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Conference Committee Irons Out Budget Items

Over the past week, the bicameral Conference Committee has met to resolve the differences in the budget packages passed by the Senate and Assembly two weeks ago.

To resolve California’s $25.4 billion General Fund shortfall, the Conference Committee’s budget closely parallels Governor Brown’s original plan. The Committee adopted $12.5 billion in cuts, created a $1.1 billion reserve, and proposed a Public Safety Realignment constitutional amendment and extensions to 2009 tax increases to income, sales and vehicles for the June 2011 ballot in order to generate $12 billion in revenue.

Cuts to Health

Here is a summary of the Committee’s agree-upon cuts to the Medi-Cal program:

  • Mandatory Co-pays. Saves $557.2 million by requiring Medi-Cal beneficiaries to pay the following co-payments: $5 for every physician or clinic visit, $3 (generics) or $5 per prescription, $50 for emergency room visits and $100 per day (with a maximum of $200 per admission) for inpatient services, and $5 for every dental visit.
  • Rate Reductions. Saves $729.6 million by reducing rates paid to Medi-Cal providers and skilled nursing facilities by 10%.
  • Utilization Controls. Saves $62 million by eliminating Medi-Cal coverage of over-the-counter cough and cold products, imposing a “soft cap” of 7 visits to physicians and clinics, and imposing an annual dollar maximum on hearing aids of $1,510 per year.
  • Adult Day Health Care. Saves $90 million by eliminating ADHC as a Medi-Cal optional benefit and expresses the Legislature’s intent to pursue additional legislation to create a more narrowly-defined ADHC benefit under a new federal waiver. Provides $170 million to fund this new benefit.
  • Medi-Cal Managed Care Tax. Secures on-going revenue by making permanent (with a 3-year sunset) the tax on Medi-Cal managed care organizations.

Here is a summary of the Committee’s agree-upon cuts to the Healthy Families Program:

  • Premiums. Saves $22 million by increasing monthly premiums paid by families enrolled in the program.
  • Co-pays. Saves $5.5 million by increasing co-payments paid by families for hospital services, consistent with hospital co-pays in Medi-Cal.
  • Vision Coverage. Saves $3 million to cut back on vision coverage, without eliminating the benefit.

For more on the entire budget package, please read the Conference Committee’s preliminary report.

What’s Next

Governor Brown has asked the legislature to vote on a complete package by next Thursday, March 10th. It appears that the Senate and Assembly will meet this deadline; floor votes are expected next Wednesday, March 9th.

As you probably know, passage of the state budget and legislative approval for tax measures to appear on a ballot requires a 2/3 majority vote by both houses of the California legislature. And to get to two-thirds, these packages will require bi-partisan support. From what we’re hearing in Sacramento, it appears there just may be enough Republicans willing to support this proposal to reach the requisite two-thirds to send the budget to the Governor.

That said, the vote is still 5 days away. We’ll see what happens next week…