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On Budget, Many Cuts & Little Compromise

Over the past week, the California legislature has passed and Governor Brown has signed 13 budget bills that include more than $11 billion in cuts aimed at helping to fill the state’s $26.6 billion shortfall. The Governor’s original plan was to pass these reductions along with $12 billion in tax extensions (which would require voter approval), but he has been unable to convince 2 Republicans in each house to agree to create the 2/3 majority required for those votes.

The Cuts

Assembly Bills 96 and 97, budget legislation that Gov. Brown signed last Thursday, imposes $6 billion in cuts to health care programs, including:

  • Mandatory Co-pays in Medi-Cal. Beneficiaries will be required to provide payments at the point of service of $5 for doctor and clinic visits, $3 for preferred prescription drugs and $5 for non-preferred drugs. Patients will also have to pay $50 for emergency room visits, $100 for one night in the hospital, and $200 max. for two or more nights.
  • “Soft” Utilization Cap in Medi-Cal. Adult Medi-Cal beneficiaries will have a limit of seven doctor or clinic visits annually, but a patient may receive more visits if his/her medical provider indicates the service is “medically necessary.”
  • Cut Backs on Services & Equipment in Medi-Cal. There will be a $1,510 annual limit for hearing aid devices. Adults will no longer be able to use Medi-Cal for their cough & cold medicine, and adults who are not tube-fed will not be able to use their Medi-Cal benefit to obtain enteral nutrition products.
  • Healthy Families Premium Increases. For families with incomes between 150-200% of FPL, premiums will rise from $16 to $30 per month per child, maxing out at $90 per month per family. For families between 201-250% of FPL, premiums will rise from $24 to $42 per child per month, maxing out at $126 per month per family.
  • Healthy Families Co-Pay Increases. There will now be $50 co-pays for emergency visits and $100-$200 for hospital stays.

Other Programs Also Take Hits

In addition to health care, other social and human services were included in last week’s cuts. Among them: an 8% benefit cut to those in CalWORKs, a reduction in the Earned Income Disregard, SSI grant cut, and cuts to Child Care.

What’s Next?

The Governor had hoped that his affirmation of these cuts would encourage compromise on the tax extension plan, but that has not happened. In fact, on Friday, the Republican caucus released additional demands that has only created more of a divide between the two sides.

With agreement looking less and less likely, Gov. Brown is considering several alternative options, including issuing IOU’s, trying to get the tax extensions on the June ballot with a simple majority vote, or qualifying the measures for the November ballot.

Unfortunately for the Governor, a poll released last week shows a significant downturn in public support for his tax extension plan, with half of likely voters thinking a June special election is a good idea, down from two-thirds in January.

With waning public support and a deepening chasm between Dems and Reps in Sacramento, many are bracing themselves for another long, hot budget summer… and the real possibility that the remaining $12 billion gap will have to be filled by additional cuts.

More soon…