Reversing improvements in the Medi-Cal program made since 1999, Governor Gray Davis has targeted health programs for significant spending cuts as he faces a 2003-2004 budget deficit of $34.6 billion, according to a new California HealthCare Foundation (CHCF) analysis, "Impact of Proposed Budget for 2003-04 on Medi-Cal and other Health Programs."

The proposed budget plan reduces spending for health services and for Medi-Cal by 5%. In addition, the plan would shift to counties responsibility for over $8 billion in services, including $3 billion in health and long-term care services covered by Medi-Cal.

"The proposed cuts to Medi-Cal would increase the number of adults without health insurance by as much as 550,000 and place enormous strain on hospital emergency rooms and other safety-net providers," said Chris Perrone, director of CHCF's Medi-Cal Policy Institute. "These cuts would also contribute to difficulties that all beneficiaries, including children, elderly, and the disabled, have finding an available physician or nursing home bed," he noted.

Mr. Perrone added, "When we cut state spending for Medi-Cal, we also lose the benefit of the dollar-for-dollar match the federal government provides to states for Medicaid spending. California's economy currently benefits from over $18 billion in Federal funds provided through Medi-Cal."

The full analysis is available at through the link below and examines proposed cuts to health programs, including the potential impact these cuts would have on low-income and elderly Medi-Cal beneficiaries and the health care delivery system. Also included is a multi-state Medicaid program comparison, which details funding and reimbursement rates. Highlights from the analysis of the proposed budget include:

General Trends

• Total state spending would drop to $96.4 billion, a decline of 5% from a peak of $101.3 billion in 2001-2002.
• Total funding for the health programs administered by the California Department of Health Services would decrease from $32.2 billion in the current year to $27.7 billion in 2003-2004.
• The budget for the Healthy Families program, which provides low-cost health insurance to low-income children in families with incomes too high for Medi-Cal, would increase by 15%.

Medi-Cal Spending

• The Medi-Cal budget would drop by $1.5 billion to $27.7 billion, not including $3 billion that would be shifted to counties under the proposed realignment plan.
• Over the past decade, Medi-Cal expenditures have grown 60% due to growing enrollment and rising health care costs.
• Medi-Cal enrollment would drop by 209,000 to 6.3 million. This reflects the net change in enrollment taking into account the addition of over 300,000 new people expected to enroll in Medi-Cal in 2003-04 and the loss of nearly 550,000 adults who would lose their Medi-Cal coverage as a consequence of proposed changes to eligibility requirements and review procedures.
• The budget proposal reduces eligibility for working families from 100% of the federal poverty level ($18,000 annual income for a family of four) to 61% ($12,000).
• Provider reimbursement reductions would average 15%, taking into account the Governor's December and January proposals.
• On average, Medi-Cal pays physicians 65% of what Medicare pays for the same service. The average for all 51 Medicaid programs is 81%.
• California currently ranks 42nd among the 51 Medicaid programs in the average fee it pays physicians, but 5th among the 10 largest states.
• 45% of physicians do not participate in Medi-Cal.
• Medi-Cal nursing home payments would also be reduced by 15%. Medi-Cal pays for 64% of nursing home days.