The statewide health care consumer advocacy coalition, working for over 20 years for quality, affordable health care for all Californians! The lead California organization for the Health Care for America Now! (HCAN) campaign.
Last week, the candidates for California Governor had a televised debate–and yet not a single question was on health care. The only mentions were Lt. Governor Newsom’s joke that some potholes are old enough to qualify for Medicare, and a follow-up question to Newsom on high speed rail about costs that added in the cost of single-payer.
As I tweeted, the lack of focus on health care was stunning. Medi-Cal is the biggest item in the #CABudget and covers 14 million Californians–a third of the state, half of children, 2/3 of all nursing home residents. The main responsibilities of the state is to educate, medicate, and incarcerate: 50% of the budget is education, 33% in HHS, 10% public safety. That’s where the Governor has the most ability to have impact–both as a major purchaser (Medi-Cal, CALPERS, etc) and regulator (DMHC, DHCS, etc) of health care.
Wasn’t health care the #1 concern of voters in exit polls of last November’s elections? In the special elections so far? Wouldn’t that suggest that maybe a question or two? From a family’s budget, health care is often the second biggest cost after housing.
While single-payer/SB562 had been debated in previous gubernatorial debates, what of Medi-Cal? Covered CA? the ACA? Trump’s #junkinsurance plans? Rx costs? #AB3087 for health care price relief? the Assembly #CABudget $1B health proposal unveiled Monday? Our #Care4AllCA package?
A few weeks ago, I was invited to moderate a debate on health care issues of leading candidates in California Congressional district 48. We prepared questions for these candidates about health care. While focused on federal issues, we hope future moderators use them as a guide and inspiration for the debates to come. This is by no means a comprehensive list, but rather a buffet of what could be asked–there’s no lack of good questions to ask about health care!
Stopping Attacks on the Affordable Care Act
Last May, the House of Representatives votes to pass the American Health Care Act, which sought to repeal the ACA, cut and cap the Medicaid program, forcing cuts to California’s health care system of over $20 billion/year, leave millions of Californians uninsured, and undermine key patient protections, including for those with pre-existing conditions. How would you have voted on the American Health Care Act?
One of the efforts by the current Congress was to “defund Planned Parenthood”—which actually doesn’t get any specific line items in the federal budget. Would you vote for the proposal to exclude Planned Parenthood as a provider of medical services in the Medicaid program?
The Trump Administration has signed an Executive Order to allow employers to claim a religious exemption on the mandate that if they provide coverage, that coverage must include contraception without cost-sharing. Should employers be able to dictate the health benefits of their workers?
Preventing the Sabotage of Our Health System
Others efforts at sabotage include that the Trump Administration is seeking is to promote “short term insurance” and “association health plans.” In both cases, these would be plans that do not have to abide by ACA consumer protections, and as such do not have to cover essential health benefits, could have annual or lifetime limits, and could deny based on pre-existing conditions? Would you vote to allow such plans to expand? Would you vote for a federal version of a state bill, SB910, would seek to ban these types of plans?
Another federal requirement is to ensure that insurers must spend a certain percentage of their premiums on patient care, rather than administration and profit. The Trump Administration wants to lower that percentage. Would you support that type of bill? Would you support a federal version of a state bill to increase that “medical loss ratio” to 90%?
Another federal bill would establish re-insurance that redistributes money from insurers that end up with healthier patients to insurers who have a sicker populations, which has shown to help lower premiums. Reinsurance and similar programs were defunded by efforts of Sen. Marco Rubio who called them an “insurer bailout.” Senators Murray and Alexander were working on a proposal that would include reinsurance—would you support such a federal bill in concept?
The tax bill included a repeal of the Affordable Care Act’s individual mandate. As a result, the Congressional Budget Office and other analyses project that premiums will rise at least an additional 10% more than normal. Would you vote for a proposal to re-institute the tax payment for those who don’t by coverage?
Do you support the goal of quality, affordable health care for all Americans?
Do you support Sen. Sanders and/or Rep. Ellison’s bills for a Medicare for all-like, single-payer health care system?
If yes, why do you support it?
How would you go about advancing us to that goal?
Would you support steps to get to that goal? If so, which ones?
Under the ACA, California has brought it’s uninsured rate down from nearly 20% to less than 7%, the biggest reduction of all 50 states. Would you support steps to get from 7% to 0%, such as increasing subsidies in Covered California?
California is a high cost-of-living state. Would you provide addition assistance above 400% of the federal poverty level, where ACA subsidies run out, to prevent people from paying more than a percent of their income?
Would you support a public option? What does that mean to you?
Who would be included? Would you expand coverage to include undocumented immigrants?
A few years ago, California has expanded its Medi-Cal program to cover all children, regardless of immigration status. Would you support expanding the Medicaid program federally so California gets a federal share for these children? Would you support expanding Medicaid for undocumented adults?
Should medical information be protected from use for any form of immigration enforcement?
Health Costs & Quality
How would you address the high cost of health care?
How would you address prescription drug costs?
Would you allow for re-importation of drug from other countries?
Would you allow Medicare to negotiate for prescription drug prices?
Would you limit meals/trips/gifts to doctors from drug companies?
Would you reduce the time that drug company hold an exclusive patent on a drug, if the drug was produced with public funding? If the drug is excessively priced?
