Governor’s May Revise Spotlights Medi-Cal Enrollment, But Includes No New HHS Restorations

HEALTH ACCESS UPDATE: Wednesday, May 14th, 2014


* Budget shows success of Medi-Cal expansion and enrollment effort; Medi-Cal enrollment now at 10.5 million, and expected at over 11.5 million Californians by July 2015.

* Governor says $2.4B surplus taken up by new spending already agreed to, including Medi-Cal expansion. Governor endorses new legislative agreement for a “rainy day fund” constitutional amendment to go on November ballot.

* Health advocates argue that high enrollment and demand increases urgency for additional investments, to rectify cuts made in past years, to Medi-Cal and the safety-net.

* Medi-Cal rates: Budget leaves in place health cuts, including a 10% reduction to California’s low Medicaid provider reimbursement rates, making it harder for patients to access doctors and specialists they need.

* Remaining Uninsured: Budget reallocates $725 million from county safety-net and public hospitals. New formula, adopted in last year’s budget, suggests need for statewide solution to remaining uninsured, including undocumented.


Yesterday, Governor Jerry Brown unveiled his May Revision of the State Budget for 2014-15, his spending plan for July 1 2014 through June 30, 2015, by trumpeting the strong and successful effort to cover more Californians in Medi-Cal coverage.

“This is good news for California,” he started, referring to a $2.4 billion more in revenues since the January budget, before indicating how the money would be spent. But the Governor did not propose new investments, restorations, or commitments in health and human services in this budget, but rather pointed to the increased Medi-Cal enrollment as where the added revenues are already going. “We have the money to cover more than a million Californians in our Medi-Cal program, many of whom didn’t have coverage before… I am proud we did it, but we also have to take into account that this thing is growing.”

This is an important but not the final word on the state budget, or whether California builds on the success of Medi-Cal enrollment to invest in our health care system. The release of the May Revise, which takes into account taxes that came in for the April 15 deadline, begins a month of negotiations between the Governor and the Legislature. The Legislature will usually hold additional budget hearings and make its adjustments to this Budget before passing it by June 15th, the constitutional deadline that has been routinely met in the last few years. That presents a window of opportunity for health advocates to make the case for key priorities, from restoring Medi-Cal rates to covering the remaining uninsured.

SUCCESSFUL MEDI-CAL ENROLLMENT: The budget did provide a new opportunity to reveal new projections for Medi-Cal enrollment, for which Governor Brown said “this is a huge social commitment” that would soon cover 30% of the state. The Budget shows Medi-Cal growing from 7.9 million in July 2013, to 10.5 million Californians today, and that enrollment is projected to grow to 11.5 million by June 2015. While this growth includes 750,000 children transitioned from the Healthy Families program and other regular caseload growth, the significant increase is in the expansions under the Affordable Care Act.

Most of those newly enrolled are newly eligible, and thus their costs are 100% federally funded, through 2016, and even in years after the federal government pays no less than 90% of the costs. The only costs are associated with the 815,000 projected to enroll who were previously eligible but not signed up. This is an approximately 300,000 projected increase from the January budget, which estimated 500,000 of these folks whose costs will be split 50% between the state and fereral government. “When you go beat the bushes and say, get health coverage, you attract a lot of people. And we attracted a lot of individuals who were previously eligible, but never signed up,” said Governor Brown. The addition $1.2 billion in Medi-Cal costs include this enrollment increase, as well as other adjustments on caseload, rates, benefits, and even the kind of rebates secured from drug manufacturers.

RESERVING JUDGEMENT: The Governor also highlighted the part of his budget that sought to pay down long-term debts and liabilities, including a shortfall in teacher’s pensions, and in supporting a “rainy day fund.” Many community advocates have argued in the past several weeks that building a reserve should be balanced with programs to meet immediate needs, if not with more revenues outright like an oil extraction tax.

Beyond this year’s budget cycle, the Governor and legislative leaders last week agreed to replace ACA 4 on the November ballot with a revised rainy day fund constitutional amendment for a vote by the public. The proposal that would, in times of non-fiscal emergency, set aside for savings or debt repayment 1.5% of the general fund, and when capital gains revenues rise to more than 8 percent of tax revenues, to capture “spikes.” Health advocates appreciate the need for a rainy day fund to prevent cuts during economic downturn when health and human services programs are needed most, but have been reviewing these proposals closely with concern that such such automatic mechanisms might prevent restorations coming out of a recession, or other opportunities for needed strategic investments in future years.

NO NEW HHS INVESTMENTS: For this coming budget year, despite the focus on the Medi-Cal expansion in the May Revise, the health and human services budget had virtually no augmentations or restorations. In health care, the only exceptions is $1 million in state general fund dollars for a pilot program for mobile vision providers to visit schools to provide eye exams and eyeglasses, and $26 million in federal funds in the AIDS Drug Assistance Program to cover two new Hepatitus C drugs.

MEDI-CAL RATE CUTS CONTINUE: The budget would leave in place many of the health cuts made in the worst recession in 75 years, including an ongoing 10% Medi-Cal rate reduction into the future. The 10% cut is on top of one of the lowest Medicaid provider rates in the country, and such low Medi-Cal rates lead to reduced access to doctors, specialists, and other providers. Health patient and provider organizations have urged the cancelling of this cut, would would cost $282.8 million.

REMAINING UNINSURED: Anticipating reductions in the uninsured and their demand for care, the budget last year put in place new formulas to reallocate money from the county safety-net or public hospitals, clinics, and other providers. Providing the first assessment of how this formula works, this May Revise states that $725 million will be taken from the county safety-net, which raises the need for a statewide solution 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, health and community advocates are seeking that the state to pursue proposals like SB1005(Lara) to cover the remaining uninsured regardless of immigration provide solutions for the remaming uninsured. They argue for budget that further invests in prevention and primary care, for a healthier community and a more efficient and effective health system.

THE PROCESS AHEAD: The Governor’s proposal is merely the start of the California Budget process–the Legislature will need to weigh in. On health issues, many key legislators have expressed interest in restoration of Medi-Cal rates and public health programs like the Black Infant Health Program, and making added investments in the behavorial treatment of autism in Medi-Cal, and in covering the remaining uninsured. The next few weeks will be pivotal, as the budget subcommittees hold frequent hearings and make qiuck decisions into early June. We’ll continue to report on Budget hearings and development on Twitter @healthaccess (using the hashtag #CABudget) and on our blog, at