Adverse Reaction Proposed Health Budget Cuts Would Lead to Increased Health Insurance Premiums

The health care cuts proposed in the May Revision budget under discussion in the legislature are estimated to deny Medi-Cal health coverage for more than one million Californians when fully implemented. As shown in this analysis, the resulting increase in the number of uninsured could increase the cost shift for California families with employer-based health insurance by 22 percent—in 2009, that would be an additional cost of more than $290 per family. To the extent that the budget passed by the legislature will create more uninsured persons—and the proposed budget currently under consideration certainly looks as if it would—cost shifting will grow. In addition, other cuts to Medi-Cal, including both benefit cuts and significant provider rate cuts, could add to the cost shift, resulting in even further premium increases. The best way to resolve unfair, inequitable and economically inefficient cost shifting is to create a comprehensive, universal system of coverage.