How would you address prices by providers like hospital and doctors?
Health care costs are more expensive in American not because we use health care anymore, but because prices are just that much higher. How do you propose bringing down those prices?
Regulating health prices like public utilities?
Breaking up health care monopolies and oligopolies?
Reforms of the delivery system?
Would you support increasing the prevalence of high-deductible health plans so more patients have “skin in the game”?
Quality and Equity
How would you hold the industry accountable to improve quality? What policies would you put in place? What tools would you use?
People of color have worse health outcomes in our health system, even when you hold for income, education, and other factors. How would you address racial and ethnic disparities in our health system?
Are there specific population-based solutions that you would endorse? (This could include specific efforts for people with certain conditions, children, seniors, racial/ethnic groups, LGBTQ people, immigrants, people with disabilities, etc.)
Several major insurers proposed to merge in the last few years–but some of those mergers fell apart, in part due to anti-trust review. Aetna-CVS has proposed to merger. What limits would you put on health industry mergers? What criteria would you use?
Would you require insurers who participate in Medicaid to be in the exchanges, or vice-versa?
Would other regulations or oversight would you put on health insurers?
What changes would you seek in Medicaid (known as Medi-Cal in California), which currently covers 13.5 million Californians, including a third of the state, half of our children, and two-thirds of our nursing home residents?
How would you, in Medi-Cal, increase access? improve quality? Reduce disparities and improve equity?
Last June, the House of Representatives voted on a budget blueprint that would have cut and capped Medicaid, ratcheting down Medicaid by tens of billions of dollars a year over a decade. Would you have voted for that budget blueprint?
The budget also included severe cuts of $400B in Medicare. Would you support such cuts to Medicare?
Would you support shifting Medicare to a privatized, voucher system?
How would you ensure Medicare’s viability into the future?
Would you support lowering or raising the age for Medicare eligibility?
The budget also included cuts to a range of social services, that impact health, from food stamps to housing support to nutrition programs.
One of the reasons that other countries spend less on health care is because they spend more human services and the social safety-net. What investments would you make in the safety-net?
After multiple reschedules, President Donald Trump gave a speech last week on prescription drug prices, unveiling a plan to address the issue that was underwhelming–several noted that the plan had few specific actions, and in fact literally had 136 question marks. While President Trump prioritized lowering prescription drug prices during his campaign, while in office he has largely capitulated to Big Pharma on a number of occasions.
President Trump promised to take on the pharmaceutical industry, but so far has done nothing but check items off their wish list. President Trump campaigned on negotiating down prescription drug prices, but so far only saw fit to offer corporate tax and regulatory giveaways to the PhRMA executives he met with last year.
Before taking office, President Trump had talked about negotiating prescription drug prices down during the campaign, and said in December that the drug companies were “getting away with murder… Our drug industry has been a disaster. PhRMA has a lot of lobbies, a lot of lobbyists and a lot of power. And there’s very little bidding on drugs. We’re the largest buyer of drugs in the world, and yet we don’t bid properly, and we’re going to start bidding, and we’re going to save billions of dollars over a period of time.”
In the meeting with PhRMA executives last year, he backtracked, saying “I’ll oppose anything that makes it harder for smaller, younger companies to take the risk of bringing their product to a vibrantly competitive market. That included price-fixing by the biggest dog in the market, Medicare, which is what’s happening.” Instead, he promised the industry corporate giveaways, saying “but we can increase competition and bidding wars, big time. We are going to be lowering taxes, we’re going to be getting rid of regulations that are unnecessary.” In January, Trump swore in a new HHS Secretary, Alex Azar, who was previously President of Eli Lilly USA.
Thankfully, California has led when the federal government lagged, passing legislation to prevent unexplained price hikes of prescription drugs that continue to harm our health system and our families’ finances. We hope the California legislature continues to confront prescription drug and other inflated health care prices, taking Big Pharma head on, from last year’s landmark law on drug price transparency to the multiple pieces of legislation currently pending in the state legislature.
Last year, the California Legislature passed and Governor Brown signed the most comprehensive prescription drug price transparency law in the nation. The law triggers notice and justification for any prescription drug price increase of 16% or more over two years. Big PhRMA actively opposed the legislation with aggressive lobbying and a paid media push, but a broad coalition of consumer, labor, insurer, school, patient, health provider, government, and other community groups joined together to ultimately win bipartisan passage of the bill. Also signed into law last year was a bill to prevent “copay coupons” that steer patients to more expensive medications when an equivalent but cheaper drug is available.
Four bills to help curb the increasing cost of our prescription drugs currently remain in the legislature:
AB 315 (Wood) would provide better information about price increases and spending associated with pharmacy benefit managers
SB 790 (McGuire) limits gifts that drug companies give to physicians to increase drug sales.
SB 1021 (Wiener) ensures that all Californians, including those living with chronic conditions, are able to afford life-saving prescription drugs by keeping co-pays affordable for consumers and maintaining standards for formulary tiers, helping consumers have access to the prescriptions they need.
AB 587 (Chiu) would codify a California Pharmaceutical Collaborative for state purchasers of prescription drugs to encourage
collaboration among state and local agencies to reduce costs and produce savings, while also improving outcomes.
Read more about California’s efforts to target prescription drug costs in this factsheet.
