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There's little, to distinguish the Governator from our own dear Gordo. Save for their, er physical dimensions, the two are philosophical twins: Take money from the disabled? Hasta la vista, crip! Cut wages for healthcare workers? You'll be back, nursie! Tinker with the law? Guilty! With our own mini-Arnold ready for a sequel in B.C., a look at Arnold's "End of Days" budget in California could provide a prequel for what British Columbians can expect of a Gordon Campbell re-run. -{ape}
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Governor's Plan to Restructure MEDI-CAL is Finacially Risky
and Could Undermine Access to Affordable Health Coverage
California Budget Watch
May 2005
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Governor Schwarzenegger has proposed a multi-pronged plan to restructure the Medi-Cal Program, which provides health coverage to 6.6 million Californians with low incomes and limited resources. The Administration plans to seek waivers, including two Section 1115 waivers, from the federal government to implement key components of the plan.
The restructuring plan could have a range of impacts, including threatening California’s financial ability to provide Medi-Cal services by capping federal funding for certain Medi-Cal services and bene. ciaries.
This report analyzes five components of the plan, including proposals to impose premiums, restructure the safety-net hospital financing system, and shift more Medi-Cal beneficiaries into managed care.
KEY FINDINGS This report finds that:
• Section 1115 waivers would cap federal funding for certain Medi-Cal services and beneficiaries. The Administration would have to obtain a Section 1115 waiver to impose premiums on more than 500,000 Medi-Cal bene. ciaries and is planning to proceed under Section 1115 to restructure the state’s safety-net hospital financing system. In both cases, the federal government would provide no more than a fixed amount of funds for the beneficiaries or services subject to the waiver – regardless of California’s actual expenditures – rather than paying a fixed percentage of Medi-Cal costs. Currently, the federal government pays half the costs of Medi-Cal expenditures, whether such costs are higher or lower than
projected.
• Section 1115 funding caps would shift more of the financial risk for Medi-Cal from the federal government to California. Section 1115 funding caps would restrict California’s ability to meet its residents’ needs in the event of an unanticipated occurrence such as an epidemic, a natural disaster, or the availability of a new drug or technology. If one or more of these events occurred, federal funds would not automatically increase to cover the costly hospital services or the needs of beneficiaries subject to the caps. Consequently, California
would have to pay all the costs that exceed the caps or reduce costs by scaling back benefits, increasing beneficiaries’ out-of-pocket costs, and/or reducing reimbursement rates paid to Medi-Cal providers.
• The Governor’s proposal to impose premiums on more than 500,000 Medi-Cal beneficiaries could reduce enrollment of eligible persons in Medi-Cal and increase other state costs. More than 90,000 children and adults without disabilities, elderly individuals, and people with disabilities could lose Medi-Cal coverage under this proposal. While the state may realize short-term savings due to lower Medi-Cal enrollment, costs would likely be shifted to other parts of California’s health care system to the extent that individuals who leave Medi-Cal seek alternative sources of care, such as in clinics or emergency rooms.
• The Governor’s proposed restructuring of the current safety-net hospital financing system could have a signi. cant impact on hospitals’ ability to serve the state’s Medi-Cal and uninsured populations. The federal government has raised several concerns with the state’s hospital financing proposal. The outcome of the negotiations with the federal government will be critical to California’s safety-net hospitals and to the state’s health care system.
• The Governor’s proposal to cap adult dental bene. ts at $1,000 per year could prevent some beneficiaries from obtaining appropriate and timely dental care and increase Medi-Cal costs per beneficiary. The state may realize short-term General Fund savings due to lower dental benefit costs. However, capping dental benefits could increase other Medi-Cal health care expenditures. For example, untreated dental needs could lead to other health problems that would require more costly Medi-Cal services.
• The Governor’s proposal to shift more than 800,000 Medi-Cal bene. ciaries, including children and people with dis-abilities, to Medi-Cal managed care plans poses significant
implementation issues to ensure that beneficiaries, particularly seniors and people with disabilities, maintain access to services.
• The Governor’s proposal to allow a centralized contractor to process certain Medi-Cal applications for children would not result in faster enrollment and could add new administrative requirements that would increase costs.
• California can improve the Medi-Cal Program without negatively affecting beneficiaries. For example, California could simplify Medi-Cal eligibility rules to reduce the paper-work burden on Medi-Cal beneficiaries and counties.
BACKGROUND
In January 2005, Governor Schwarzenegger released a proposal to restructure the Medi-Cal Program, which provides health coverage to 6.6 million Californians who have low incomes and meet other eligibility criteria. The Governor proposes to restructure the program “in order to advance the twin imperatives of maintaining health care coverage to eligible Californians, while containing costs and maximizing operational efficiencies.”
Key Components of the Governor’s Restructuring Plan
This report examines key components of the Governor’s Medi-Cal restructuring plan, including proposals to:
• Impose monthly premiums on more than 500,000 children and adults without disabilities, seniors, and people with disabilities;
• Restructure the state’s safety-net hospital financing system;
• Establish an annual cap of $1,000 for dental services for adults, except for services required by the federal government;
• Expand the use of managed care for children, families, elderly individuals, and people with disabilities; and
• Process certain Medi-Cal applications for children through a centralized contractor, rather than through county welfare offices.
The Governor’s Proposals Could Have a Range of Impacts
In assessing the Governor’s proposal, the state should weigh the potential impacts of each component on the state’s overall health care delivery and financing system. For example, the waiver required to implement premiums could shift more of the financial risk for Medi-Cal from the federal government to California, since the waiver would cap the amount of federal funds that California receives for Medi-Cal beneficiaries subject to the waiver. Currently, the federal government pays half the cost of Medi-Cal expenditures, whether such costs are higher or lower than projected.
For more, please see:
California Budget Project
http://www.cbp.org/2005/0505_medicalrestructure.pdf
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