Budget | HealthyCal - Part 3
 

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LAO: Don’t eliminate welfare

Published: May 18, 2010 | No Comments

The Legislative Analyst office is out with its quick review of Gov. Arnold Schwarzenegger’s revised budget, and the nonpartisan analyst recommends scrapping the governor’s proposals to eliminate welfare and subsidized child care. Similar savings can be achieved elsewhere in the budget, the office, says, with less pain to people who rely on the the state for survival or to be able to work while someone watches their children. But the LAO agrees with the governor that the situation is dire, and also agrees, at least in concept, that the Legislature should use this moment to make big changes that will save money in future years. As the image above shows, even if the Legislature adopted the governor’s proposals as they are, the state would still be facing multi billion shortfalls in the coming years.

See the full report here.

 

The anatomy of a budget shortfall

Published: May 15, 2010 | No Comments

By Daniel Weintraub

As the governor’s revised budget makes all too clear, California is in a world of hurt. The deepest recession since the Great Depression has reduced personal incomes, retail sales, corporate profits and property values. Those are the things the state and local governments tax to provide the revenue to support the schools, universities, health and social services and law enforcement on which most of us depend in one way or another.

Still, despite an alarming drop in tax receipts below expectations in April, Gov. Arnold Schwarzenegger is forecasting an increase of about $3 billion in revenues between the budget year that ends June 30 and the next fiscal year. That would be a boost from about $86.5 billion to $89.3 billion, or about 3.2 percent.

So if revenues are growing, why is there such a huge budget shortfall. A couple of reasons.

First, that entire projected growth and more will be wiped out before the year even begins by the need to repay the deficit in this year’s budget. If no changes are made before the end of the fiscal year, the state expects to spend $6.2 billion more this year than it is taking in. That red ink must be sopped up as part of next year’s spending plan.

That means the state will actually have less to spend next year on programs than it is spending this year. Under this scenario the state would have $83.1 billion left after paying off the deficit. That’s about 4.8 percent less than the $87.3 billion that the state is spending this year.

It gets worse. Current laws and the increasing demand for services will drive costs up automatically unless the Legislature and the governor take action to reduce services or change eligibility rules for various programs.

If nothing is done, general fund spending will climb from $87.3 billion this year to $99.5 billion next year, according to Department of Finance projections. This is why the budget shortfall is often described as an $18 billion problem.

Break it down this way: the government ends the year $6.2 billion in the red and projects spending next year to grow at a rate that would exceed revenues by about $10 billion. Throw in the cost of rebuilding a tiny reserve for emergencies and you get to the $18 billion figure.

That’s more than 20 percent of the size of the general fund for a year. It is more than the state spends on prisons and its four-year universities combined. It’s more than the entire Med-Cal budget and half what the general fund dedicates to K-14 education.

And that $18 billion number comes after including temporary tax increases that will soon go off the books and federal funds that were part of the economic stimulus bill and are scheduled to expire beginning next year. So even if the state somehow managed to erase the shortfall this year, the books would not remain balanced for long.

California is not going to eliminate its welfare program, as Gov. Schwarzenegger has proposed. But there are likely to be some pretty deep cuts in health, public assistance and education programs in the months ahead. Either that or what might be the longest budget deadlock in state history. Republicans have said they won’t vote for higher taxes. Democrats have said they won’t vote for deeper cuts to education or the safety net.

Without one or both of those things, there is simply no way to bridge a gap of the size that has opened up in California’s budget.

 

Group homes sue state over rate freeze

Published: May 5, 2010 | No Comments

By Daniel Weintraub

An association of group homes that care for Californians with developmental disabilities has sued the state to in federal court, arguing that a freeze on reimbursement rates since August of last year violates federal law.

The suit was filed by the California Association of Health Facilities in U.S. District Court, Los Angeles on behalf of 528 group homes serving 3,500 low-income people who are mentally or physically disabled

“This rate freeze has resulted in tremendous financial hardship for hundreds of providers who are caring for the state’s most vulnerable residents, generally in community-based settings,” said Jim Gomez, the group’s president. “These facilities are completely dependent on the Medi-Cal program for their funding and financial survival.”

Filed April 30, the suit argues that California’s 2009 budget package effectively froze Medi-Cal payments at 2008-2009 levels for these facilities. According to the association, the federal government requires the statwe to re-evaluate Medi-Cal payment rates annually.

For the 2009-2010 rate year, beginning Aug.1, 2009, the average Medi-Cal rates would have increased from 1.1 percent to nearly 9 percent, depending on the type of facility.