On Friday May 11th, Governor Jerry Brown released his proposed May Revision to the state’s 2018-19 budget, which continues California’s commitment to implement and improve on the Affordable Care Act (ACA), but still leaves around 2.8 million without coverage, and more Californians struggling to afford care. The Governor did not include any new health investments in his proposal, however, health and consumer advocates are urging that the state budget invest in covering the remaining uninsured and take new steps toward universal coverage, including expanding Medi-Cal and increasing affordability assistance in Covered California and the individual insurance market. The State Assembly recently proposed a $1 billion health care package for the next fiscal year, and a proposal from the Senate is forthcoming. Many of the proposals that the Assembly has adopted are mirrored in the Care4All California campaign, a campaign focused on bringing California closer to universal coverage without the need for federal approvals.
While this proposed budget continues the significant coverage gains under Affordable Care Act, Governor Brown offers no new help to the many Californians still struggling to access affordable health care. Especially when the federal government continues to undermine our health system in ways that would spike premiums, Health Access supports the priorities of the Assembly and Senate in seeking coverage expansions and additional financial assistance so Californians can better access and afford care. California can and should make a meaningful down payment to the goal of universal coverage, by expanding Medi-Cal and providing additional affordability assistance for those who purchase insurance individually.
Especially in our high cost-state, California should extend additional financial assistance so that more people can afford and sign up for coverage, making the system work better for everyone. While the Affordable Care Act took big steps towards the goal of universal coverage, we support the Assembly and the Senate seeking to fill the gaps in the current system. Too many middle-income families face cliffs in financial assistance if they are just over certain income levels. As the Trump Administration acts to depress enrollment and ultimately spike premiums, additional help to afford coverage can act as an antidote, increasing take-up and stabilizing the market.
The California budget should make needed restorations and expansions in Medi-Cal, a core pillar for the health system on which we all rely. We should close coverage gaps in Medi-Cal, in particular by removing the unfair exclusion on immigration status, and raising the income eligibility line for the aged, blind and disabled to match the rest of the population. We support the Assembly’s proposal to cover all income-eligible young adults in Medi-Cal regardless of immigration status, and also ask the Legislature to prioritize older immigrant Californians who have the most urgent health needs. Additionally, while we have restored vision and dental coverage, California should restore the other half-dozen benefits eliminated during the Great Recession, which include podiatry and speech therapy.
The current budget surplus was created based on the cuts made most notably to health and human services, and as such, the surplus should go to restoring benefits to our most vulnerable who have gone without for nearly a decade. Expanding coverage helps the health and financial security of not just the individual and family covered, but the community as a whole.
With the support of many California community and consumer advocates, on May 7th, California Assemblymembers endorsed a plan to expand Medi-Cal coverage and increase affordability assistance to those purchasing health plans through Covered California and the individual insurance market, taking a major step towards bringing the state closer to a more universal and affordable health care system.
In a rare action so early in the state budget process, the Assembly Budget Subcommittee on Health and Human Services, chaired by Assemblymember Joaquin Arambula, voted to support and prioritize a package worth $1 billion in new health care investments, including:
Providing additional affordability assistance for premiums in Covered California for those below 400% of the federal poverty level (incomes of around $48K for an individual and $98K for a family of four);
Providing a tax credit so those between 400-600% of the federal poverty level who don’t currently receive a subsidy, don’t have to spent more than a percent of their income when buying coverage;
Expanding Medi-Cal to include all income-eligible young adults up to age 26 regardless of immigration status;
Undoing the Medi-Cal “senior penalty,” moving eligibility for seniors in full-scope Medi-Cal up from 123% to 138% of the poverty level to align with other adults in the program;
Enrolling more low-income Californians in Medi-Cal coverage through express lane eligibility from the Women, Infants, and Children (WIC) program.
The proposal was unveiled at a press conference earlier in the day with Dr. Arambula along with Assemblymember Jim Wood, chair of the Assembly Health Committee, Assemblymember Phil Ting, chair of Assembly Budget Committee, and Assemblymember David Chiu, who served on the Assembly Select Committee on Universal Coverage.
These Assembly leaders stated that this progress towards universal coverage will be a top Assembly priority for funding in the state budget. The pieces of the budget will need to be decided in the next month through negotiations with the Senate and Governor. The Senate has also been considering similar and related proposals advanced by Senator Hernandez (Senate Health Committee Chair), and Senator Lara (Senate Appropriations Committee Chair) as well as consumer and health advocates.
The Assembly action is a significant step toward providing real relief for many Californians struggling with accessing and affording health care. Beyond the specific financial help for hundreds of thousands of Californians, it’s a major downpayment toward the goal of a more universal and affordable health system, in a way that can be advanced without the need for federal approval. California has already made major strides forward by implementing and improving on the Affordable Care Act, and these actions would further fill in the gaps that too many Californians fall through, especially in our high cost state.
The package in many ways mirrors the path toward a more universal, affordable, and accountable health system that was proposed by over 50 organizations in the Care4All California campaign earlier this year. Care4All California coalition leaders continue to advocate for additional or refined policy proposals in the Assembly, the Senate, and other negotiations throughout the next few weeks. In particular, premium affordability assistance in Covered California is also needed for consumers below 200% of the federal poverty level. And while immigrant and health advocates have sought to remove Medi-Cal’s unfair exclusion of undocumented immigrants entirely, another priority population would be older undocumented adults who have more medical needs.
