Is California Headed For State Vs. Counties Health Budget Battle?



SAN FRANCISCO – After four years of massive budget cuts to California’s public health insurance programs – and the voters’ approval of a tax increase –  Gov. Jerry Brown is laying down his scalpel.  Brown presented his proposed budget for the coming year on Thursday, including an additional $350 million in funding for the state’s Medicaid program and a cautiously emphatic endorsement of President Barack Obama’s health care law: “What President Obama did was historic and heroic,” said Brown, a Democrat, during a press conference in Sacramento, Calif., “and I will be a good partner.”

California was an early supporter of the law, and indeed it was the first state to pass legislation authorizing a state-based health insurance exchange, but Brown had never declared definitively that the state would open its Medicaid program, known as Medi-Cal, to poor adults with no dependent children, as prescribed by the Affordable Care Act. At his budget unveiling, Brown floated several options for following through on that pledge: California’s 58 counties which, by state law, are required to provide health care to the “medically indigent” could administer their own programs or, Brown seemed to strongly suggest, the state could relieve them of their duties for a price.

California’s counties receive some $3 to $4 billion a year from vehicle registration fees and the state sales tax to provide health care to impoverished residents. If the counties cede that duty to the state, Brown suggested, they will have to forgo at least some or all of that funding. (Or in one novel alternative: swap providing health care for footing the bill for child care for poor families.)

Just how much revenue counties would have to give up will be the topic of negotiations in the coming months, and counties that operate their own public hospitals will have much to say. Public hospitals are often the only source of medical care for the uninsured, and they – and other hospitals that provide unreimbursed medical treatment to poor patients – are already facing a reduction in federal payments under the health law. The Golden State is expected to have 2 to 4 million so-called “residual uninsured” in 2014 when the health law takes full effect. Those residents, many of whom are undocumented and barred from buying their own insurance coverage through “Covered California,” the state’s online marketplace, and are ineligible for any public insurance programs, will continue to rely on county-run facilities and safety-net clinics.

If the state drains the counties of health care funding, says Anthony Wright, executive director of Health Access, an advocacy group, “You run the risk of losing public hospitals and clinics at exactly the moment we need all the capacity we can get.”

Brown’s summons to the negotiating table was not unexpected, says Farrah McDaid Ting, a senior legislative analyst at the California State Association of Counties. “We knew there was going to be a conversation this year about how counties spend money on health care,” says McDaid Ting. But she says many California counties have made an enormous effort over the last few years enrolling impoverished residents into county-run, Medicaid-like programs with considerable funds from the federal government and those newly enrolled residents “were supposed to flip the switch in January [2014] and go straight into Medi-Cal.” Indeed, the program, which required a waiver from federal Medicaid laws, was called “Bridge to Reform.”

For supporters of the health law here in California, the clock ticks too quickly. While the legislature will begin a special session on health care concerns later this month, Wright says he is keenly aware that there are only nine months until residents are expected to enroll in health insurance plans: “We need to do this with all speed and urgency.”