In 2001, after nearly a decade of unprecedented economic growth, California faced a multi-billion-dollar budget deficit. The Governor proposed a package of spending cuts totaling $5.2 billion. By 2002, the budget deficit had grown to $34.6 billion and the drastic cuts proposed by the Governor for budget year 2002-03 dwarfed those for 2001-02.

As the second-largest component of the state general fund, Medi-Cal is impacted by these cuts, which come at a time when the need for health coverage through the program is growing. The program’s caseload swelled nearly 20% in 2001-02, increasing from 5.2 million to 6.1 million enrollees. As the unemployment rate in California approaches 6%, the number of people who depend on the Medi-Cal program for access to health care services will likely grow.

This issue brief provides an overview of the Medi-Cal budget and its cost drivers, and discusses the impact of the Governor’s budget cuts on the Medi-Cal program for the years 2001-02. The brief also looks generally at the four areas in which state policymakers and program officials might alter the program to trim it back: eligibility/enrollment, benefits, service use, and provider rates.

The complete issue brief is available under Document Downloads.