Summary of the May Revise on Health Care: Movement on Medi-Cal, But Continued Cuts

Tuesday, May 14, 2013



 * California Governor Brown commits to state-based Medicaid expansion with standard benefits under the Affordable Care Act to start on January 1

* Expansion conditioned on a cut of $300 million and eventually $1.3 billion (over 75%) of the funds to serve the 3-4 million remaining uninsured. Cuts would undermine safety-net of public hospitals, community clinics, and Low-Income Health Programs.

* Budget continues Medi-Cal cuts to dental care and to worst-in-nation Medi-Cal provider rates, misses opportunity for targeted restorations to draw down new federal matching funds.

Governor Jerry Brown announced his May Revision of the California State Budget today, declaring for the first time in decades a multi-year balanced budget. In his brief remarks unveiling the proposal, the Governor highlighted the planned investments in education, as promised in the campaign for Proposition 30, as well as the work to implement the Affordable Care Act (ACA).
OVERALL HEALTH SUMMARY: The Governor’s proposal budget makes progress from his previous proposals on the urgent work to expand Medi-Cal under the ACA, but it would also continue steep cuts to Medi-Cal benefits and provider rates, and it seeks to take county health funds that would undermine California’s safety-net of public hospitals, clinics, and county-based low-income health programs.
MEDI-CAL EXPANSION: In his remarks, Governor Brown committed implement the Affordable Care Act and “expand Medi-Cal generously, boldly and prudently,” and to be ready on day one. The budget includes $1.5 billion in federal funds to implement the Medi-Cal expansion (including only $21 million in state funds, largely for administration). Advocates have urged that California needs to move urgently to take full advantage of the benefits of the Affordable Care Act, and this budget makes progress in getting the state to move forward.
While they are still significant differences to work out, the Governor and the Legislature are now moved closer to a resolution to take advantage of this historic opportunity to improve the health system we all rely on. New details for the Governor’s proposal on Medicaid expansion include:
* The commitment to a state-based expansion, rather than the previously-proposed county-based option that was widely seen as unworkable.
* Medi-Cal benefits for the newly-eligible will be the same as those currently eligible, including long-term care, which would be subject to an assets test.
* The Administration proposes to shift pregnant women and recent legal immigrants now in state-funded programs onto private insurance through Covered California, but to provide “wrap around” coverage for all cost-sharing and benefits not federally-funded.
* While the Governor continues to insist on linking Medi-Cal expansion to a state-county realignment, he is no longer seeking an “all-or-nothing” programmatic realignment of responsibilities, but rather a more flexible financial “mechanism” that recognizes actual costs and experience, and the differences between the counties.
CUTTING CARE FOR THE REMAINING UNINSURED: That said, counties, health providers, and consumer advocates argue that the Governor’s proposal takes too much money too soon.
As the federal Affordable Care Act is ready to expand coverage and increase investments in our health system, this state budget would seek to cut $300 million immediately and $1.3 billion in 2016–over 75% of the funds to serve the remaining uninsured through the county health infrastructure built up over years.
Health advocates argue we should not prematurely reduce the resources already set aside to serve the 3-4 million remaining uninsured, and that we need to fulfill the promise of the health reform to all Californians, including those who fall through the cracks.
CONTINUING CUTS TO MEDI-CAL: At the time of transition to health reform when the  health care system will need all the capacity available, this budget would go forward with big cuts for both public and private health care providers, which would make it harder for both the insured and uninsured to get the care they need when they need it.
The Governor continues pending cuts to Medi-Cal provider rates, already some of the lowest in the nation, and which prevents many Californians from getting in to see a doctor or specialist when they need it. The budget continues the denials of key Medi-Cal benefits, including dental benefits to over 3 million low-income Californians.
Cancelling the pending Medi-Cal provider rate cut or restoring dental coverage would bring in one-to-one federal matching dollars for those now in Medi-Cal, but be fully federally funded for those newly-eligible under the Affordable Care Act. By not making smart, targeted investments and restorations, that’s money not coming into our state, not helping families get needed care, not improving our health system, and not advancing our economic recovery.
OTHER HEALTH UPDATES: The Governor’s May Revise budget also makes other adjustments of note:
* The budget includes $71.9 million for increased county administration costs related to implementing the Affordable Care Act and enroll Californians in new coverage.
* The Coordinated Care Initiative, to combine services for seniors and people with disabilities in both Medi-Cal and Medicare, will have an adjusted rollout that starts the demonstration project in January 2014, pushed back from October of this year.
* The budget proposes to revive the Managed Care Organization tax as a sales tax on health plans to help draw down federal funds to support health programs in the budget.
* The budget no longer includes a proposal to cut $135 million from Medi-Cal managed care plans from unspecified efficiencies.
The expectation is that the California Legislature will pass an adjusted budget on time, by June 15. Thus, the next four weeks are crucial for the implementation of the Affordable Care Act, the future of the Medi-Cal program, the state’s commitment to the remaining uninsured, and more. More updates will be forthcoming.
Health Access California promotes quality, affordable health care for all Californians.