 

Tax receipts falter in April; ugly budget season coming

Published: April 27, 2010 | No Comments

Three months of higher-than-expected tax receipts, which many in the Capitol had hoped would wipe out a big chunk of the state’s budget deficit, appear to be coming to an end. April revenues so far have been several billion dollars below projections, with only five more days of envelopes to open at the Franchise Tax Board and the Employment Development Department. Unless the state sees a big end-of-the-month rally, the coming budget season is going to be a bleak one for people who depend on public services, and, potentially, an ugly one for the politicians in Sacramento.

As of Monday the state remained about $4.5 billion shy of the $10.5 billion projected for April in withholding from paychecks, estimated payments from taxpayers and end-of-the year tax payments for 2009 that were due on April 15. Even if the state collected $500 million a day for the rest of this week, a shortfall for this month alone would wipe out a $2.7 billion “surplus” for the current calendar year built in January, February and March, when revenues came in above projections.

All of this means that legislators and Gov. Arnold Schwarzenegger will indeed be grappling with a budget shortfall in the neighborhood of $20 billion on a general fund budget of about $90 billion. Funding for schools, higher education, health and public assistance will all be at risk. Democrats will be pushing for tax increases, but Republicans have said they will not support them. Some Republican votes are needed to pass a tax hike because doing so requires two-thirds super-majorities in each house of the Legislature.

The governor is due to release his revised budget proposal on May 14.

 

LAO: cutting health, welfare spending

Published: March 28, 2010 | No Comments

Health and social service spending represents nearly a third of the state’s general fund. But facing a $20 billion deficit, the Legislature’s hands are tied by federal mandates, court decisions and voter-approved measures. The nonpartisan Legislative Analyst examines the health and welfare budget and offers proposals for reducing it. See the report here.

 

Appeals court blocks Medi-Cal rate reduction

Published: March 4, 2010 | 1 Comment

UPDATED AT 9:06 AM ON MARCH 4

A federal appeals court has blocked the state's attempt to cut reimbursement rates for Medi-Cal to doctors and hospitals, including the UC Davis Medical Center, shown here.

A federal appeals court has once again blocked California from reducing payments to doctors and hospitals that care for the poor under the state’s Medi-Cal program, finding that the Legislature did not sufficiently study the impact of the cuts before enacting them. The Ninth Circuit Court of Appeals also rejected the state’s attempt to cut reimbursements for the wages of in-home care workers by nearly 20 percent.

The appeals court panel upheld lower court injunctions blocking the rate reductions until a full trial on the merits of the case could be held. The Medi-Cal case was brought by the California Pharmacists Association and a long list of other plaintiffs. The case challenging reductions in the wages of in-home care workers was brought by a woman who uses in-home care and the Service Employees International Union, which represents the workers.

The panel did not say that the state could never reduce reimbursement rates. But because the programs are partially funded by the federal government, the state must follow federal rules for managing the services. One of those rules states that Medi-Cal reimbursement rates must be high enough to ensure that care and services available under the plan are available to the same extent that such services are available to the general population. This is known as the “equal access to care” provision.

The state argued in its defense that some of the services at issue are not available at all to the general population because they are designed for the low-income people. But the court found that the state still had a responsibility to determine if the rate cuts would reduce access to care before implementing them.

Writing for a three-judge panel, Judge Milan D. Smith scolded the state for its repeated attempts to cut Medi-Cal rates without sufficient study.

“We have now handed down multiple decisions instructing the State on (its) procedural requirements,” Smith wrote. “We trust that the State now understands” that in order for it to comply with those requirements, it must rely on “responsible cost studies” that provide reliable data on which to base its reimbursement rates. The court in the past has also ordered the state to study the impact of the proposed rate changes before setting the rates. In this case, the court found, “the state did neither.”

California’s reimbursement rates for Medi-Cal are already below average among larger states and the state’s cost per person in the program is among the lowest in the nation.

Gov. Arnold Schwarzenegger’s office said the state will appeal the ruling.

More info:

See the court’s opinions and memoranda here.

Note: An earlier version of this item incompletely identified the plaintiffs in the case involving in-home care.

 

Care for 1 million kids at risk

Published: February 26, 2010 | No Comments

The California Budget Project has just released a county-by-county analysis showing how Gov. Arnold Schwarzenegger’s budget proposal would affect children’s health care. Statewide, the study says, 216,000 children would lose eligibility in the first round of cuts, the state would lose $265 million in federal funds, 824,000 kids would lose vision care, and 377,000 would see increased premiums. If the governor’s proposal to eliminate the Healthy Families program unless the state gets $6.9 billion in additional federal aid, more than 1 million kids would lose coverage and the state would forfeit $1 billion in federal funds. See the full report here.

