California Governor Releases Plan for $10.2B in Reductions to Health and Other Programs To Cover Budget Shortfall

California Gov. Gray Davis (D) on Dec. 6 proposed $10.2 billion in cuts in state spending, including cuts in health care programs, as part of an effort to cover an expected $21 billion budget deficit, the Los Angeles Times reports (Jones, Los Angeles Times, 12/7). While cuts to education were the greatest of the proposal, health and human services spending cuts were the "second-biggest target" of Davis' plan (Morain, Los Angeles Times, 12/9). Davis' proposed cuts to health care programs include the following:

• Eligibility for Medi-Cal, the state's Medicaid program: Income eligibility limits would be reduced to 61% of the federal poverty level for low-income individuals (LaMar, Contra Costa Times, 12/7). The change would reduce the eligibility level from $18,000 a year for a family of four to $12,000. The state would save $6.2 million in the fourth quarter and $118 million next year with the change. More than 200,000 beneficiaries would lose their coverage.
  
  
• Reverification: Medi-Cal beneficiaries would be required to reverify their eligibility quarterly rather than every year, for an expected savings of $5 million this fiscal year and $85 in the next fiscal year.
  
  
• Medi-Cal benefits: The plan calls for the elimination of optional Medi-Cal benefits, including dental care and medical supplies such as syringes and testing strips for diabetics, catheters and rubber sheets.
  
  
• Medi-Cal reimbursements: Davis' plan calls for a 10% cut in Medi-Cal payments to physicians and other providers, including nursing homes (Los Angeles Times, 12/9). Hospitals and federally qualified health centers would not be subject to the reimbursement decreases.

Reaction
State lawmakers yesterday began a special session to consider Davis' proposal. While the governor wants lawmakers to "act quickly" on his plan, several lawmakers said they wanted to wait until Davis releases his 2003-2004 fiscal year budget proposal before voting on any of the spending cuts (Gledhill, San Francisco Chronicle, 12/8). Lawmakers differ on how to cover the budget deficit. Most Republicans favor covering the shortfall entirely with spending cuts, but many Democrats support also raising taxes. Many advocates criticized the cuts. Jim Hard of the California State Employees Association Local 1000 said that instead of the cuts, the state should increase the income tax rate for the richest state residents. "These solutions are far better than undermining services for seniors, children, persons with disabilities, the sick and the poor," he said (LaMar/Kleffman, Contra Costa Times, 12/9). Pat McGinnis, executive director of California Advocates for Nursing Home Reform, said the cut could endanger patient care. "Where do you make [the 10% reimbursement rate cut] up? You make it up by increasing the private payment rates ... and by not taking as many Medi-Cal patients," McGinnis said (Los Angeles Times, 12/9). According to the New York Times, the budget cuts that Davis announced "serve as a prelude to even deeper cuts" in the budget for the fiscal year that begins next July (Broder, New York Times, 12/9).