President Obama’s Budget Proposal: What It Means for California

Even with a gridlocked, Republican-controlled Congress, federal budget advocacy will be important this year—no matter how busy we are with reform implementation at the state level. Here is Health Access’ quick take on some specific health elements of President Obama’s budget proposal, the first step in the months-long federal budget process.

  • CHIP Re-authorization: The President’s budget includes a 4-year extension of the Child Health Insurance Program (CHIP). There’s been significant turnover in Congress since CHIP’s passage, and that lack of knowledge and ownership by many elected representatives could hurt getting the renewal through. A looming threat in Senate Finance Committee, now chaired by Utah’s senior Senator Orrin Hatch, are the conditions that are contemplated as part of CHIP re-authorization. When CHIP was created in 1997 with broad bipartisan support, the program was pointedly designed to give states broad flexibility in terms of program design (separate or integrated with Medicaid), eligibility, enrollment simplification, and more. California wisely chose to activate most of the available options in order cover as many kids as possible, including lifting the 5-year bar for legal permanent residents’ eligibility for the program (with 28 other states). California recently decided to transition all of its CHIP enrollees (previously called Healthy Families) into Medi-Cal. Finally, the state uses state funds to cover the DACA children and youth eligible for deferred action. California has also taken advantage of many of the simplification options for state CHIP and Medicaid programs for kids (see details). Most of California’s congressional delegation is “gettable” on CHIP re-authorization–but advocates need to make the case–we need ongoing CHIP funding to keep our state budget whole.
  • Upside and downsides to Obama proposals to rein in Medicare spending. First the bad news: the President’s budget introduces co-payments for Medicare home health care services—a policy at odds with a progressive and cost effective ‘aging in place” agenda and one that could shift costs to state Medicaid programs. Now for the good news on issues close to home, like the high cost of specialty medications. In California we are contemplating several solutions to the high cost of new medications—legislation similar to AB1917 (Gordon) of last year and benefit design initiatives to limit specialty drug costs in plans offered through Covered California. President Obama wants to use the federal government’s buying power to negotiate lower prices for Medicare beneficiaries, which would have the effect of lowering copayments for patients. This Congress won’t agree—but it’s nice to see ideas that go to the root cause of high costs on the table.
  • Giving Medicaid cost containment initiatives a chance to work. Given promising results from cost containment initiatives already underway in Medicaid, we were not surprised to see few changes for this category in the President’s Budget.


  • However, if House Budget Committee chairman Rep. Tom Price (R-Ga.) and his colleagues have their way, Medicaid, Medicare, and Social Security would be turned upside down, block granted, or radically reformed in some other regrettable fashion. We’ve heard this before—and glad the President’s budget doesn’t contemplate any “gran bargains” that might go down this path.