While the health care news in the Governor’s State of the State was the calling of a special session to implement health reform, there are other parts of the speech that were relevant. In particular, much of the beginning of the speech was focused on the need for fiscal discipline.
But, of course, governing never ends. We have promises to keep. And the most important is the one we made to the voters if Proposition 30 passed: that we would guard jealously the money temporarily made available.
This means living within our means and not spending what we don’t have. Fiscal discipline is not the enemy of our good intentions but the basis for realizing them. It is cruel to lead people on by expanding good programs, only to cut them back when the funding disappears. That is not progress; it is not even progressive. It is illusion. That stop and go, boom and bust, serves no one. We are not going back there.
The budget is balanced but great risks and uncertainties lie ahead. The federal government, the courts or changes in the economy all could cost us billions and drive a hole in the budget. The ultimate costs of expanding our health care system under the Affordable Care Act are unknown. Ignoring such known unknowns would be folly, just as it would be to not pay down our wall of debt. That is how we plunged into a decade of deficits.
Recall the story of Genesis and Pharaoh’s dream of seven cows, fatfleshed and well favored, which came out of the river, followed by seven other cows leanfleshed and ill favored. Then the lean cows ate up the fat cows. The Pharaoh could not interpret his dream until Joseph explained to him that the seven fat cows were seven years of great plenty and the seven lean cows were seven years of famine that would immediately follow. The Pharaoh took the advice of Joseph and stored up great quantities of grain during the years of plenty. When famine came, Egypt was ready.
The people have given us seven years of extra taxes. Let us follow the wisdom of Joseph, pay down our debts and store up reserves against the leaner times that will surely come.
Thanks to Governor Brown and the California voters, this is first budget in a long time without multi-billion dollar cuts to health, education, and other vital services. That;s no small achievement, and the Governor was right to highlight it.
While fiscal discipline is important, it also needs to be balanced with the effort to make sure the basic needs of Californians are met. This is not a time of plenty; Joseph would not consider this a year of the fat cow. Our economy is still struggling, with a too-high unemployment rate. California needs a budget that provides help to California families, and to our economic recovery. Despite the Governor’s statement, there is an argument for reinvestments even if they are short term, both to provide much-needed assistance at a time of need, but also to boost the economy that still needs help.
As today’s San Francisco Chronicle reports, health and human services has taken $15 billion of cuts in previous years, and California families and our economy need help now. In just the past few budgets on health care, California has lowered provider payments in Medi-Cal to some of the lowest rates in the nation, eliminated benefits like dental coverage for three million adults in Medi-Cal, and shut down whole programs like Healthy Families and Adult Day Health Care. While some of these changes will be permanent, small strategic investments and restorations could yield major improvements in our health system, and could bring in additional federal matching funds into our budget and economy. Fiscal prudence also means taking advantage of funding opportunities, and not leaving dollars in DC.
The Governor wildly overstates the costs and risks of the Affordable Care Act. A recent University of California study that estimates the “minimal state costs” for expanding health care under the Affordable Care Act: http://laborcenter.berkeley.edu/healthcare/medi-cal_expansion.shtml.
Given how the ACA is structured, there are fewer unknowns and fewer risks that many other items in state government, including the rail and water projects that the Governor is championing. Given that the expansions of coverage will be covered by the federal government by 90-100%, it’s not a burden but likely the biggest bargain in government these days.
With such favorable terms in the ACA, the real concern should be the opportunity cost of inaction, or delayed action. With relatively small investments, we can get significant matching funds to make big improvements in our health system. California should seek not just an expanded Medi-Cal but an improved one, one that dramatically improves the health system we all rely on. While these investments have always made sense, given the federal matching dollars, there is more incentive now, as the newly eligible are 100% federally funded for the next three years—and with no less than a 9:1 match in 2020 and beyond. California can and should make key decisions in the next few months to maximize the benefit:
The debate over restorations vs. fiscal discipline misses the point. We need to make improvements so we need to make health reform work as successful as possible, to make changes that are not just incremental but transformational.
In his learned speech, the Governor cited the history of California’s innovation and risk-taking, and implementing health reform provides great benefit for minimal risk.California can use this opportunity to build a health system for the future, making this as transformational a moment for our state as the railroad or university system.