May Revise Released: Tax Extensions Needed

HEALTH ACCESS UPDATE
Monday, May 16, 2011

GOVERNOR RELEASES MAY REVISION OF BUDGET;
TAX EXTENSIONS NEEDED TO PREVENT ADDITIONAL TOUGH CUTS TO HEALTH AND OTHER VITAL SERVICES

* Medi-Cal patients already face caps on doctor visits; increased costs; and reduced access to providers–cuts made in March budget for FY2011-12
* New proposals include continued push to eliminate Adult Day Health Centers; shift of 900,000 Healthy Families kids to Medi-Cal; Elimination of MRMIB, CMAC, other boards;

* If taxes allowed to expire, would force billions of additional cuts to health, education, etc.

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Earlier today, Governor Jerry Brown released his May revision of his 2011-12 state budget proposal, which made additional changes to his January proposal to make steep budget reductions ($12 billion of budget cuts including $6 billion of cuts to health and human services already made in March), balanced with new revenues (largely extensions of current tax rates, still being debated).

The May proposal accounts for $6.6 billion in increased collected revenues above projections, which allowed him to scale back certain tax hike and education cut proposals and to pay off some state debt. Yet in his budget announcement, he said he didn’t want people thinking “we’re out of the woods”–“untrue!” The surge in revenues, according to the budget, is not enough to close the gap.

He cited an ongoing $10 billion structural deficit that needs to be addressed through either new revenues or additional cuts. In addition to the steep cuts made in March, the Governor seeks to close the deficit by raising revenues–by preventing current tax rates from expiring.

On health care, the budget does make some additional proposals beyond the severe cuts made in March, which , included caps on Medi-Cal doctor visits, significantly increased premiums and co-payments for low-income families, and drastic cuts to Medi-Cal providers.

For example, the Governor is maintaining his proposal to eliminate adult day health centers (ADHCs), even though when the Legislature did vote to eliminate them, it had also passed a proposal to re-establish the centers with half the funding.

The Governor also put forward a new proposal to eliminate various boards and agencies, including the Managed Risk Medical Insurance Board (MRMIB), California Medical Assistance Commission (CMAC), California Health Policy and Data Advisory Commission (CHPDAC), Public Health Advisory Committee (PHAC), and several others.

In particular, the abolition of MRMIB to move many its various programs–like Access for Infants and Mothers (AIM) and the high risk pools Major Risk Medical Insurance Program (MRMIP) and Pre-existing Condition Insurance Program (PCIP)–to the Department of Health Care Services (DHCS).

The 900,000 children who get coverage through the Healthy Families program, California’s State Child Health Insurance Program (SCHIP), would be shifted to Medi-Cal. Administration officials indicate that their proposal would be to at least maintain children’s eligibility and enrollment, coverage benefits, and cost-sharing level; the savings would come because Medi-Cal generally covers children at a lower cost, although concerns would need to be addressed about access to providers, physicians, and specialists under lower rates. One of strongest concerns was raised by MRMIB itself, which is an independent board.

The biggest cuts are those that are not listed–those cuts that would be forced if new revenues are not approved. Those revenues would require a 2/3 vote of the Legislature, including 4 Republican votes even if every Democrat voted for them. Otherwise, allowing revenues to expire on June 30th blows a new, big budget hole of billions of dollars, causing much steeper cuts in health, education, and other vital services.

While some statewide officials, included Treasurer Bill Lockyer, have called for what an “all-cuts” budget would look like, the Governor said he didn’t “want to give Republicans a roadmap to ruin.”

The budget Governor Brown did propose for fiscal year 2011-12, with the tax extensions, includes the following health items:

MEDI-CAL CUTS MADE IN MARCH FOR FY2011-12:
· Limit access to doctor visits for 7.7 million Californians including millions of low-income families, seniors, and people with disabilities and chronic illness, including:
o Limit doctor/clinic visits to 7/year, unless certified as meeting specific criteria by a physician

· Raise the cost of care for Medi-Cal patients, the vast majority of whom are under the poverty level and have monthly incomes below $1,000, including:
o $100/day for a hospital stay, up to a maximum of $200.
o $50 copayment for emergency room visits.
o $5 copayment for doctor, clinic, dental, and pharmacy visits and prescriptions.

· Eliminate coverage for over-the-counter drugs.

· Reduce Medi-Cal provider rates by 10%, despite California having one of the lowest Medicaid provider rates in the country, and that half of doctors already don’t take Medi-Cal coverage.

· Eliminate Medi-Cal adult day health care, impacting 27,000 patients and 330 centers statewide–although replacing it with a scaled down program with half the funding.

HEALTHY FAMILIES CUTS MADE IN MARCH FOR FY2011-12

* Increase monthly premiums for families between 200 and 250 percent FPL by $18 per child, an increase of 75%, (with a family maximum of $126); and for families between 150-200% FPL by $14/child by nearly 100%.
* Raise emergency room co-payments from $15 to $50 and raising hospital inpatient services co-payments of $100 per day with a $200 maximum ($0.7 million).

NEW SELECTED MAY REVISE PROPOSALS FOR FY2011-12

* Shift 900,000 children from Healthy Families to Medi-Cal, which covers children for less money. The Governor’s proposal seems to maintain eligibility, benefits, and cost-sharing, but questions remain on access to providers.

* Eliminate Adult Day Health Centers (ADHCs), budgeting only $25 million for transition costs. (The state Legislature booked ADHC elimination in March, but budgeted $85 million for a replacement program.)

* Eliminate various boards, including Managed Risk Medical Insurance Board (MRMIB), California Medical Assistance Commission (CMAC), California Health Policy and Data Advisory Commission (CHPDAC), and several others. MRMIB programs–Healthy Families, Access to Infants and Mothers, two “high-risk pools” would shift to be under the Department of Health Care Services.

As always, more information is available on our website at www.health-access.org. We also live-tweet and post breaking news (like today’s announcement of the May Revise) on our Twitter feed, at www.twitter.com/healthaccess.

Health Access California promotes quality, affordable health care for all Californians.
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