Bush’s Budget: Cuts for California Care

Monday, February 5, 2007

· Children would be kicked off Healthy Families
· Steep cuts to Medicaid; Public hospitals would take $500 million cut
· More Medicare recipients would pay higher premiums

President George W. Bush released his seventh budget proposal Monday – a $2.9 trillion spending plan which he states “protects the American people.’’ He increases total defense spending to $625 billion from $600 billion last year. That’s an increase of 4.1 percent, which includes more money for Iraq and the global war on terrorism.

Many advocates and legislators stated that a closer examination of Bush’s plan shows that it leaves the most vulnerable Americans exposed to ill health and little protection. In particular, the proposal takes a hatchet to domestic spending areas, and health care in particular. The President’s proposal cuts Medicare by $252 billion, asking recipients to pick up the slack. He also cuts Medicaid by $26 billion over 5 years.

And in spite of the promises he has made in the 2004 campaign and other times to ensure children have adequate health coverage, the budget would barely maintain enough money to keep children currently enrolled. It would also force 18 states – including California – to cut children out of the program.

The budget also includes other proposals unveiled at his State of the Union two weeks ago, which would leave more Americans uninsured by discouraging employer-based coverage, and shifting funds away from public hospitals on which we all rely, further weakening the safety net for the nation’s most vulnerable.

Look at actual budget documents here.


Bush’s budget puts him directly at odds with California efforts for health reform, including those by Gov. Arnold Schwarzenegger, and legislative leaders, both Democratic and Republican.

Gov. Arnold Schwarzenegger, Democrats, and Democratic leaders want to increase eligibility to allow children in families earning $51,500 (family of 3) to enroll in Healthy Families. Bush wants to restrict eligibility, to cut it off at $34,000.

Schwarzenegger wants to expand Medi-Cal to low-income, childless adults. Bush wants to make it harder for the people already on it to stay on.

Several members of Congress have expressed their dismay at the lopsidedness of the Bush Budget and have until October to craft a new one. But with promises on all sides to reduce the long-term federal deficit, it’s unclear how health care might shake out.


Advocates this year were preparing to fight for the reauthorization of the State Children’s Health Insurance Program. SCHIP, which expires this year, provides health coverage to 10 million children nationwide, including 750,000 children in California. But to ensure that children can keep coverage through Healthy Families (California’s SCHIP program), Congress should not merely reauthorize the program — it would also have to increase its allotment.

In order to ensure children don’t get kicked off, California by itself would need an additional $2 to $3 billion over the next five years, according to the California Budget Project.

While Bush proposes to reauthorize SCHIP, he would make a cut in the first year, forcing children to lose coverage, and he would only increase spending by $5 billion over five years for the entire nation–well short of the over $40 billion needed to maintain current enrollment growth.

In California , the outlook is worse.

Bush’s plan would encourage states to cut children in families whose income exceed 200% of poverty ($34,340 for a family of three.) California ’s cutoff is 250% ($42,925 for a family of three).
That would mean approximately 170,000 children would abruptly lose Healthy Families Coverage.

The plans of the Governor and the Legislature would actually increase eligibility to 300% ($51,510 for a family of three,) to cover another 77,000 children in California, but that would also be endangered by the President’s plan .


The reductions in Medicaid include an adminstrative rule change that would take a $500 million chunk out of California ’s already cash-starved public hospital system, according to the California Association of Public Hospitals. In Los Angeles County , home to one of the busiest trauma centers in the nation, it would mean a $200 million cut.

The Bush plan also proposes to:
* Prohibit federal Medicaid funds for Graduate Medical Education, which trains medical professionals and allows them to treat low-income patients
* Use electronic financial records to ensure Medi-Cal patients are eligible. (The reverse–to ensure patients who are eligible may be enrolled–is not done.)
* Deny people, whose home equity is higher than $500,000, to be eligible for Medicaid long-term care services. In California , where home values are high, this new rule would have a major impact for patients who have few other assets.


Because California is also a high-income state, Bush’s proposed changes to Medicare would also disproportionately impact seniors here. Right now, recipients who earn more than $80,000 a year must pay higher premiums. That income cut-off, though, rises with inflation.

Bush’s budget would freeze the cut-off at $80,000, meaning more and more people would then need to pay premiums.


Some helpful budget analyses may also be found at the following links:
* Families USA, for more specific health-related news
* Center for Budget and Policy Priorities, for a national look at economic issues and implications with an eye toward low- and moderate-income families.
* California Institute, an affiliate of Public Policy Institute of California, for implications in California .
* House Budget Committee’s Democratic Staff analysis of past Bush budgets

For more information, contact Hanh Kim Quach, policy coordinator, Health Access California, at 916-497-0923, or hquach@health-access.org.

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