Singing the “Blue Pencil” Budget Blues…

Friday, August 24, 2007

* $700 million in cuts is part of agreement with Senate Republican holdouts
* Implementation of children’s coverage outreach and drug discount program delayed
* Primary care clinics and Medi-Cal managed care also face cuts

New on the Health Access WeBlog: More Budget Update; Small Biz for Health Reform; The Veto Threat; Fact Checking the Gov; MA Redux; What is Universal? What is Covered?; Wonked!; Special Session?; Field Poll Analysis; President Bush Attacks SCHIP; New TV Ads; The Social Security Metaphor; New Report on Individual Market Consumer Protections; The Real Difference Between Nunez and the Gov; California Speaks; Kuehl Speaks; Having Our Say; The 2/3 Vote; Healthy San Francisco; Complaints About Insurers.

Earlier today, Governor Arnold Schwarzenegger signed the 2007-08 Budget, totalling over $145 billion. Due to a standoff by Senate Republicans, the budget was passed on Tuesday, August 21st, over 50 days after the beginning of the budget year. Of particular note was the $703 million in cuts the Governor made using his line-item veto authority.

As the governor and Legislature begin discussions on health care reform, more than half of cuts made in the 54-days-late budget that Gov. Arnold Schwarzenegger signed Friday came from the department of Health and Human Services.

While $332 million of the cuts were simply a re-adjustment in Medi-Cal expectations and will not result in a reduction in services, other cuts would have significant impacts on nascent programs.

Among the cuts:

* PRESCRIPTION DRUG DISCOUNTS: $6.3 million from the California Discount Prescription Drug Program Fund: The Governor zeroed out the money to implement this program that would negotiate with drug companies to provide discounts to uninsured and underinsured Californians. In his veto statement, he directed the Department to identify ways to start the work, but the program is likely to be delayed.

Along with legislation on global warming and minimum wage, the Governor has repeatedly mentioned this program – a result of AB2911 (Nunez/Perata) — as one of the major successes from 2006, including on multiple appearances on “Meet the Press.”

* CHILDREN’S COVERAGE: $66 million to make it easier for children to enroll – and stay enrolled – in the state’s Medi-Cal and Healthy Families Program: There’s a range of cuts to children’s coverage. This includes cutting the $15.4 million to implement SB437 (Escutia) to streamline enrollment, and also cutting $15 million in funds for county outreach and enrollment efforts. These cuts effectively prevents the state from reaching out to more than 100,000 children who could be enrolled in public programs.

The Governor had a major bill signing ceremony on SB437, and has participated in several events on children’s coverage, which remains an element of the Governor’s health reform.

* CLINICS: $10 million from the Expanded Access to Primary Care. This cut will decrease access to care for uninsured patients through community clinics.

Providing care through community clinics was something that even legislative Republicans have advocated for in their health reform proposals this year.

* MEDI-CAL MANAGED CARE: $106.3 million in cuts to Medi-Cal Managed Care: While the budget retains $54 million in state dollars for an increase to Medi-Cal HMOs.

Yet the Governor would not draw down $53.1 million in federal matching funds, as part of this reduction to Medi-Cal–at the very time that health reform proposals seek to expand the program.

The Governor’s budget document is available at:

A California Budget Project analysis is available at:

More information on the budget and health reform is available at the Health Access WeBlog, at

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