Yesterday, Health Access was proud to be with over 50 organizations to launch the Care4All California campaign, to achieve universality, affordability, and accountability in our health care system.
This new health reform campaign builds on the years of progress under California’s implementation and improvement of the Affordable Care Act (ACA). California has attained the largest drop of the uninsured rate of all 50 states – and last year’s coalition and organizing efforts to prevent the repeal of the ACA and dramatic cuts to Medicaid shows that Californians want to protect the care they have. The new campaign will support a package of over 20 policy proposals – legislative and budget, Assembly and Senate – to advance to the goal of universality, affordability and accountability in our health system.
The campaign includes patient and health advocates, labor unions, women’s groups, communities of color, people of faith, immigrant communities, consumer groups, progressives, and other groups united to set ambitious health care goals for California.
The Care4All California campaign challenges California to apply the same bold leadership that capitalized on the Affordable Care Act to achieve the nation’s biggest reduction in the number of uninsured. With 93% of Californians covered by health insurance, universal access is within our grasp. California can – and must – move forward to close the remaining coverage gaps, while lowering the cost of care, achieving greater equity, and improving quality. The campaign has outlined a path forward that is attainable despite unwilling federal partners in Washington, DC.
The Care4All California plan – contains at least 20 pieces of legislation and budget items, spanning Assembly and Senate authors, includes:
1) Advance California to universality and affordability in coverage, by expanding Medi-Cal to remove key exclusions for income-eligible Californians, based on immigration status, as well as age, and increasing affordability assistance in Covered California, on a sliding scale up and down the income ladder, to lower both premiums and costs sharing like deductibles in a high cost-of-living state.
2) Contain costs while holding the health care establishment accountable for improved quality and reducing healthcare disparities, through increased oversight over the industry, including on issues of industry consolidation, rising health insurance premiums, and other cost drivers.
3) Stop the sabotage of President Trump’s administrative attacks on the ACA from eroding existing coverage and consumer protections, loosen standards on health plans, and undermine our insurance market, public programs, and health system.
The Care4All California campaign includes the following organizations: ACCE, American Cancer Society Cancer Action Network – CA, American Heart Association, American Lung Association, APLA Health, Asian Americans Advancing Justice – California, Black Women for Wellness, California Black Health Network, California Coverage and Health Initiatives, CA Federation of Teachers , California Immigrant Policy Center, California Labor Federation, California LGBT HHS Network, California Physicians Alliance, California Rural Legal Assistance Foundation, Catholic Charities – Diocese of San Diego, Children Now, Children’s Defense Fund CA, The Coalition of Orange County Community Health Centers, Community Health Councils, Congress of California Seniors, Consumers Union, California Pan-Ethnic Health Network, Disability Rights California, EQCA, Friends Committee on Legislation of California, Greenlining Institute, Health Access, Justice in Aging, La Maestra Community Health Centers, Latino Coalition for a Healthy California, Los Angeles LGBT Center, Lutheran Office of Public Policy, Mi Familia Vota – California, National Association of Social Workers – CA, National Health Law Program, National Immigration Law Center, Next Gen America, PICO California, Planned Parenthood Affiliates of California, Prevention Institute, Project Inform, Public Law Center, Reform CA, San Francisco AIDS Foundation, SEIU California, St. John’s Well Child and Family Center, The Children’s Partnership, Voices For Progress, Western Center on Law & Poverty, and Young Invincibles.
This new report shows the specific options that California has to improve affordability and further expand and secure coverage for all of our residents—action we can take immediately, without the need for federal approval. The five policy proposals include:
Adding state premium subsidies to the federal ACA subsidies to further reduce enrollees’ premium contributions;
Providing financial assistance to further reduce deductibles, co-payments, and other cost sharing for some Californians already receiving ACA cost sharing subsidies, and making more Californians eligible for this assistance;
Capping the percentage of income spent on premiums by Californians who earn too much for ACA premium assistance by providing state-funded premium subsidies;
Establishing a state reinsurance program to lower premiums for unsubsidized individual market enrollees; and
Extending eligibility for state-funded premium and cost sharing subsidies to children and spouses affected by the ACA “family glitch.”
On March 13, 2018 the Assembly Select Committee on Health Care Delivery Systems and Universal Coverage released their report and recommendations based on their months-long hearing process. The Assembly hearings on universal coverage were a substantive and enlightening review of both the problems in our health system and many potential solutions. While the hearings did tease out the obstacles to some types of reform–most notably the lack of a friendly federal partner over the next several years–what’s most important is detailing a number of actions California can take now to expand coverage to those left uninsured or underinsured as outlined in this new report. California can and should seize the moment to take significant, pro-active steps to expand coverage and improve affordability for consumers, in ways that do not run into federal obstacles.
Addressing the real needs of patients and the public on healthcare is not just possible, but urgently needed now. California can secure coverage for all, by opening up Medi-Cal regardless of immigration status and improving affordability assistance in Covered California–neither of which need federal approval.
