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2003-11-26 -- SCHWARZENEGGER PROPOSES MID-YEAR HEALTH CUTS

HEALTH ACCESS UPDATE Tuesday, November 25, 2003


* Cuts to Medi-Cal Providers;
  Cap on Enrollments to Healthy Families
  & other programs
* Senate Discussion on Spending Cap & Deficit Financing
* Also: Medicare Bill Passes
* Also: Have You Been Misled on SB 2 Referendum Signature Petition

Donna Arduin, the director of finance for Governor Arnold
Schwarzenegger, proposed today a list of $1.9 billion in cuts to the
current year budget. This includes $440 million cut to health and
human services in the current year, and $1.163 billion in next year's
budget. Both Assembly adn Senate Budget committees heard Director
Arduin's presentation on the cuts, as well as the pending proposals
for spending limits and deficit financing.

The total cuts still amount to roughly half of the state revenue lost
with the repeal of the car tax. There has yet to be any proposal to
make up all the money from the repeal of the car tax, or how to
otherwise meet the rest of the budget shortfall.

MID-YEAR HEALTH CUTS DETAILED

These health cuts, namely a provider rate cut and enrollment caps on
numerous health programs, would deny basic health care to California
children, seniors, and people with disabilities.

* MEDI-CAL RATE CUT: The biggest health cuts is "an additional 10
percent rate reduction for specified Medi-Cal providers, including
physicians, medical transportation, home health, and other medical
providers and services," such as California Childrens Services and
FamilyPACT.

Such a provider cut has been rejected by both parties in the
Legislature repeatedly over the past two years, because of the impact.
Already, California has one of the worst reimbursement rates in the
nation, and as a result, half of doctors in California do not accept
the 6.4 million children, seniors, and people with disabilities on
Medi-Cal. A further cut will mean that those on Medi-Cal will have a
far harder time getting medically-necessary care.

* CAP ON ENROLLMENT: The proposal would also "cap various health and
human services programs at the January 1, 2004 estimated level of
caseloads. Waiting lists would be established, and as attrition
occurs, new enrollments would be permitted up to the capped level."
The programs would include:
* the Healthy Families program that insures low-income children,
* "regional centers,
* AIDS Drug Assistance Program,
* state hospitals,
* rehabilitation programs,
* the Genetically Handicapped Persons Program, and
* the California Children's Services state-only program.

Other programs include a range of state-only programs for immigrants,
including:
* "Medi-Cal non-emergency services for documented and undocumented
immigrants,
* Healthy Families program for documented immigrants,
* CalWORKs for documented immigrants,
* California Food Assistance Program,
* Cash Assistance Program for immigrants

The cap on the Healthy Families program will directly deny health care
to well over 100,000 children in the next year, and hundreds of
thousands more afterwards. Like Medi-Cal, Healthy Families is
undersubscribed, with around 500,000 children eligible for the program
but unenrolled (CHIS, UCLA Center for Health Policy Research, 2001),
and who then would be barred from entering the program. Enrollment
efforts have proven successful in getting more children to be enrolled
recently, although thought most of those efforts have been recently
defunded.

Healthy Families application data from the MRMIB website shows they
get about 12,000 applications per month on average. In less than six
months, since June 2003, Florida's cap on their State Child Health
Insurance Program generated a waiting list of nearly 50,000 children.
We project that the state would easily build up a waiting list of more
than 100,000 children in less than a year. (Center for Budget and
Policy Priorities)

LOS ANGELES ACTION ON CUTS: Los Angeles advocates are organizing a
press event tentatively scheduled for Tuesday, December 2nd, at
11:00am to demonstrate the impact of the cuts to health and other
vital services. Groups include ACORN, Alliance for Children's Rights,
Asian Pacific American Legal Center, CA Immigrant Welfare
Collaborative, Children's Defense Fund, LA Coalition to End Hunger and
Homelessness, Maternal Child Health Access, and SEIU. To get involved
or for more information, contact Idabelle Fosse, Health Access, at
213-748-5287, or idabelle@health-access.org.

