Finalizing the Budget, Deciding the Fate of Healthy Families

Wednesday, June 27, 2012



* Budget includes major cuts to California health care providers: hospitals (public, private, & district); nursing homes; health programs; etc.

* Trailer bills pending for floor votes would shift “dual-eligible” seniors/people with disabilities to managed care plans, and shift all Healthy Families children into Medi-Cal;

* ALERT: Over 70 children’s and community groups oppose elimination of Healthy Families, as do key Republican leaders. Calls continue throughout today to legislators.

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Today, Wednesday, June 27, the California Legislature is scheduled to vote on the finishing touches of a revised 2012-13 California budget, to solve a $16 billion deficit. Half of the budget solution to the deficit is $8 billion in additional budget cuts, including over $1 billion in Medi-Cal alone. Nearly $6 billion in tax revenues, making up 35% of the Governor’s budget solutions, would result from a proposed ballot measure pending approval by the voters in November.

The main budget was passage nearly two weeks ago, but budget negotiations between the Governor and legislative leaders continued on the over 20 more “trailer bills” that will be voted on today, which provide policy direction on how to implement the cuts in the main budget bill.

One of the most contentious and last remaining items is the fate of the Healthy Families program, which now covers 880,000 children just above the poverty level. Under trailer bill language in AB1494, Healthy Families would be eliminated, and all the children would be transferred in Medi-Cal. Many children’s and community groups, medical providers, many insurers, Republican legislators, and others, are still working to prevent this program from being eliminated. AB1494 is expected to be one of the tightest votes today, as advocates continue to make calls to legislators.

Another trailer bill is AB1468, to implement the Coordinated Care Iniative, to transfer “dual eligible” seniors and people with diabilities–those eligible for both Medicaid and Medicare–into Medi-Cal managed care. As Senate Budget Chairman Mark Leno said last night, “This fundamentally changes the way we do business,” and how the state delivers care to a vulnerable population. This proposal is slated to save $660 million in the first year.

While the proposals are distinct, in both instances consumer advocates have acknowledged potential benefits but also raised concerns about the transition, timing, and the need for continuty of care, and the capacity of the Medi-Cal managed care plans to provide access to the needed doctors and specialists given low reimbursement rates.

These policy changes are on top of other siginficant health cuts already adopted in this year’s budget, including reductions to hospitals (both public, private, and district hospitals) and nursing homes. As a result of these widespread cuts, the impacts will be felt widely through the state, to anybody who might visit an emergency room or health facility, as well as for children in Healthy Families and, seniors and people with disabilities in Medi-Cal.

The health cuts include:

* DIRECT CUTS TO HEALTH PROVIDERS: HOSPITALS, NURSING HOMES, ETC.: The proposal includes significant additional cuts to health care providers beyond the January budget, including
  * hospital payment cuts to supplemental payments to private hospitals; elimination of of public hospital grants, etc., for $150 million general fund savings;
  * an additional $100 million designated for public hospitals under the federal Medicaid waiver would be taken for state general fund savings;
  * an additional cut to district hospitals (non-designated public hospitals) of $75 million; and
  * nursing homes reimbursement changes for $47.6 million and another for $23.3 million in general fund savings.

* HEALTHY FAMILIES CUTS TO CHILDREN’S COVERAGE: The proposal would reduce Healthy Families managed care plans from 100 per child per month to less than $85 per child per month. The budget proposal would also shift children from Healthy Families to Medi-Cal. Such a switch could mean disruption impacting access to care for the 880,000 children covered by the program. The budget year savings is adjusted to be just $13 million general fund.

* SHIFT OF “DUAL-ELIGIBLES” TO MANAGED CARE: This proposal, as part of a broad “coordinated care initiative,” would shift 1.4 million low-income seniors and people with disabilities who get both Medicare and Medi-Cal (so called “dual-eligibles”) into managed care. Advocates have raised issues about patient populations that have already been shifted, and how access and transition problems with impacts this particularly vulnerable population. The budget year savings is estimated at $663.3. million general fund.

* The Governor revised his proposal to impose cost-sharing on Medi-Cal patients which was adopted by the Legislature last year but rejected by the federal government. A new, more narrow proposal, would seek $15 co-payments on non-emergency ER visits, and $1-3 co-payments on specific prescription drugs, for a $20 million general fund savings. Even in this more narrow form, this change would still require federal approval.
* Other budget proposals continuing from January seek to reduce laboratory rates, and to no longer paying for certain Medi-Cal services, for a $75 million general fund savings.

These cuts from this year would be cumulative, on top of $15 billion in cuts to health and human services already made in recent years, from the elimination of dental and other benefits for millions, and other cuts to doctors, clinics and hospitals directly.

These cuts to health and human services would be enacted regardless of the fate of the November ballot measure on revenues. However, the failure of that measure would trigger additional cuts in education and public safety, and likely other areas as well.

Health Access will continue to put out timely updates in the next several days on our blog, Twitter account, Facebook feed, and E-mail as we learn more about the state budget, the Supreme Court ACA decisions, updates on legislation, and other items.

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