Not a Pleasant Surprise Budget…

HEALTH ACCESS UPDATE
Thursday, January 5th, 2011

GOVERNOR PROPOSES STATE BUDGET
WITH MORE UGLY CUTS TO HEALTH AND HUMAN SERVICES

* $842 Million Cut to Medi-Cal, including cuts to clinics, hospitals, and the shifting of “dual-eligible” seniors & people with disabilities to managed care plans;
* $152 Million Cut to MRMIB, including a 25.7% cut to Healthy Families managed care plans that cover 875,000 children
* Steep cuts to California’s health and human services, even if voters approve revenues in November; Without revenues, it gets worse

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SACRAMENTO– Governor Jerry Brown today announced a 2012-13 California state budget, with $10.3 billion in additional cuts and revenues to address the ongoing deficit.

The majority of the $4.2 billion in proposed cuts are to health and human services, most notably Medi-Cal and CalWORKS. The budget also assumes the passage of a November 2012 intiative to raise revenues–but if voters do not approve those taxes, then another $5.4 billion in cuts to education and public safety would be triggered.

The Governor noted the severity of the proposed cuts in his press conference: “This is not nice stuff…It’s not a pleasant path. It’s not wine and roses. It’s a prickly path.”

The cuts of more than $1 billion in health services range from Medi-Cal to Healthy Families, from clinics to hospitals. Of particular note, the proposal would cut Healthy Families managed care plan rates by 25.7%, impacting access to care for over 875,000 children. The budget shifts 1.4 million vulnerable seniors and people with disabilities into managed care, when advocates have raised issues about access and continuity of care.

These cuts are on top of major health reductions in recent years, from the elimination of dental and other benefits, and cuts to doctors and hospitals directly, all impacting the millions of Californians with Medi-Cal coverage, and the health system on which we all depend. The cuts are poorly timed, in an economic downturn when these safety-net programs are even more in demand; when the local and state economy needs these dollars, and the federal matching dollars than would also be losts with these cuts; and when the state is attempting to get ready to take advantage of the benefits of health reform. Cuts to health and human services impact not just low-income California families, but our economy, and our health system.

The Governor is proposing these cuts for the 2012-13 budget, which is slated to be approved in June, but he is seeking early approval, in March, of some of the cuts. He spent most of his press conference talking about the need for California voters to pass revenues to balance these cuts with revenues, and his plan to place an initiative on the ballot with temporary taxes to prevent further cuts.

The proposed health cuts in the Governor’s budget include:

* SHIFT OF “DUAL-ELIGIBLES” TO MANAGED CARE: This would shift 1.4 million low-income seniors and people with diabilities who get both Medicare and Medi-Cal (so called “dual-eligibles” of “Medi-medis”) into managed care. Advocates have raised issues about patient populations that have already been shifted, and how access and transition problems would impact this particularly vulnerable population. Budget year savings: $678.8 million general fund.

* OTHER MEDI-CAL CUTS: This includes reducing laboratory rates, and no longer paying for certain services of “limited benefit.” Budget year savings: $75 million general fund.

* COMMUNITY CLINIC CUTS: This would change payments to Federally Qualified Health Centers (FQHCs), for a reduction of $27.8 million general fund.

* HOSPITAL CUTS: This includes a one year “redirection” money allocated for public and private hospitals of $42.9 million general fund.

* MEDICAL THERAPY CUTS: This would reduce eligibility in the Medical Therapy Program, for families with incomes above $40,000/year. $91 million general fund.

* CHILDREN’S COVERAGE CUTS TO HEALTHY FAMILIES: The proposal would reduce Healthy Families managed care plans by 25.7 percent (to align with Medi-Cal rates), impacting access to care for the 875,000 children covered by the program. (The budget proposal would also shift children from Healthy Families to Medi-Cal.) Budget year savings: $64.4 million general fund.

* AIDS DRUG ASSISTANCE PROGRAM (ADAP) CUTS: The budget would increase prescription drug cost-sharing, so patients would pay on average from $28 to $385 a month. Net savings projected of $14.5 million general fund.

The Governor proposes to enact these cuts regardless of the result of a November initiative to raise tax revenue. However, the failure of a revenue measure in November would lead to greater pressure to make even additional cuts in all areas, including health care, in the future.

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