Governor’s $112 Billion Budget Proposal
Includes Long-Anticipated Medi-Cal ‘Redesign’
[Posted 01/20/05 ]

The Schwarzenegger administration Friday released its proposed 2005-2006 budget. Despite an estimated $9 billion budget deficit, the governor’s spending plan does not cut Medi-Cal physician reimbursement or contain any direct cuts to Medi-Cal eligibility or benefits.

The budget proposal does, however, contain the governor’s long-anticipated Medi-Cal “redesign.” The plan would move many elderly and disabled recipients into managed care, institute monthly premiums for more than 550,000 beneficiaries who are at the federal poverty level ($15,610/year for a family of three), and cap dental benefits at $1,000. The administration expects the changes to save the state $12.3 million in 2005-2006, with savings reaching $139.1 million/year with full implementation in 2008-2009

Below are details of the governor’s $112 billion spending plan as it relates to health care.

Medi-Cal Managed Care: The proposal would expand the Medi-Cal Managed Care program to up to 13 new counties, affecting 262,000 enrollees from in El Dorado, Placer, Imperial, Madera, Merced, Marin, Mendocino, San Benito, San Luis Obispo, Sonoma, Ventura, and possibly Kings and Lake counties. The proposal would also require 554,000 elderly and disabled beneficiaries currently enrolled in fee-for-service Medi-Cal to switch to the managed-care program.

CMA opposes mandatory managed-care enrollment. The association is concerned that forcing enrollees into a managed care system would restrict access to care and disrupt patients’ relationships with their current physicians.

Imposing Monthly Premiums: The plan would require 550,000 beneficiaries to pay monthly Medi-Cal premiums beginning in FY 2006 Premiums would be $10 for adults and $4 for children, with a family cap of $27. Premiums would not be imposed on beneficiaries with family incomes below the federal poverty level ($19,590/year for a family of four) or elderly and disabled beneficiaries with monthly incomes less than the Supplemental Security Income/State Supplementary Payment (SSI/SSP) program levels ($812/month for a single individual, $1,437 for a couple).

CMA is concerned that the new premium program could reduce enrollment, forcing people to delay care and not get checkups, while increasing use of emergency rooms by the uninsured. The administration has estimated that 110,000 beneficiaries would lose coverage for failure to pay premiums. About 6.6 million Californians are eligible for Medi-Cal.

Dental Benefits: The redesign would limit annual dental benefits to $1,000 (excluding some emergency procedures).

Medi-Cal and Healthy Families Enrollment: The governor’s budget proposes modest funding increases to facilitate enrollment in Medi-Cal and Healthy Families, providing $14.5 million to reestablish application assistance fees and $5.6 million for programs to help children transition from Medi-Cal to Healthy Families.

Obesity Prevention: The Governor announced that obesity prevention is a priority for his administration. His budget proposal allocates $6 million for obesity prevention efforts, including work- and school-based prevention programs, and increasing access to obesity prevention services in public and private health insurance programs.

Prescription Drugs. The Governor’s budget includes $4 million for the California Rx program, which would provide prescription drug discounts to uninsured Californians with incomes below 300 percent of the federal poverty level ($27,930/year for an individual, $56,550/year for a family of four).

Border Health. The budget would eliminate $700,000 in state funding for the Office of Binational Border Health. The administration has indicated that the border health office would still receive $500,000 in federal funds.

Contact: For more information on the Medi-Cal redesign, contact Robin Flagg, 415/882-5110 or rflagg@cmanet.org. For other budget information, contact Lisa Folberg, 916/444-5532 or lfolberg@cmanet.org.