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Big Week for the Budget

The Capitol is all abuzz with the budget these days. Governor Brown’s proposal, announced in early January, aims to close the $25.4 billion two-year deficit through a mix of cuts (mostly to social service, education, and health programs), additional revenues (generated by extending several existing tax policies), and a change to Realignment (transferring responsibility for administering and paying for several types of services to counties). His plan is to get the tax measures to qualify for the June 2011 ballot as they require voter approval; to do so, the legislature is on a fast-paced schedule.

Hearings in the legislature’s various budget subcommittees have been held in both houses over the past three weeks. All subcommittees “left open” (i.e. did not vote on) most of the Governor’s proposed healthcare cuts. It is hard to predict where members will ultimately vote on any issue, but it appears that the legislature is not willing to simply adopt all of the Governor’s proposals. Where there will undoubtedly be cuts — including some to health programs — but there may be alternatives proposed by the legislature in the next couple weeks.

As a reminder, here are the Governor’s proposed Medi-Cal program cuts:

  • 10 physician and clinic visits maximum
  • 6 prescription drugs per month maximum
  • $5 co-payments for doctor visits and prescription drugs
  • $50 emergency room and $100-$200 hospital stay co-payments

And the Gov’s proposed Healthy Families Program cuts:

  • Elimination of the vision benefit for all beneficiaries
  • Premium increases for many families
  • New $50 emergency room and $100-$200 hospital stay co-payments

This Week

The full budget committees for each house meet this week: Assembly on Wednesday, Senate on Thursday. It is not yet known if the health proposals will be voted upon in full committee or in conference committee — the group of members from both houses that will gather as part of the next stage in the process to make many of the final budget decisions.

Analysis

The state is in a challenging, somewhat paradoxical, position at the moment. To help balance the budget, the Governor and legislature will need to make tough choices, and cuts to Medi-Cal and Healthy Families are on the table.

At the same time, California is leading the charge on health reform implementation; starting January 1, 2014, more than 2 million will be newly eligible for Medi-Cal and more than 3.2 million Californians will be eligible for premium subsidies in the Health Benefits Exchange. What’s more, today is the deadline for 57 counties and/or other entities to submit their applications for billions in federal aid to cover their medically indigent adult population through the newly-approved 1115 Waiver’s Low Income Health Program.

This dichotomy — cutting benefits while simultaneously preparing for major coverage expansions — poses a challenge to lawmakers, stakeholders, and advocates alike. In the end, whichever way the budget is ultimately resolved, the fundamentals of our programs and structures must remain intact in order to have solid foundations on which health reform can rest.

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