Unfathomable cuts…

Thursday, May 14th, 2009


* Governor To Ask Federal Government for Permission for a $750 Million Medi-Cal Cut
* Cuts Would Harm Health System & Economy; Hundreds of Millions in Lost Federal Funds
* Governor Rejects Proposing Long-Term Revenues Needed to Prevent Devastating Cuts

More Updates on the NEWLY REDESIGNED Health Access Blog: More on the Bad Budget Day; Major Developments on Federal Health Reform; The Purple Bus Lady Rolls Through California; Coverage When It Counts; How to Finance Health Reform; President Obama’s Health Reform Week; U.S. Senate Assignments; Lots of Links on Health Reform; A Saturday Morning in San Diego with Rep. Susan Davis; Taming “The Beast”; More on Spending Caps Across the Country

Today, Governor Arnold Schwarzenegger announced several proposal cuts to fill a $15.4-21.3 billion deficit in the 2009-10 budget year. The economic crisis has caused the budget agreed to by the Governor and legislative leaders to fall out of balance.

The Governor’s “2009-10 May Revision General Fund Proposals,” available at the Department of Finance website at http://www.dof.ca.gov/, includes a package of largely cuts to fill a $15.4 billion shortfall, and then additional “contingency proposals” if Propositions 1C (and to a lesser extent, 1D & 1E) fail on the May 19th ballot next week.

“To look for new revenues is out of the question,” said the Governor at his press conference. His package includes cuts, borrowing, selling state-owned properties, eliminating some state agencies and boards, accelerating revenues, shifting funds and laying off 5,000 state employees.

SPECIFIC HEALTH CUTS: There are nearly $2 billion in additional cuts to health and human services. If Propositions 1C (as well as 1D and 1E) are rejected, there is an additional $600 million cuts in health and human services.

* The biggest health cut is a $750 million cut to Medi-Cal, contigent on negotiating a waiver from the federal government. The Schwarzenegger Administration wants to revisit rollbacks in eligibility that are now restricted by the federal government in order for California to accept billions in federal stimulus dollars. Those rollbacks were not explicitly specified in the Governor’s summary, but have included in the past:
* the denial of Medi-Cal coverage to hundreds of thousands low-income parents under the poverty level (a range from around $13-$18,000/year for a family of three); and
* the imposition of quarterly status reports on children, with the savings coming from over 250,000 children dropping coverage as a result.
* Since these previous proposals do not add up to $750 million in savings, even after full implementation over several years, other cuts and savings would have to be found as well to meet this goal.

* Other specific health cuts include:
* $132.2 million in reduced health benefits to those in CALPERS;
* $125 million in reducing health services for legal immigrants;
* $36.8 million by cutting rates for family planning services;
* $20 million by cutting payments to private hospitals, a 10% cut in general support; and
* $2.7 million by eliminating certified application assisters that help children & families enroll in coverage

In Medi-Cal, there is also a new prescription drug purchasing effort to save $75 million, and a new anti-fraud initiative targeted at adult day health centers, pharmacy, doctors, durable medical equipment, and transportation, with the goal of saving $47.9 million.

There are other human services cuts as well, to IHSS home care, SSI/SSP for seniors, CALWORKS for low-income families, and also includes the elimination of CAPI and CFAP for legal immigrants.

* If Proposition 1C fails, the projected budget deficit grows by $5 billion. If Proposition 1D & 1E fail, the deficit grows by nearly $1 billion. In those circumstances, the Governor’s “contingency budget” includes:
* $54.4 million in eliminating Healthy Families coverage for over 225,000 children (who are betweeen 2005-250% of the federal poverty level, or between $36,000-$45,000 for a family of three)
* $60 million out of Proposition 99 funded-programs, redirecting money from county health funds, clinics, the Breast Cancer Early Detection, Asthma, rural health, the Access for Infants and Mothers program which provides prenatal care, and the Major Risk Medical Insurance Program, which provides coverage for those denied for “pre-existing conditions.”
* $25.5 million in reducing adult day health care benefits to three days a week;
* $24.6 million to local health jurisdictions of HIV education and prevention;
* $10 million cut in maternal, child and adolescent health grants;
* $8.8 million through a 10% rate reduction for certain substance abuse treatment services in Medi-Cal; and
* $2.9 million in suspending a comprehensive school-based prevention program on dental disease.

THE POLITICS OF THE PROPOSITIONS: The Governor used his press announcement to argue for the package of proposition on the May 19th ballot next week. His document says the budget depends on the passage of 1A, 1B, 1C, 1D, and 1E, even though Propositions 1A and 1B do not have an impact on this or next year’s budget. Proposition 1C, which would provide a cash advance from lottery proceeds, is the ballot measure that would make the major difference.

Some health advocates, including Health Access California, argue that Prop 1A, even though it would bring in revenues in 2011-12, includes a constitutional spending cap that would make it harder to ever restore these cuts, even when the economy improves and the state has more revenue.

Regardless of what happens with the fate of the propositions, there is an ugly budget with awful choices on cuts and/or taxes this year, and there continues to be a long-term mismatch between the revenues the state brings in, and the education, health and other vital services that Californians expect and deserve.

The work of consumer and health advocates is to continue to demonstrate the impact of these proposed cuts, not just to directly impacted Californians who will lose their coverage or care, but to the health system and economy as a whole, and all Californians as a result.

More commentary will be available on the newly-redesigned Health Access website at http://www.health-access.org/, and our blog, at http://blog.health-access.org/.

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

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