Health Access and other consumer advocates urge the legislature to take action on this ambitious agenda, that is achievable without federal approval, to improve affordability and universality in health care and coverage. California can take significant steps this year with a part of the budget surplus available, to provide real relief for patients, and as a down payment for further reform. Promoting and organizing for the vision of a universal health care system is a priority, but California should not wait three or more years for a friendly federal partner, when there is real relief we can provide this year and in the next few years.
By implementing and improving upon the Affordable Care Act, California has seen the greatest drop in the uninsured of all fifty states. If we can keep Medicare, Medicaid and the ACA intact from federal cuts and caps, our state can and should build on our progress, and take additional steps to improve access and affordability for all Californians.
On February 20, 2018 the Trump Administration’s Center for Medicare and Medicaid Services (CMS) announced a proposed rule to extend the use of so-called “short-term” health insurance plans from three months to a year, and otherwise promote the use of these substandard “junk” policies that would not follow Affordable Care Act consumer protections. Such “short-term” plans could deny coverage to people with pre-existing conditions, do not have to cover essential health benefits, and can impose annual and lifetime limits on how much care they will cover.
Health Access, and other health and consumer organizations urge the state Legislature to protect patients by passing SB 910, by Senator Ed Hernandez, to ban such “short-term” insurance. These short-term coverage plans are actually a long con, collecting premiums from patients but not actually covering medically necessary care. This substandard coverage imperils the finances of those who buy it, but also spikes premiums and destabilizes the insurance market for everybody else. California should not allow the Trump Administration to sabotage our health system and should simply ban this junk coverage from being sold in the first place, protecting patients across the board.
Why is short-term insurance considered junk insurance?
It can deny people with pre-existing conditions.
It can charge higher rates based on a person’s health status.
It does not have to cover any or all 10 ACA essential health benefits.
It can include dollar caps on services and stop covering medical expenses after the cap is reached.
It does not have a maximum limit on annual out-of-pocket costs.
It does not allow people to use federal financial assistance to pay premiums.
More information on SB 910 (Hernandez) can be found in this fact sheet. This announcement is the newest proposal in a string of attempts by the current federal administration to try to undermine the Affordable Care Act. California has already taken substantive steps to protect California consumers and patients from theses harmful attacks – including preserving our open enrollment period, and determining a work-around for the de-funding of the cost-sharing reductions. A list of California’s efforts to resist administrative attacks on our health care is available here.
On February 12, 2018 President Trump released his proposed federal budget for the next fiscal year, which would dramatically cut our nation’s health care system, and especially in California.
The budget goes beyond ACA repeal in cutting and capping Medicaid, endorsing last year’s Graham-Cassidy proposal where California was disproportionally and intentionally singled out for harsher and earlier cuts. Such a proposal, even by itself, would cut California’s budget and health system by tens of billions of dollars and would leave over 6.7 million more Californians uninsured. In September of last year, over 100 groups sent a letter to California’s Congressional delegation to urge public opposition to this proposal. None of the fourteen Republican members who voted for an earlier ACA repeal bill (American Health Care Act) have expressed any opposition to this new, harsher, and explicitly anti-California bill. The legislation would phase out, block grant and ultimately repeal all funding for the Affordable Care Act, as well as cut and cap Medicaid—cutting California’s health care by a massive $23 billion a year by 2026, and a staggering $53 billion in 2027 and beyond, according to a California Department of Health Care Services analysis released on Friday, which is in line with other analyses by the Center for Budget and Policy Priorities, Manatt, Avalere, and other independent researchers.
President Trump’s budget depicts a health care armageddon nationally, with the harshest and most devastating impacts on California. All Californians should continue to be alarmed that such a draconian proposal is still proposed as the official goal of our current federal government. We must be vigilant, and all our Representatives must be vocal, in opposing this effort to take health care and key patient protections away from millions of Californians, and other extreme proposals such as cutting and capping Medicaid. No California Congressmember, much less fourteen of them, should stay silent against such a devastating and disproportionate attack on California and our health system, especially one as explicit and intentional as the one in President Trump’s budget. Even the fourteen Representatives that voted for previous ACA repeal bills should realize how much worse this proposal is for the country, for California, and the regions they purportedly represent.
President Trump’s budget of broken promises spotlights severe Medicaid cuts that he said he would never propose, while doing nothing to address prescription drug prices that he said he would bring down. Even if President Trump’s budget is not enacted as written, this draconian proposal is a dangerous place to start negotiations from–as well as a repugnant reflection of our values. It cuts Medicaid, Medicare, and other crucial health and human services–all right after looting the Treasury to pass a tax cut for corporations and the wealthiest.
The Senate and Assembly Committees on Budget and Fiscal Review each held informational hearings on the Governor’s 2018-2019 Proposed Budget, providing a general overview for the public. These hearings kick off the 2018 budget committee process in the Legislature.
The proposed state budget includes $131.7 billion in general fund spending compared to last year’s budget of about $125 billion. Both Amy Costa, the Chief Deputy Director of the Department of Finance (DOF) and Mac Taylor, the Legislative Analyst, acknowledged this number is due to higher revenues. The Legislative Analyst also said legislators have important decisions to make to ensure that the significantly higher discretionary funding reflects the Legislature’s priorities.
In her opening remarks, Senator Holly J. Mitchell, Chair of the Senate Budget Committee, said the budget process, is one that “is fundamentally a democratic one, [with] the ways that the money flows reflecting the collective values of our state.”
