Update: California Legislature Passes Budget–Continues ACA Implementation, But Also Recession-Era Cuts


Monday, June 16, 2014


*        Budget continues implementation of the Affordable Care Act and Medi-Cal expansion and enrollment, extends full-scope Medi-Cal coverage to pregnant women, and restores Black Infant Health Program and HIV Prevention Programs, but also neglects key investments, leaves in place cuts made in past years, to Medi-Cal rates and benefits, public health programs and the safety-net.

*        Budget deal leaves in place health cuts made in the depths of the recession, including a 10% reduction to some of the lowest Medicaid provider reimbursement rates in the nation, making it harder for patients to access doctors and specialists they need. Other cuts remain to Medi-Cal benefits, and to public health programs that invest in prevention, children’s health, school health centers, and other areas. The budget also reallocates $725 million from county safety-net and public hospitals, limiting services to the remaining uninsured.

        Most inexplicably, the budget also rejects foundation money offered to help enroll/renew people in Medi-Cal, denying California federal matching funds for this purpose that would have been provided without any state cost. 

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Yesterday evening, the California Legislature passed a California state budget for 2014-15. It includes a health budget and trailer bill that continues the state’s implementation of the Affordable Care Act, including budgeting for high Medi-Cal enrollment, and extends full-scope Medi-Cal coverage to pregnant women. At the same time, the budget continues many of the recent cuts made to Medi-Cal rates and benefits, public health programs, and the safety-net for the remaining uninsured.

While most of the legislative discussion on the health care items was about the lack of restoration of recession-era cuts that were made to Medi-Cal rates and other public health programs, benefits, and services, the California Budget did have some notable changes in health policy. The Budget:


* provides a high level of enrollment in the Medi-Cal expansion as part of the implementation of the Affordable Care Act;

* expands full-scope Medi-Cal for pregnant women, by increasing Medi-Cal eligibility to 138 percent of the federal poverty level (FPL) for pregnant women, and establishes a “wrap program” for women between 139 and 213 percent FPL so they can have Medi-Cal pay their premiums & co-pays, and cover services not covered by their Covered California plan–a more detailed description of this victory is on the Health Access blog;

* requires Medi-Cal coverage of behavioral health treatment for children with autism if required by the federal government, with a stakeholder process for implementation;


* restores $4 million for the Black Infant Health Program and $3 million for new HIV prevention projects;

* establishes a 3-year mobile vision services pilot program for children in schools in Los Angeles with $1 million;

* adds the new Hepatitis C drugs to the ADAP formulary ($26 million for the Office of AIDS) and covers out-of-pocket costs of other AIDS patients with coverage.

* establishes a State Dental Director and a statewide dental health program;


* reforms the Office of Patient Advocate, including to improve systems to collect data on health complaints and how they are resolved;

* approves trailer bill language that establishes a new payment structure for the Martin Luther King, Jr. Community Hospital to allow it to reopen in 2015.

* ensures an agricultural workers health plan covers catatrophic care, wtih $3.2 million;

* includes a rate increase for PACE programs, starting in April 1, 2015, with $1..8 millions

* includes approximately $20 million and 86 positions for a variety of programs and purposes, including the following: healthcare reform, new county budgeting methodology, Coordinated Care Initiative, mental health wellness, MEDS modernization, ground emergency medical transportation, Breast & Cervical Cancer Program, and Drug Medi-Cal provider re-certifications.

* eliminates the Managed Risk Medical Insurance Board, and transfer to the Department of Health Services any remaining MRMIB programs, including the Major Risk Medical Insurance Program, which will hold stakeholder processes on getting its enrollees covered elsewhere.


The most discussion yesterday was on what was not included in the budget, most notably any restoration of Medi-Cal rates. In both Senate Budget Committee in the afternoon and the floor debates in the evening (which were livetweeted on the @HealthAccess Twitter account), legislators from both the Assembly and Senate, both Democrat and Republican, decried that California has one of the lowest Medi-Cal provider rates in the nation.

Senate Budget Chair Mark Leno made the point that the difference was with the Administration, and in order to make headway legislators need to bring specific issues and problems to the Department of Health Care Services for them to see and rectify. When the Administration argued that most Medi-Cal recipients were in Medi-Cal managed care, and thus not impacted by the fee-for-service rates, Senator Holly Mitchell responded stating that “those in fee-for-service include some of our most vulnerable,” and that we also needed to examine the Medi-Cal provider capacity in managed care: “When we talk about Medi-Cal, we are talking about lives.”

Other items not included in the final budget–even though some were proposed in Assembly or Senate versions of the budget–included:

* restoration of key Medi-Cal benefits cut in 2009, including acupuncture, audiology, chiropractic, incontinence creams and washes, optician and optical labs, podiatry, and speech therapy ($13 million total);

* restoration and funding for various public health programs including the Early Mental Health Initiative, Drug Overdose Grant Program, School-Based Health Centers, Public Health Laboratory Training Program, Dental Disease Prevention Program, Asthma Public Health Initiative, Syringe Access Programs, and other initiatives on Adolescent Family Life, STD Prevention, Teen Pregnancy, Injury Control, and the Office of AIDS (each $1-$15 million);

* consideration of coverage or care for the remaining uninsured including the undocumented, given that the budget, under a formula adopted in last year’s budget, reallocates $725 million from the county safety-net that serves this population, limiting their ability to serve the remaining uninsured.

The most inexplicable health budget item was the rejection of money offered by the California Endowment to assist Medi-Cal enrollment and renewals. Both houses of the legislature agreed to accept the money earlier this year, as they did with a similar offer last year. But in the final budget this year, the Administration is refusing these free foundation dollars, offered at no cost to the state, denying California the federal matching funds that are available for this purpose.

The Legislature passed the Budget Sunday evening, meeting the constitutional deadline to pass a final Budget by June 15th; the Governor has until the end of June to sign the measure (with whatever “blue pencil” line-item vetoes he decide that are within his discretion), so the spending plan is in place when the new budget year begins on July 1.