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CMA Capitol Insight: When It Rains, It Pours



February 05, 2013
Area(s) of Interest: Licensing & Regulatory Issues 

CMA Capitol Insight is a biweekly column by veteran journalist Greg Lucas, reporting on the inner workings of the state Legislature.




When It Rains, It Pours


On the heels of the first budget in a decade in which revenues are projected to cover spending commitments, the state’s income tax payments for the month of January were $12.7 billion – $5 billion more than expected. That’s good budget news but could be a fluke, state beancounters caution. Proposition 30, approved in November, boosted taxes on individual Californians earning $250,000 or more by as much as 3 percent. (Same deal for families with adjustable income of $500,000 or more.) Even though it passed in November, the measure covers the entire 2012 tax year, sparking taxpayers affected by the rate change to significantly increase their fourth quarter estimated payments to avoid penalties come April. The Legislative Analyst says the stock market is good so people might be cashing out capital gains as well. While Gov. Brown’s Department of Finance is grateful for the cash on hand, they say it may mean less in April and June, the two biggest collection months of the year. The estimated annual $5 billion generated from Proposition 30’s rate increases – separate from this new $5 billion January windfall – is already built into the budget for the current fiscal year and the one that begins July 1.


Speaking of Cash…


How about eggs at $80.20 a dozen? That’s what they would cost if their price had risen since the 1930s at the same rate as medical inflation. Toilet paper would be $24.20 a roll. A dozen oranges would top the charts at $107.90. One pound of coffee would be $64.17 and a pound of bananas would be $16.04. This from the American Institute for Preventive Medicine in 2007, used in a recent presentation by Nick Macchione, director of San Diego County’s Heath and Human Services Agency.


Elsewhere in the PowerPoint…


Macchione stressed what doctors, nurses and public health officials have said repeatedly: Three behaviors lead to four chronic conditions which, in San Diego County anyway, contribute to 50 percent of deaths. The three behaviors – smoking, an unhealthy diet and not exercising – contribute to the incidence of cancer, heart and lung diseases and Type 2 diabetes. Nationwide, $1.4 trillion is spent on those chronic diseases, Macchione said. The federal government’s postponed paydown this year on its debt is only around $1 trillion, and that’s the same as one million millions. If the goal of the Affordable care Act is to improve quality and access of care at a lower cost, it would be much simpler to accomplish if even half of that $1.4 trillion got cut from the bottom line.


California’s Changing Demographics


Early in 2014, Hispanics will become the plurality in California for the first time since 1850 when California became a state. Also contained in a new report by the Department of Finance issued late last week, California’s population will reach 50 million in 2049 and grow to nearly 53 million by 2060. That increase, nearly 15.4 million between 2010 and 2060, is bigger than the current populations of either Illinois or Pennsylvania. Just California’s population growth over that 50-year period would rank as the fifth largest state in the Union. Click here to see additional findings, including which counties will have populations of 1 million or more.


Quote Machine


During his recent State of the State speech, Gov. Jerry Brown shared quotes from early 20th Century jurist Oliver Wendell Holmes, FDR, Montaigne, William Butler Yeats and paraphrased “The Little Engine That Could” to illustrate California’s resolve to build a high speed rail system eventually linking Los Angeles and Sacramento. And who can forget the parable from Genesis of the pharaoh’s fat and lean cows.


Of the Affordable Care Act…


The Democratic governor didn’t say a whole lot other than noting that California was the first state to pass laws to implement the act, which is widely described as the biggest change in health care delivery scene the 1965 introduction of Medicare and Medicaid. Here’s what the governor said: “Our health benefit exchange, called Covered California, will begin next year providing insurance to nearly 1 million Californians. Over the rest of this decade, California will steadily reduce the number of the uninsured. The broader expansion of Medi-Cal that the Act calls for is incredibly complex and will take more time. Working out the right relationship with the counties will test our ingenuity and will not be achieved overnight. Given the costs involved, great prudence should guide every step of the way.” The costs and the people. This expansion will mean that 25 percent of California’s 38 million residents will be cared for through Medi-Cal.


What’s So Special About It?


As he promised previously, the Democratic governor also said in his State of the State speech that he would convene a “special” session of the Legislature to deal with implementation of the Affordable Care Act. He’s convened it. A “special” session means only bills dealing with that session’s topic can be introduced and acted on. Many such sessions have been called over the years to deal with disaster aid in the wake of fires and earthquakes, budget issues and gun control. Bills passed during special sessions become law sooner – 90 days after the special legislative session adjourns rather than January 1 of the following the year.


So Far, a Light Workload


Only two pieces of legislation have been introduced in the special session – a Senate bill and an Assembly one. Both are identical. They expand coverage under Medi-Cal – California’s version of Medicaid – to everyone under age 65 with incomes that don’t exceed 133 percent of the federal poverty level. The Affordable Care Act requires this be done. Actually, it’s 138 percent of the federal poverty level. (More on that below.) California has the largest number of persons under age 65 without coverage in the nation – 7.1 million. One in four working Californians are uninsured, according to a December 2012 report by the California Healthcare Foundation. Press releases touting the two bills say they will streamline enrollment and renewal. The bills would also implement a new way of determining the amount of income that counts toward eligibility. The “Modified Adjusted Gross Income” methodology – yup, known as MAGI – is basically the way taxable income is calculated under Internal Revenue Service rules. The bills also allow former foster kids enrolled in Medi-Cal when they were 18 to continue to receive care until they are 26 – another requirement of the Affordable Care Act.


Gift of the MAGI


Although the Affordable Care Act says Medi-Cal (Medicaid) eligibility should be increased to 133 percent of the federal poverty level, switching to the MAGI method of calculating income makes the minimum threshold 138 percent. An individual earning $14,856 annually is at 133 percent of the poverty level in the 48 contiguous states. In Alaska and Hawaii, the amount is higher. A family of four would make $30,657 a year. A person at 138 percent of the poverty level would earn $15,415. A family of four would earn $31,809.


The Serendipitous Origin of Serendipity


The word was first coined in 1754 by Horace Walpole, a British politician and writer. Serendipity is defined as “the faculty or phenomenon of finding valuable or agreeable things not sought for.” In a letter to a friend vacationing in Italy, Walpole said he came up with the word after reading “The Three Princes of Serendip.” In this fairytale, Walpole told his friend, “as their Highnesses travelled, they were always making discoveries, by accidents and sagacity, of things which they were not in quest of.” The word “serendip” is Persian for the island nation off the southern tip of India now known as Sri Lanka. Supposedly “serendipity” led to the discovery of Kellogg’s Corn Flakes, Silly Putty, the Slinky, inkjet printers and chocolate chip cookies. Alexander Fleming discovered penicillin after he left for vacation without disinfecting some of his petri dishes. Upon his return, the bacteria had been killed by the penicillium mold.

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