“I’m encouraged by our Governor’s proposals to fund critical public services in early care and education, K-12 Local Control Formula Funding, Medi-Cal provider rate increases, and court funding…but there is more we can do for the most vulnerable among us,” continued Mitchell, citing that “public services, our social safety net, education, healthcare, transportation and flood infrastructure” continue to be under-resourced.
Assemblymember Phil Ting, Chair of the Assembly Budget Committee, praised the Department of Finance for fully funding the Rainy Day Fund, along with investments in education, small-business, and transportation funding.
Panel Overview of the 2018-2019 Proposed Budget
DOF’s Amy Costa began by giving an overview of the proposals in the Governor’s Budget, and by commending the progress made since 2011, with the state eliminating a $20 billion annual shortfall, and the passing and signing of timely budgets for seven consecutive years.
According to DOF, major components of the Governor’s proposed budget include a one-time surplus of $6.1 billion dollars, Prop. 98 minimum guarantees, filling the Rainy Day Fund to the full constitutional target of 10% of tax revenues, a new proposal for an online community college, $180 million for an extension of the Cal Competes Program – including $20 million for small businesses – and funding for the first full year of transportation funding for SB 1, totaling $7.4 billion in funding for the measure.
CHIP, Federal Actions and the State Budget
During the Senate Overview hearing, Costa spoke about the implications of federal reauthorization (or lack thereof) of the Children’s Health Insurance Program (CHIP), whose total funding is dependent on the federal government’s authorized reimbursement rate.
When the Governor’s proposed budget was released, and during the Senate Overview hearing, Congress had not yet acted on a longer-term CHIP funding plan. [CHIP was reauthorized on Monday.] If CHIP had not been reauthorized, the state would have needed to come up with hundreds of millions of dollars to fund coverage for children – and likely would have had to cut in other areas as a result. A closer look at CHIP funding can be found on our blog.
In the Assembly’s overview hearing, Assemblymember Jim Wood asked about the implications of CHIP reauthorization. The Governor’s proposed budget assumed the state would contribute 35 percent of the program’s cost, with Congress funding the historical federal share of 65 percent. Congress reauthorized CHIP funding through 2022-2023, with a 12 percent state share through 2018-2019, increasing to 35 percent for the 2020-2021 fiscal year.
For the upcoming budget year, this means the state will have lower costs compared to what was assumed in the Governor’s proposed budget. As a result, the LAO anticipates the Governor’s May Revision to reflect $900 million in lower General Fund expenditures – one-time savings that can be allocated for other purposes.
DOF also indicated that federal cost sharing on other health entitlement programs will have implications in the budget, and cautioned that while the budget assumed continued economic growth, the current economic recovery would match the state’s longest recovery in history, the economic recovery of 1991. If the state were to enter into a recession, the state estimates a $20 billion dollar annual loss in the budget, for a total of $70 billion across several fiscal years.
Governor’s Budget Prepares for a Rainy Day and Natural Disasters
Over the last several months, Costa continued, the state has weathered several major natural disasters that required emergency response, in part due to a very healthy fund for emergency costs. Costa also provided an overview on funds to help the state prepare for unexpended expenditures. The Governor’s budget proposes putting an extra $3.5 billion dollar into the Rainy Day Fund, bringing its total to $13.5 billion and meeting the constitutional target of 10% of the State Budget. The Governor is also proposing $2.3 billion towards the State Fund for Economic Uncertainty. However, DOF also cautioned the Legislature to consider the state’s debts and liabilities which are now at $6 billion.
Finally, DOF concluded their overview by reviewing other major funding proposals. With Prop.98 funding up $2.1 billion dollars from the prior year, totaling $78.3 billion, per pupil spending is now at $11,614 dollars per pupil.
Mac Taylor, the Legislative Analyst, began his overview with high-level remarks about the overall structure of the budget, advising the Legislature that although the Governor has placed a high priority in preparing for the future, the LAO estimates that the Legislature has $7 billion in surplus dollars that they must decide how to spend.
The Governor proposes using four-fifths of the surplus dollars on building reserves. Taylor went on to say that building reserves is the “most cautious thing you can do,” but also offered that we are in the midst of a rare, healthy economic time. “Budget times don’t get much better than this. We are in a good setting, where you can both meet commitments to existing programs, and build reserves,” said Taylor.
However, the LAO cautioned legislators about uncertainty in both the federal and state tax systems, particularly because federal tax reform adds to already uncertain revenue estimates for the state. Taylor provided an example with Proposition 55, which extends income tax increases on high-income taxpayers through 2030. The volatility of capital gains taxes can contribute to uncertainty about revenues.
Taylor also advised that many of the decisions about spending will come down to how much the Legislature wants to prepare for a recession, and to be mindful of interactions between reserve funds and what the Governor and Legislature are allowed to allocate monies towards – for example, if you max out the Rainy Day Fund, leftover dollars must be spent on infrastructure.
During the Assembly Overview hearing, the Legislative Analyst acknowledged that a 10% reserve is a good target to achieve in the Rainy Day Fund. The Legislature could decide to not allocate to Governor’s proposed $3.5B towards the Rainy Day Fund, in order to have more discretion to use it for its own funding priorities.