SPENDING CAP DISCUSSED & DEBATED

During testimony by Administration officials, the Senate Budget
Committee discussed the Governor's proposed spending cap & debt
financing proposals. Governor Schwarzenegger has proposed a spending
cap that would take state government spending at what may be its
lowest point (04-05) and limit increases to cost of living and
increase in population. This formulation incorrectly assumes that
health care spending is currently adequate, and that health care costs
won't increase at greater the rate of inflation. It also would impede
any effort to restore any of the billions of dollars of cuts made
during this budget crisis.

PROP 98 INTERACTION: Legislators raised many questions about the
proposal and its interaction with Proposition 98, the constitutional
provision that assures funding of education. The proposal does alter
Proposition 98 in fundamental ways. For example, in a good year, when
revenues exceeded projected expenditures, the revenues would be swept
into a rainy day fund (the Budget Stabilization Fund) and not counted
against the Prop. 98 guarantee unless spent for education.  Spending
for tax cuts and for state deficit bonds could be made without
increasing funding for education: this undermines the existing
provisions of Prop. 98.

Significantly for health care, Prop. 98 grows at the rate of increase
in personal income while this spending cap is limited to increases in
the cost of living, which historically has grown more slowly than
personal income. This means that Prop. 98 would take a greater and
greater share of the budget, further "compressing" revenues available
for health, social services and other programs, according to
Legislative Analyst Elizabeth Hill. Verbal testimony by Deputy Finance
Director Michael Genest suggested that the written document tying the
rate of increase to the cost of living might not reflect the intent of
the Administration. Further clarification is awaited on this point.

THE POWER OF A KING: The proposal also effectively gives the Governor
complete control over spending cuts by allowing not only mid-year cuts
of unlimited magnitude but also allowing the Governor to change
existing laws without legislative action. The Legislature could act in
30 days to stop the Governor's action but if the Legislature failed to
act, the cuts and the changes in law would take effect immediately.

What do these changes mean for health care? Let's look back a year
when Governor Davis proposed throwing hundreds of thousands of people
off Medi-Cal, cutting benefits such as wheelchairs and dental
coverage, and cutting provider rates by as much as 15%.  Davis could
have proposed these changes on say, the day before Thanksgiving and
dared the Legislature to act by Christmas. Legislators who had been
elected only a few weeks before, who had not even been sworn into
office, who had literally not moved into their offices, would be
forced to make decisions about whether hundreds of thousands of
Californians had health coverage.

The Magna Carta established that the legislature has the power of the
purse: this is the power to decide what is spent and how by the
executive. Whether it is financing the adventures of kings or the
health care of Californians, the power of the purse remains the most
fundamental power of a legislature in the American system of
government. This proposal undermines the separation of powers by
giving the Governor astonishing powers to cut spending to health and
other vital services.

MEDICARE BILL PASSES

Earlier today, the U.S. Senate passed the Medicare privatization bill
by a vote of 54-44. The bill will soon be headed to the President's
desk, and he is expected to sign it. The narrowness of the vote, in
both the House and Senate, suggests the real concerns about the
privatization provisions and the inadequacy of the prescription drug
benefit. It will be up to advocates to push to undo the damage, while
appropriately expanding the benefit so that seniors truly have the
basic coverage they need.

BEEN MISLED ABOUT THE SB 2 REFERENDUM? LET US KNOW!

Health Access has received numerous reports that petition circulators
who have been soliciting signatures to repeal SB 2 (Burton) on the
ballot have mischaracterized the nature and purpose of the petition.
Misrepresenting a petition is a misdemeanor.

If you have had an experience with a petition gatherer, please let us
know. Contact Jessica Rothhaar in Northern California, at
510-873-8787, or jessicar@health-access.org, or Idabelle Fosse in
Southern California, at 213-748-5287, or idabelle@health-access.org.

Anthony E. Wright Health Access
1127 11th St., #234,
Sacramento, CA 95814
Ph: 916-442-2308,
Fx: 916-497-0921
awright@health-access.org