a $10 annual fee to purchase prescription drugs that a price negotiated down by using the state’s purchasing power.
*AB2877 (Frommer) California Rx Prescription Drug Website. The budget sets aside $96,000 and 1 position to maintain this site, which will help Californians get information on do comparison shopping by price for prescription drugs.
Also on prescription drug prices, the proposal would switch the basis of drug reimbursements on pharmacy claims from Average Wholesale Price (AWP) to Average Manufacturer’s Price (AMP). This is seen as closer to the actual cost of the producing the drug, rather than AWP, which is sometimes termed “Ain’t What’s Paid.” This change is expected to result in general fund savings of $44 million.
* SB437 (Escutia) Enrolling children in public programs. The budget includes $16.9 million ($35.9 million state and federal) and 9.4 positions dedicated to finding and enrolling children who are eligible for Medi-Cal and Healthy Families but not yet enrolled. New streamlined programs in the programs could enroll as many as 30,000 children in the budget year; about 447,000 children are eligible, but not enrolled in public health programs.


As we work with policymakers this next year on universal coverage expansion, one element not to overlook is the reauthorization debate about State Child Health Insurance Program (SCHIP)–called Healthy Families in California–which will be up this year in the federal budget.

President George W. Bush is expected to release this national budget later this month and its expected to be ugly, in attempts to reduce the federal deficit. In spite of the fact that Congress is now controlled by people who are sympathetic to this program, it will be important to impress upon the delegation that California s SCHIP-Healthy Families Program needs significantly more money to continue the rate of growth in the program. Healthy Families currently provides health coverage on a sliding scale to nearly 900,000 children who would otherwise be uninsured.

The California Budget Project estimates the state will need up to $3 billion more in the next five years to keep the program going without having to place children on waiting lists or drop them from coverage. Particularly as Governor Schwarzenegger looks to the Healthy Families program to provide coverage to even more children, continued support from the federal government will be critical.

Health advocates are planning to visit Congressional members in trips to Washington, D.C., later this month and through the year. For more information on these federal issues, contact Elizabeth Abbott or Jessica Rothhaar at Health Access California.

For more information about the budget, contact Hanh Kim Quach, policy coordinator, Health Access California, 916-497-0921, or

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