Many, many groups line up against the health cuts…

Friday, May 21st, 2010

* Dozens of organizations testify against cuts, caps, and cost-sharing in Medi-Cal
* Gov proposes limits on drugs (6/month) and doctor visits (10x/year)
* Cuts to Medi-Cal & Healthy Families could impact 8 million Californians

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The Assembly Budget Subcommittee No. 1 on Health and Human Services, chaired by Assemblyman Dave Jones, heard a torrent of testimony in opposition to Governor Arnold Schwarzenegger’s proposal for health care cuts that were part of the May Revision of his 2010-2011 budget.

Raising many concerns, the subcommittee agree to leave many items open, rather than to approve proposals to impose caps and cost-sharing worth over $523 million in cuts to Medi-Cal, and another $14 million in Healthy Families.


In describing the cuts, director Toby Douglas acknowledged the severity of the proposals, saying they “are not what we want to do.” Whlie acknowledging the severity of the $19.1 billion budget deficit, Assemblyman Jones countered there are budget choices to making these cuts, from eliminating “corporate welfare” to raising revenues.

The Medi-Cal “cost containment” package announced with specifics in the May Revise Budget, would:

· Limit care and coverage for 7 million Californians including millions of seniors and people with disabilities and chronic illness, to save $90 million, including:
o Limit doctor/clinic visits to 10/year to save $69 million, with “no exceptions,” as Toby Douglas stated;
o Limit prescription drugs to 6 per month (except for life-saving drugs, although undefined) to save $4 million.
o Eliminate coverage for over-the-counter drugs to save $13 million.
o Establish maximum annual benefit dollar caps on medical supplies (e.g., diabetes management test strips & lancets, wound care, incontinence supplies) and durable medical equipment (e.g., wheelchairs and hearing aids) to save $3.8 million.

· Raise the cost of care for Medi-Cal patients, the vast majority of whom are under the poverty level and have monthly incomes below $1,000, to save $218.8 million. Administration official admitted that these costs “would be higher than in other states,” and that these and other elements would require a federal waiver.” The costs include:
o $100/day for a hospital stay, up to a maximum of $200, to save $59 million.
o $50 copayment for emergency room visits to save $41.5 million.
o $5 copayment for doctor visits and prescriptions to save $118 million.

· Eliminate Medi-Cal coverage for recent legal immigrants to save $118 million, affecting about 90,000 legal immigrants who have resided in the US for less than five years;

· Eliminate the Medi-Cal adult day health care benefit to save $104 million, affecting about 35,000 frail adults;
· Move seniors and people with disabilities from their current doctors into mandatory managed care to save $137 million. This proposal is being discussed as California’s Medicaid waiver (Section 1115) renewal negotiation;
· Eliminate coverage of Medicare Part B premiums for beneficiaries whose income exceeds the Medi-Cal eligibility threshold by less than $500 per month to save $1 million;

· Freeze Medi-Cal rates for hospitals at current levels to save $65 million;
· Reduce Medi-Cal rates for radiology to 80% of the Medicare rate to save $10.5 million;
· Reduce Medi-Cal rates for family planning services;

Republican Assemblyman Emmerson and others raised concerns and asked if there were more equitable ways to get similar savings, rather than hard caps on benefits. A person who needs a more complex wheelchair “isn’t going anywhere” with an annual cap on durable medical equipment of $1604, he said.

The Administration justified some of these caps and cuts as stating they would still meet, in aggregate, the needs of 90% of Medi-Cal enrollees–a standard they believed would be approved by the courts. But in testimony, many testifiers pointed out the problem in such a structure–that those with the highest needs would be impacted the most.

Democratic Assemblyman Chesbro asked the Department if the analysis included the impact of cuts in one area could increasing costs in other areas. He mentioned that a cap on durable wheelchair equipment or a special bed would discourage many hospitals for discharging patients in a timely manner, increasing costly hospital stays. Toby Douglas of the Administration calculated that “those cost shifts are not accounted for,” due to the uncertainty of making that calculation.

Even some Republicans raised specific issues. GOP Assemblymember Nestande, who endorsed many of the elements of the paln and the concept of imposing cost-sharing on Medi-Cal recipients, argued that a $50 emergency room visit was “a little bit high.”

Chairman Jones summed his thoughts more fully: “I think these are terrible proposals. I can’t find a one of them that makes any sense at all to me.” In leaving the item open, as the Assemblymembers wait for more information, he said he “couldn’t imagine a scenario where we can do these things.”


The committee also heard testimony about Healthy Families, which provides coverage for nearly 1 million low-income children, largely between the poverty line and two-and-a-half times the official poverty level. Previous proposals sought to significantly reduce the number of people on Healthy Families.

The federal health reform law of 2010, which seeks to expand care and coverage, includes a “Maintenance of Effort” (MOE) requirement that explicitly prevents states from cutting eligibility or enrollment in programs like Medi-Cal and Healthy Families. (A similar MOE was also included in the economic stimulus package, tied to additional Medicaid dollars.)

The penalty for violating these MOEs is the loss of federal Medicaid matching dollars—in California, over $26 billion. For this reason, the Governor has retracted his earlier proposals to eliminate Healthy Families altogether and roll back Medi-Cal eligibility to reduce the rolls by over 1.5 million people.

Instead, the Governor now seeks to cut both Medi-Cal and Healthy Families by going around these restrictions. The MOE applies only to eligibility and enrollment, not to benefits. So efforts to restrict the eligibility for families at 200-250% needed to be retracted, while the proposal to eliminate vision benefits continues to be on the table.

Advocates testified that they believe that some proposals, such as increasing premiums for Healthy Families, are likely to violate federal health reform, by causing eligible Californians to drop off coverage altogether. The proposals would:

* Increase monthly premiums for families between 200 and 250 percent FPL by $18 per child, an increase of 75%, (with a family maximum of $126). $13.3 million General Fund reduction. An earlier proposal would also increase premiums for children from 150-200% FPL by $14/child. Many believe such premium increases violate federal health reform by changing enrollment procedures.
* Raise emergency room co-payments from $15 to $50 ($2.5 million) and raising hospital inpatient services co-payments of $100 per day with a $200 maximum ($0.7 million), for an overall reduction of $3.2 million General Fund.
* Eliminate vision care for children, including coverage for eyeglasses.

The committee also held open and did not vote on the cuts to Healthy Families.

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