No news is good news?

Monday, May 14, 2007

· April tax revenues give budget some slack; Few changes in health programs
· AB1324 (De La Torre) on insurance rescissions passes Assembly

New on the Health Access WeBlog: Responses on Biz Coalitions, Update on Rescission Bill

Gov. Arnold Schwarzenegger unveiled his May revision of the $145.9 billion state budget Monday. In spite of the molasses-slow housing market, a little bump from April’s tax season helped tide the budget over for this year. The full budget and a summary is available at:

After several budget hearings over the past several months, this announcement begins a month-long legislative sprint to consider these changes, and negotiate a budget for the 2007-08 budget year.


Schwarzenegger’s Health and Human Services budget does not expand or increase eligibility in any health programs.

The Governor’s health reform proposal is not included–and was not expected to be included–in this budget proposal. To the extent that major health reform passes this year, those changes and programs will be reflected in next year’s budget process.

The budget estimates the money needed for Medi-Cal, Healthy Families to continue to provide coverage for Californans who are eligible and enrolled. Here’s a short update on key health programs:

· Medi-Cal provides coverage to many low-income seniors, people with disabilities, children, and in some cases their parents.
· Remainder of 06-07: $35.4 billion ($13.6 billion general fund). This now covers 6.5 million eligible Californians.
· For 07-08: $37.7 billion ($14.7 bilion general fund) to cover an estimated 6.6 million eligible Californians in any given month.

· Healthy Families: covers children in families up to 250% of poverty.
· Remainder of 06-07: $1 billion ($362.2 million general fund). Now covers 844,000 children.
· For 07-08: $1.1 billion ($400.4 million general fund) to cover 920,000 children.

· Access for Infants and Mothers: covers some pregnant women
· Remainder of 06-07: $124.4 million. Serves 1,606 women monthly.
· For 07-08: $133.2 million to serve about 1,159 women monthly.

Other changes included a new rate methodology for Medi-Cal managed health plans to be phased in, costing $214.3 million ($107.1 million general fund); and an $39.4 million increase in county and other adminstration costs for implementation of the federal citizenship verification requirements under the Deficit Reduction Act.

The budget proposes to continue to fund small but important programs to which the federal government will no longer provide matching funds, like the Healthy Families to Medi-Cal “Bridge” that covers about 2,000 new children a month. The proposal would continue the program this year, costing $1.5 million, and restructure the program to allow future federal funding starting July 2007.


In the overall budget, Schwarzenegger pays down $3.1 billion in debt, including paying off some debt early. Democratic legislative leaders contrasted this choice with his proposal to not give cost-of-living increases for elderly, blind and disabled SSI paychecks, which amount to about $860 a month per person. KQED reporter John Myers’ asked Schwarzenegger whether this tactic was like “making an extra mortgage payment when you can’t pay the utility bills.” Schwarzenegger said it wasn’t the ideal situation, but that he wanted to pay off more debt.

Assembly Speaker Fabian Nunez called the proposal “mean-spirited” and said Schwarzenegger’s May Budget proposal would not pass as it is now. By paying off debt early, Assembly Budget Chairman John Laird said the governor was choosing “Wall Street over California’s children, seniors and people with disabilities.’’


Each house of the Legislature will finish putting together their versions of the budget this month. Then begins the process of combining the Assembly, Senate and Governor proposals before the July 1 fiscal year begins.


Also on Monday, AB1324 (De La Torre), which re-states existing law that bans insurance companies from cancelling coverage if policyholders had applied for insurance in good faith.

The bill directly addresses Blue Cross’ habit of cancelling patients’s coverage after expensive claims were made, as uncovered in the LA Times. The patients were left uninsured and on the hook for hundreds of thousands in treatments.About 6,000 patients later joined together in a class action suit against the insurer, and have been joined by doctors and hospitals.

The insurance plan has been fined by the Department of Managed Health Care for this practice and on Friday, Blue Cross agreed to change its policy on how it decides to cancel coverage.AB1324 passed on Monday on a 47-16 bipartisan vote (unofficial tally). Seven Republicans, including Bill Emmerson and Alan Nakanishi who are both members of the Assembly Health Committee, voted in favor of the bill.

For a list of other bills of interest to health advocates, visit

Our blog, updated daily, has other updates on the health reform debate this year, including a newly-posted scorecard to keep track of the various healthcare coalitions:

For more information, contact Hanh Kim Quach, the author of this report, at

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

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