Federal Court Rules Budget Cuts Unlawfully Jeopardize Health Care for Millions of Californians
[Posted 09/02/08]

On August 18, a federal court in Los Angeles ordered the State of California to reverse the 10 percent Medi-Cal reimbursement cut that took effect on July 1, finding that the cuts would irreparably harm access to health care for nearly 7 million Californians. When fully enforced, the ruling will restore more than $1 billion to California’s health care system, including $121 million to California physicians who provide care to the poor, due to CMA’s legal efforts.

“This is the third court in five years to find that the state of California has put at risk the access to health care for millions of Californians by underfunding the Medi-Cal program,” says CMA President Richard Frankenstein, M.D. “Hopefully, lawmakers get the message that they cannot balance the budget on the backs of the state’s poor or those who provide their health care. The state safety net needs to be strengthened, not weakened.”

“This decision is a critical step towards ensuring sufficient funding for Medi-Cal, but we still have a ways to go,” says Dr. Frankenstein. Even prior to the cuts, California ranked at the bottom of the country in Medi-Cal funding, and spent less per Medi-Cal beneficiary than any other state. Since the cuts took effect, many providers have been forced to reduce or completely stop services for Medi-Cal beneficiaries, costing many Californians critical access to health care.

In an emergency budget session in early 2008, the state legislature and governor agreed to a 10 percent cut to reimbursement rates for Medi-Cal providers to take effect July 1. Health care providers filed at least three different lawsuits in May, alleging that the state had failed to set Medi-Cal reimbursement rates at a level that ensures access to health care for Californians on Medi-Cal, in violation of state law. The other lawsuits are still pending.

Although a legislative conference committee voted to reduce or eliminate some of the cuts in June, Medi-Cal still faces a 10 percent reimbursement rate cuts and additional cuts in the proposed FY 2009 budget. The preliminary injunction is just a first step in stopping the continuing decline of services to Medi-Cal beneficiaries in the state of California. While this is a small victory for residents of California, we continue to face challenges of providing health care for the most vulnerable in California.

The State has appealed the ruling and a hearing to consider the appeal is scheduled for September 15.

Contact: Ned Wigglesworth, 916/444-5532 or nwigglesworth@cmanet.org.