Governor’s Budget: No New Cuts, But Cuts Continue From Crisis

HEALTH ACCESS UPDATE:Thursday, January 9th, 2013



*        Governor’s budget leaves in place health cuts made in the depths of the recession, including cuts to some Medi-Cal benefits and a 10% reduction to some of the lowest Medicaid provider reimbursement rates in the nation.

*        Budget increase to Medi-Cal due to previously-enacted ACA implementation and other policy changes, including on mental health and substance abuse. New adjustments include “forgiveness” of some of the retroactive Medi-Cal rate cuts (while maintaining the cuts going forward), and $17.5 million for pediatric dental outreach and prevention. Budget continues transition of seniors and people with disabilities into managed care.

*         Last year’s budget reallocated dollars from the county safety-net with new formulas; This year’s budget neglects the remaining uninsured that were neglected by those formulas. The budget misses the opportunity to fill the full promise of health reform, and not leave money in DC or Californians without care or coverage.


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This morning, Governor Jerry Brown formally releases his proposal for the 2014-15 state budget, which includes funding for education and health care as the major areas of state focus, and pays off $11 billion in debt and add $1.6 billion to a “rainy day” fund.

The health care budget is a marked departure from the last decade of budget crises where steep cuts were routinely proposed–in fact, over $15 billion in health and human services were cut over the last five years. This year, the health budget is actually increased $670 million, although almost entirely through previously-enacted ACA implementation and other benefit and policy changes. That said, the health and human services budget had few augmentations or restorations, leaving in place the huge cuts made in the worst recession in 75 years, such as on non-dental benefits cuts from Medi-Cal in 2009, and a ongoing 10% Medi-Cal rate reduction into the future, on some of the lowest Medicaid provider rates in the country. Such low Medi-Cal rates lead to reduced access to doctors, specialists, and other providers.

The budget includes some limited increases, including $17.5 million for a pediatric dental outreach prevention program, and “forgiveness” for the past years of unrecouped provider rate cuts (while allowing the Medi-Cal rates to move forward. The budget continues the transition of seniors and people with disabilities into managed care, under the Coordinated Care Initiative. The Governor’s proposal may also signal the end of the Managed Risk Medical Insurance Board, now called MRMIB, as many of its functions are subsumed by the ACA and DHCS.

For many health advocates, the proposed budget was a moment of relief, from past budget crises and awful additional cuts. But health policy analysts also argue it would be financially irresponsible not to revisit and restore more of the cuts made in the depth of the recession, including those that can draw down more federal matching funds, like Medi-Cal does.

The Governor’s budget reallocated money from the county safety-net last year, but proposes nothing to care or cover California’s remaining uninsured this year. As Fresno and perhaps other counties look to reduce care to the uninsured, including the undocumented, its important for the state to help provide solutions for the remaming uninsured. The budget misses the opportunity to invest in prevention and primary care, for a healthier community and lower costs in the long term.

The Governor’s proposal is merely the start of the California Budget process–without a budget crisis forcing cuts, expect budget hearings in March, April and May that will be able to focus on legislative oversight of agencies, as well as policy debates about restorations and new priorities. A “May Revision” of the Governor’s proposal is likely to come mid-May, with a final budget passing mid-June.