Full #CABudget Analysis and Update

HEALTH ACCESS UPDATE: Friday, January 9, 2015

*        2015-16 budget allows for higher enrollment in Medi-Cal to 12.2 million Californians, a $94.6 billion overall program including federal dollars ($18.6 billion in state general fund dollars).

        Governor Brown’s budget continues the health and human services cuts made in the depths of the recession, with no significant restorations to public health programs, Medi-Cal health benefits, or Medicaid provider reimbursement rates.

*         Budget includes policy changes to: impose an open enrollment period to change Medi-Cal managed care plans; enroll those in limited-benefit health programs in comprehensive coverage; broaden the managed care plan (MCO) tax to help fund a restoration of a previous cut to in-home supportive services; renew California’s Medicaid waiver; and review the Coordinated Care Initiative.

*        The budget proposal does not change current and longstanding California policy that those newly eligible are covered under President Obama’s order to extend “deferred action” immigration status, but it isn’t officially in the budget–nor are other efforts to finish the job and cover the remaining uninsured.

        Issues not included but that will be explored in budget hearings or through bills, including  proposals to cover California’s remaining uninsured regardless of immigration status (SB4 by Sen. Lara), and to limit Medi-Cal estate recovery (SB33 by Sen. Hernandez), which discourages patients from enrollment and potentially risking losing the family home. 


Earlier today, Governor Jerry Brown released his proposed budget for the 2015-16 fiscal year. His $113.3 billion budget (state general fund dollars), reflects a 1.7% increase from the current budget, and includes $47.2 billion for elementary and secondary education, $14.1 billion in higher education, $24.1 billion in health, $7.8 billion in human services, and $10.2 billion in corrections.

The Governor’s budget continues California’s current commitments on health care and health reform, but also continues the cuts to public health programs and Medi-Cal rates and benefits made during the recession, and doesn’t make the investments needed to reduce barriers to coverage, increase access for Medi-Cal patients, or cover the remaining uninsured.

DISCUSSION ON POVERTY: Governor Brown called for “self discipline and real prudence” with the budget, and that it wasn’t time for “exuberant overkill.” Prompted in part by advocates from the HHS Network, including Health Access California and other allies around the state, arguing that a state budget shouldn’t just pay down the wall of debt but also break down the wall of poverty, many of the questions at the Governor’s press conference addressed the issue of income inequality. Perhaps in anticipation, a section of the budget summary was titled “Addressing Poverty and Income Inequality.” In response to questions, Governor Brown referenced presidential efforts including Roosevelt’s “forgotten Americans” and Johnson’s War on Poverty, the book The Other America, and the Kerner Commission report. “This is part of America, the structure of modern individualism, capitalism, stratification,” said the Governor.  “It’s there. California does more than most states to mitigate that.” He referenced that the problems are “part local, part global,” and noted the challenges of addressing the issue even by state or national policies. “These are all issues that have been around for a long time, and I think we are doing a good job in California. Comparatively, we are doing more than other states, and we will continue to do as much as we can,” Brown added.

He cited his mayoralty in Oakland, and his time in Calcutta, India: “I’ve been in contact with low-income people of many persuasions… I think I do have a sensitivity of people’s difficulties in life.” said Brown. “Just in two years, we added two million people to health care, and now it’s “now what’s next?” He continually cited the Medi-Cal expansion, alongside the school Local Control Funding Formula, and other state efforts to address poverty.

On health care and Medi-Cal specifically, the Governor made reference to the Medi-Cal expansion: “That’s a 50% increase. That’s 4 million people. That’s real money going to real people. Theses are people who are not rich. They are not middle class. They are low-income people. Having this health security is a comfort, is decent, and is going to improve the quality of their lives. One of the biggest causes of bankruptcy are medical bills. So when we spend all this money, and it’s billions–when you add up what the federal, state and local governments pay, it’s over $90 billion.”

MEDI-CAL: The Governor’s budget continues health reform and the Medi-Cal expansion, with no major restorations. The Budget assumes the Medi-Cal caseload will increase approximately 2.1 percent from 2014‑15 to 2015‑16 (from 11.9 million to 12.2 million), after the big jump in the previous year largely because of the continued implementation of federal health care reform. The Governor’s Medi-Cal 2015-16 budget reflects a $94.6 billion overall program, mostly federally funded with just $18.6 billion contributed from the state general fund.