After the Legislative Analyst’s overview, the committee moved on to questions from Legislators, with Senator Mitchell asking the panelists to comment on the implications of federal tax reform. Amy Costa began by saying that the changes are “hard to understand in nature just yet, but that we do know that tax reforms will impact individual taxpayer behavior. We may not fully realize the implications until people file [for taxes] in 2019.”
Proposition 55, Proposition 56, and Medi-Cal Funding
Both Senators Mitchell and Skinner had questions about Proposition 55 (2016), which extended tax increases on high-income earners, and gives the Director of Finance significant discretion to determine how much should be allocated to Medi-Cal. The Administration could increase Medi-Cal spending by up to $2 billion annually, beginning in 2018-2019 with Proposition 55 monies. Both Senators Mitchell and Skinner asked why the Governor did not use Prop. 55 revenues to increase Medi-Cal spending. Senator Skinner noted that access to care has been an issue for beneficiaries.
The Department maintained that Proposition 55 gives DOF discretion to decide how much money will go to Medi-Cal. The Department pointed to the Governor’s proposed increases for provider payments in Medi-Cal through Proposition 56 dollars, as an existing investment in Medi-Cal.
The Governor is proposing to increase supplemental payments to Medi-Cal providers, allocating an additional $163 million and $70 million for physician and dental payments, respectively. The proposal also extends the duration of the payments from two years to three years.
Senator Pan also asked about the status of Proposition 56 provider payments, asking whether the Department has obtained federal approval to make the supplemental payments. The Department said they received approval for all supplemental payments, except for managed care payments. The Department committed to getting back to Senator Pan on the exact status of approval for managed care payments.
With several members of the full budget committee questioning the Administration’s lack of investment in the Medi-Cal program through voter-passed proposition dollars, Senator Mitchell closed the discussion by responding that the Legislature will have ongoing questions for the Administration on how Proposition 55 dollars are used. Health Access will continue to monitor provider rate increases through Proposition 56 to ensure higher provider rates actually result in increased access to care for Medi-Cal beneficiaries.
Senator Pan moved on to funding for graduate medical education and the $50 million dollars allocated towards residency training for doctors in underserved areas through last year’s budget, and was critical of the administration’s decision to have the funds go towards the University of California, and not specifically towards graduate medical education programs, as Pan asserts the voters intended. As Chair of the Senate Budget Subcommittee on Health and Human Services, Senator Pan said he will be taking a closer look at this issue through the subcommittee process.
The Budget Chair concluded by thanking the panel, and looking ahead to February, when budget sub-committees conduct oversight hearings. Budget subcommittee hearings will begin in March.
As the state budget process moves forward in February, Health Access will fight to protect funding for critical programs both at the federal and state level. We will continue urging California’s Congressional delegation to oppose the proposed massive federal cuts to Medicaid and Medicare. In Sacramento, we will work with the Legislature and the Governor to make critical investments to cover our remaining uninsured and improve affordability for low and middle income Californians.
On January 10, 2018, California Governor Jerry Brown released his 2018-19 proposed State Budget, which includes $131.7 billion in general fund spending and continues California’s commitments to implementing and improving upon the Affordable Care Act. Health advocates are urging the Governor and the Legislature to continue support for Medi-Cal and make investments to cover the remaining uninsured, make key restorations and investments in the program, while taking new steps toward universal care.
The Governor’s budget proposal approaches funding for health care programs “with caution,” as the Governor reflected in his press conference on uncertainty about a potential recession, and whether Congress will fulfill the federal government’s commitments to Californians on healthcare.
Although the non-partisan Legislative Analyst’s Office (LAO) projects a $7.5 billion surplus by the summer of 2019[i], the Governor urges prudence on spending the surplus because of potential federal changes, including uncertainty surrounding funding for Medicaid and Medicare and the reauthorization of the Children’s Health Insurance Program. The Governor’s Budget proposal puts most of the surplus into the Rainy Day Fund by putting $3.5 billion more than required by law, which brings the fund to 100 percent of its constitutional target to “buffer against uncertainty and protect against future cuts.”
Federal Proposals Put Health and Human Services at Risk
The biggest question about the state budget is the risk posed by federal proposal to cut and cap Medicaid and other health programs. The recently-passed Republican tax bill provides massive tax cuts for corporations and wealthy households, while blowing open a $1.5 trillion hole in the deficit. According to the GOP Congress’ budget resolution passed in 2017, it will be paid for by cutting vital services for low-income Americans,[ii] proposing $1.8 trillion in cuts to Medicaid. Such a cut would force catastrophic cuts to Medi-Cal, California’s Medicaid program that provides health insurance for 13.5 million low-income Californians.
The broader social safety net is also at risk, with federal income security programs such as Supplemental Nutrition Assistance Program (SNAP or CalFresh in California), Supplemental Security Income (SSI), and CalWORKS facing $2.3 trillion in cuts.[iii] Because federal funds make up more than a third of the state budget, deep cuts in such federal funding for health and human services programs would go beyond just those programs, not just imperiling Californians’ health and economic security, but education and other budget priorities as well. Within health care, Legislators and the Governor would be faced with limiting eligibility or cutting benefits if these proposed federal cuts go through.
While we must continue to be vigilant and fight against federal cuts to health programs, California must continue with Affordable Care Act (ACA) implementation and finish the job of covering all Californians.