 

Budget would cut support for seniors

Published: February 25, 2010 | No Comments

By Bruce Chernof, M.D.

Gov. Arnold Schwarzenegger’s proposed budget for the coming year has serious implications for California’s low-income seniors.

According to a recent analysis by the UCLA Center for Health Policy, the proposal would dismantle California’s home- and community-based long-term care system.

Full implementation of the proposed cuts would likely leave frail, low-income seniors – among the state’s most vulnerable residents – without needed support. Many could face a total loss of daily assistance, including those with serious functional limitations (e.g., inability to bathe themselves) and cognitive impairments such as Alzheimer’s disease. Left with few alternatives, many would be forced to turn to nursing homes for care. However, the state has neither enough open licensed beds nor the funds to pay for the increased demand on institutional services.

In California and throughout the country, efforts at long-term care policy reform have for years focused on helping people with disabilities remain in their homes and communities. To support the highest level of autonomy possible, the Americans with Disabilities Act of 1990, backed by findings of the U.S. Supreme Court in Olmstead v. L.C. (1999), holds the state accountable for providing care and support in the community where possible as an alternative to institutionalization. As a result, California’s community-based long-term care services have kept thousands of older adults and adults with disabilities out of institutional care. The UCLA Health Policy Center’s analysis of U.S. Census data found that nursing home rates have dropped from 5.1 percent of the population in 1980 to 2.8 percent in 2008. This time frame corresponds with increased access to publicly supported home-and community-based services.

These programs, designed to allow individuals to stay in their own homes rather than placing them in more expensive nursing homes, are subject to substantial cuts. For example, the In Home Supportive Services (IHSS) program provides personal care assistance to nearly half a million low income people who are over the age of 65, blind or disabled. Proposed cuts, according to data from the nine counties analyzed in the UCLA study, would eliminate services for 87 percent of all current recipients. More than two-thirds of elders with cognitive impairment would have their services totally cut, as well as 94 percent of those who live alone. But even the few who will retain services are at risk. If the state does not receive all $6.9 billion of federal assistance it requested, then “trigger cuts” would eliminate the entire program.

Seniors in jeopardy of losing IHSS also stand to lose Adult Day Health Care (ADHC), a community-based day care program that provides health, therapeutic and social services to 37,000 persons at-risk for nursing home placement. Cuts propose to eliminate this program all together.

Other cuts to programs that help seniors are up for discussion as well, forcing them and their families to scramble for long-term care alternatives should services disappear. Among the most unpopular of alternatives is going to a nursing home. Yet even this option presents challenges. The California Legislative Analyst’s Office estimates that up to 50 percent or 213,500 of those losing IHSS services could seek nursing home placement as a result of cuts, yet the state has only around 20,000 licensed nursing home beds available at any moment. The UCLA analysis suggests that – at most – 5 percent of those needing placement could be accommodated. Where will the rest go?

Left to fend for themselves, low income older and disabled adults with substantial impairments could likely turn to the more expensive acute care system – emergency room visits and hospital admissions – for help.

Compared to the rest of the country, California has the largest number of older adults in the nation and as baby boomers retire, that number will only grow larger. While the proposed reductions might save money in the near term, it could likely result in increased acute care costs and long-term care costs down the road.

Dismantling these programs would also have a negative effect on an already precarious California job market. If the cuts go into effect, unemployment will almost certainly rise. As many as 7,600 employees would lose their ADHC jobs and up to 370,000 paid caregivers would lose some or all of their IHSS work. Many would lose health insurance benefits provided by these jobs. Also, family caregivers who rely on these services to help care for loved ones so they can maintain employment outside of the home would be forced to find with alternative care or face jeopardizing their own jobs.

The current collection of home- and community-based services in California is not perfect. With little cohesion, this patchwork of programs often operates in silos and could benefit from a more comprehensive and effective coordination process. However, its overall contribution has been positive for seniors and family caregivers alike.

The State of California faces an overwhelming financial crisis that threatens to unravel the safety net for seniors. There are no simple answers to this painful crisis. Yet it presents an opportunity to create a more integrated, efficient and person-centered approach to care rather than leaving our poorest and most vulnerable Californians with no place to go.


Bruce Chernof, MD, is the president and CEO of The SCAN Foundation in Long Beach, California. The SCAN Foundation supported the UCLA Center for Health Policy analysis of the governor’s proposed budget.

 
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