With regard to the Medi-Cal expansion, $14.3 billion would come from the federal government to pay for 100% of the newly eligible under the Affordable Care Act. In contrast, just under $1 billion ($943.2 million) is the state costs of paying for those previously eligible but newly enrolled–which in turn is matched by additional federal dollars.

IMMIGRANT HEALTH CARE: The budget does not make any eligibility changes to Medi-Cal, including to California’s longstanding history in covering immigrant populations in Medi-Cal otherwise excluded from federal programs. The budget references the President’s recent executive order on immigration, citing that “these individuals may be recognized as having Permanent Residence Under Color of Law statdue to their deferred action status…This status potentially qualifies individuals for state-funded full-scope Medi-Cal… At this time there is a great deal of uncertainty about the scope, timeing and effect of these actions. Consequently, the budget does not assuem any higher costs from these individuals, but covering eligible immigrants under these programs could cost hundreds of millions of dollars annually.” So the expectation is that Californians impacted by the President’ action who meet the income requirements will be covered, but more work is needed to fnish the job to cover those that the President’s executive authority couldn’t assist.

When asked directly about the #Health4All proposal to cover all of the remaining uninsured, including the undocumented, the Governor didn’t reject it outright but simply said “There’s not a lot of money left in the budget. It’s very tight.” This proposal, SB4 (Lara), will be a major emphasis for health, immigrant and community advocates this yaer.

THE CONTINUED CUTS: This budget leaves in place cuts made during the recession, including one that the Legislature sought to restore in last year’s budget. This includes:

* Key public health programs (last year, the final budget restored the Black Infant Health Program but not a dozen other programs that both prevention and treatment efforts);

* Medi-Cal benefits that were cut in 2009 (two years ago, dental coverage was partially restored but other benefits from podiatry to psychology to audiology to vision services remain largely uncovered for adults on Medi-Cal);

* Medi-Cal provider rates–rates that are among the lowest in the nation and that make access to doctors, specialists and other providers harder for some of the 12 million Californians with Medi-Cal coverage. (The 2011 budget cut provider rates by 10%. The Governor’s budget does include $130 million to fund for exemptions to provider rate cuts that were approved last year, for high-cost drugs, certain speciality physician services, and other particular services.)

Advocates argue that restoring and investing in Medi-Cal, as the Legislature proposed last year, would improve access to care, and bring in enhanced federal matching funds into our health system and economy.

KEY HEALTH POLICY DECISIONS INCLUDED: The budget does include some specific budget-related adjustments based on policy decisions made last year to reflect the county administration workload in enrolling new Medi-Cal recipients ($78 million), and in including behavioral health treatment for autism ($151 million). The budget also proposes policy changes like:

* Requiring those in limited benefit programs to seek enrollment in full coverage programs–a goal consumer advocates support, with the caveat that those programs should continue for folks not eligible for comprehensive coverage or they should include wrap around services when such comprehensive coverage doesn’t provide those services.

* Imposing an open enrollment in Medi-Cal, which would restrict access and limit choice for those eligible for Medi-Cal.

* Revamping/broadening the managed care organization tax that currently funds Medi-Cal to meet federal guidelines and support a restoration for in-home supportive services.

* Seeking ways to improve participation in the Coordinated Care Initiative for those seniors and people with disabilities in both Medi-Cal and Medicare.

* Pursuing a renewed five-year Medicaid waiver to “support ACA implementation, drive significant delivery system transformation, and provide long-term fiscal stability of the Medi-Cal program.” There are multiple workgroups currently meeting to craft this proposal to the federal government.

ISSUES NOT INCLUDED: There were key health budget policy issues raised by the Legislature last year that were not addressed by this budget, from the budget restorations for provider rates to the effort to cover the remaining uninsured, this year reflected in Senator Lara’s SB4.

The budget also does not remove the current estate recovery policy that discourages patients from signing up for Medi-Cal coverage. Last year, the Governor vetoed a bill to limit Medi-Cal estate recovery, arguing the policy change should be done in the budget instead. Advocates will vigorously pursue this change, including this year in Senator Hernandez’ SB33, so some Californians don’t fear that their loved ones lose the family home as a result of signing up for coverage.