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Governor Brown's proposed budget would dramatically cut health and human services



January 09, 2011
Area(s) of Interest: Public Health 

Just days after taking office, Governor Jerry Brown today issued his 2011-2012 budget proposal, including major cuts to health care, in an attempt to close the projected $25.4 billion shortfall. The Governor's proposal would close the deficit through a mix of spending cuts, revenue increases, and other solutions (such as taking money from special funds). The spending cuts total $12.5 billion, with $1.7 billion slashed from the Medi-Cal program alone. Of particular interest to physicians are proposals to:

  • Cut Medi-Cal provider rates by 10% ($720 million)
    the budget proposes to reduce provider payments by 10 percent for physicians, pharmacy, clinics, medical transportation, home health, adult day health care, certain hospitals and nursing facilities, as well as long-term care facilities. This proposal assumes that the U.S. Supreme Court overturns CMA's injunction, which prevented the state from slashing Medi-Cal provider reimbursement by 10 percent in 2008. The U.S. Solicitor General has already recommended that the Supreme Court not hear the case.
  • Control Medi-Cal utilization ($217 million)
    The budget proposal would also limit utilization of important health care services for adults. It would, for example, limit Medi-Cal patients to 10 physician office visits per year, limit enrollees to six non-lifesaving prescriptions per month, and set cost caps on hearing aids and other medical devices.
  • Impose Medi-Cal copayments ($557 million)
    Copayments would be set at $5 for physician office visits, including preventive and primary care services, $50 for emergency room visits, and $100 per day (up to $200 maximum) for hospital stays. Provider reimbursement for the visit would then be reduced by a corresponding amount. CMA opposed this proposal when Governor Schwarzenegger made it last summer, as it would put physicians in the untenable position of either having to collect copays from the poor or denying them care.
  • Contain costs in the Healthy Families program ($39 million)
    Although last year's federal health reform legislation prevents states from reducing Healthy Families eligibility, the governor's budget proposal would contain costs in other ways. The proposal would eliminate the vision benefit, increasing premiums by 75 percent or more for various income sectors, 3) increasing copayments for emergency room visits from $15 to $50, and 4) imposing a new copayment for inpatient hospital stays of $100 per day (up to $200 maximum). in these difficult economic times, this would almost certainly have the effect of removing children from the Healthy Families Program, thus denying them access to care.
    The governor's proposed budget cuts more holes in California's tattered health care safety net. Medi-Cal currently covers 7.7 million Californians and enrollment is expected to grow by 1.5 - 2 million after the implementation of federal health reform.

    Even at current rates, most physicians lose money treating Medi-Cal patients. As a result, it is nearly impossible to find physicians accepting new Medi-Cal patients in certain specialties. If these cuts are allowed to take place, these access problems will only be exacerbated. When Medi-Cal patients can't find a doctor, many will end up in the emergency room, the most costly and least efficient venue for Medi-Cal patients to receive treatment.

    "With California's Medi-Cal rates already among the lowest in the nation, California's health care safety net cannot sustain these drastic cuts," said CMA President James G. Hinsdale, M.D. "CMA will continue to fight for physicians and work to preserve access to care for California's low-income populations."

    For more details on the Governor's proposed budget as it relates to health care, see CMA's budget analysis.

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