California Governor Signs $99.1 Billion Budget With 5% Reduction in Reimbursements for Medicaid Providers

California Gov. Gray Davis (D) on Aug. 2 signed a $99.1 billion state budget for the 2003-2004 fiscal year that includes a 5% reduction in reimbursements for providers who treat patients enrolled in Medi-Cal, the state's Medicaid program, to help cover a $38 billion deficit, the Los Angeles Times reports (Jones et al., Los Angeles Times, 8/3). The budget includes $12 billion, or 10.8%, in reductions to state expenditures, with some of the "deepest cuts" made to social services programs, the San Francisco Chronicle reports (Berthelsen/Wildermuth, San Francisco Chronicle, 8/3). The budget, which leaves an $8 billion budget deficit next fiscal year, authorizes the state to borrow funds, eliminate programs and increase fees (Martin et al., San Francisco Chronicle, 7/30). The Medi-Cal physician reimbursement reductions will save the state $115 million (Los Angeles Times, 7/29). Optional Medi-Cal benefits provided to beneficiaries will remain in place (San Francisco Chronicle, 7/30). However, the budget will require Medi-Cal beneficiaries to reapply for the program two times per year, rather than one, to help reduce costs (Bluth, Sacramento Bee, 8/3). Funds for public health and human services programs in the budget will remain the same as those provided last fiscal year (Chorneau, AP/Fresno Bee, 7/30). The state will borrow $1.5 billion against future payments from the state's share of the national tobacco settlement (Los Angeles Times, 7/29). Under the budget, the state will reduce expenditures for health care for low-income residents by a total of $1.57 billion, about $930 million of which will result from a revision in Medi-Cal accounting practices. The revision will delay the date when Medi-Cal considers a medical bill, which will shift a part of expenses from this fiscal year to next fiscal year, the Chronicle reports (San Francisco Chronicle, 8/3). The budget allocates $14 billion from the general fund for health care (Mendel, San Diego Union-Tribune, 8/3).

Reaction
Davis said that the budget represents a "victory over Republican efforts" to reduce state health care expenditures, the Times reports. "They wanted to eliminate one million immunizations for children. We wouldn't let them. They wanted to eliminate health benefits for 400,000 children who already have had them. But we wouldn't let them," Davis said (Los Angeles Times, 8/3). State Assembly Republican Leader Dave Cox criticized the budget and said in a statement that Davis has "devastated the state's economy and left us with an unprecedented $38 billion hole" (San Diego Union-Tribune, 8/3).