What’s Included in the Proposed Budget:
The Governor’s projects a $101.5 billion overall Medi-Cal program, including $21.6 billion in Medi-Cal General Fund spending, an 11 percent increase from the 2017 Budget Act. Medi-Cal is projected to cover 13.5 million Californians in 2018-2019. Medi-Cal spending growth covers higher health care costs, increased enrollment, and coverage of full adult dental benefits, which was restored in the 2017 Budget Act after years of advocacy. The budget also includes $22.9 billion ($1.6 B General Fund) to fund the state’s portion of the Medi-Cal expansion under the Affordable Care Act, which has brought coverage gains to previously ineligible, non-elderly adults with incomes under 138% of the Federal Poverty Level.
Children’s Health Insurance Program (CHIP) reauthorization: About 2 million California kids in Medi-Cal benefit from CHIP funds. Because Congress has not reauthorized CHIP, which expired September 30, the state may receive a lower federal share for children now covered by CHIP (50 percent instead of 65 or 88 percent) if Congress doesn’t reauthorize the program. If not reauthorized, the state will need to come up with hundreds of millions of dollars to fund coverage for these children–and likely have to cut in other areas as a result. The Governor’s budget proposal assumes Congress will reauthorize the CHIP with a 65 percent federal share as of January 1, 2018. The Governor notes that without federal funding beyond March 2018, coverage for over 32,000 pregnant women and children are not protected by maintenance of effort (MOE) provisions of the ACA, under which California has committed to fund the CHIP program through September 2019.
Proposition 56: Proposition 56, the tobacco tax initiative passed by California voters in 2016, dedicates most of the new revenue generated by the tobacco tax to Medi-Cal. Health Access was one of the organizational supporters of Proposition 56, helped draft the initiative, and actively campaigned for the measure. Health Access supported Prop. 56 monies to ensure access to care, with several state audits and studies highlighting access challenges in Medi-Cal.[iv] Last year, the budget used $546 million from Proposition 56 dollars to increase Medi-Cal provider rates for physicians, dental providers, women’s health, intermediate care facilities for the developmentally disabled, and HIV/AIDS care. The Department of Health Care Services has directed the supplemental payments for physician services to certain procedures, including new patient visits, and psychiatric evaluations and medical services. Dental providers are receiving supplemental payments for restorative, endodontic, and diagnostic services, among others. The Governor’s budget proposes to increase supplemental payments for physicians and dental providers by $232.8 million, for a total of $649.9 million. Of this increased amount, $163 million is allocated for physician payments and $70 million is for dental payments. Health Access looks forward to working with the Legislature and the Administration to ensure that higher provider rates actually results in increased access to care for Medi-Cal beneficiaries.
Beyond what is in the Governor’s budget, what’s especially notable is what isn’t included in the budget: additional expansions to get near universal coverage in California; restorations of key Medi-Cal benefits, and more.
Take Further Steps to Universal Coverage. California should continue make key restorations and investments in Medi-Cal and take steps toward universal coverage. Thanks to our robust implementation of the ACA, California’s uninsured rate has dropped to an all-time low of 7 percent – about 2.5 million to 2.8 million Californians remain uninsured. About half of the remaining insured in California are undocumented, many of them low-income Californians.
Expanding Medi-Cal Regardless of Immigration Status: The budget should include investments that assure every Californian has quality, affordable coverage, regardless of immigration status.
Improve Affordability: Over 1.5 million Californians get coverage through Covered California, and 90% of them receive federal financial assistance to help them afford their premiums. Some consumers still face challenges affording health coverage, particularly those over age 50 who live in higher cost regions. Consumers who earn more than 400% FPL do not qualify for any federal subsidies, making it difficult for them to afford coverage. The Legislature and Governor should invest resources in making coverage more affordable for those who struggle with getting and keeping health coverage.
Equalize the income limits for the Medi-Cal Aged and Disabled (A&D) program to align with the rest of Medi-Cal: The income limit of the A&D program is equivalent to 123% of the federal poverty level, lower than the 138% FPL limit for Medi-Cal. As a result, nearly 60,000 Californians face high Medi-Cal share of costs that are unaffordable to them. The Legislature and Governor should equalize income limits for the A&D program so low-income seniors and people with disabilities get the Medi-Cal coverage they are entitled to.
Restore Remaining Medi-Cal Benefits: The state eliminated a number of non-federally mandated Medi-Cal benefits during the Great Recession. In recent years, full adult dental, acupuncture, and optical (in 2020) have been restored. The Legislature should finish the job by restoring audiology, chiropractic, incontinence creams and washes, podiatry, and speech therapy. Covering these benefits in Medi-Cal will lead to better care, reduce health complications and increase cost-savings to the state. For example, in 2016, it was projected that the inclusion of podiatric medical services in Medicaid can reduce amputations by 10%, helping improve patient care and reduce costs to the state.[v]
As the state budget process moves forward, Health Access will fight to protect funding for critical programs both at the federal and state level. We will continue urging California’s Congressional delegation to oppose the proposed massive federal cuts to Medicaid and Medicare. In Sacramento, we will work with the Legislature and the Governor to make critical investments to cover our remaining uninsured and improve affordability for low and middle income Californians.