Taken as a whole, California’s 2022–23 state budget represents one of the most significant investments in health care in a generation. It puts California on track to be the first state in the nation with universal health coverage. It delivers another major investment in the training of our future health workforce. It gives California desperately needed tools to rein in skyrocketing health care costs. And paired with a new statewide data sharing agreement, it takes an important step toward weaving together California’s terribly fragmented health systems.

These budget gains will inevitably depend on effective implementation to realize their full potential. Still, 2022 is shaping up to be a major milestone in California’s journey to ensure that all residents can afford and obtain the care they need.

Here are four major health care victories in the budget that deserve to be highlighted:

Win #1: Making History on Health Coverage

The budget eliminates one of the biggest remaining roadblocks to universal coverage in California — the use of immigration status to shut out otherwise eligible Californians from the full benefits of Medi-Cal. It allows all Californians with low incomes between the ages of 26 and 49 to enroll in full-scope Medi-Cal regardless of immigration status starting in 2024. An estimated 700,000 Californians will benefit. (Californians with low incomes in all other age groups are already eligible for Medi-Cal regardless of immigration status.)

While these changes open the door to coverage, we should not expect people who have been systematically disenfranchised to automatically walk through it. That’s why we must double down on collective efforts to strengthen outreach, enrollment, and navigation so the newly eligible Californians can sign up without delay or confusion in 2024. It is of utmost importance that all Californians with Medi-Cal, including those newly eligible, can count on timely access to high-quality care.

Win #2: Unprecedented Investment in the Health Care Workforce

California cannot ensure universal access to care without also ensuring that the state has the right number and type of health care workers in the right places. But our health care workforce, stretched thin even before the pandemic, is now at a breaking point. In California, people with low incomes, people of color, and residents of rural areas bear the biggest burdens of those shortages. The good news is that the new budget includes $1.5 billion in investments over the next three years to strengthen and expand the state’s health and human services workforce. This enhanced funding will grow California’s behavioral health, primary care, and public health workforce, and provides additional dollars to expand the number of community health workers.

While these funding gains are notable, much of the funding is a one-time investment. It will take a sustained commitment to address human shortages that have been decades in the making. Future budgets should provide financial support for greater racial and ethnic diversity across the state’s health workforce. A recent study in the American Journal of Obstetrics and Gynecology found that having a more diverse pool of registered nurses led to significantly lower risk of severe adverse maternal outcomes during childbirth, even after the data were adjusted for variations in hospital and patient characteristics. In California, the gaps between the health workforce we have and the one we need are glaring. Latino/x Californians make up nearly 40% of the state’s population but account for only about 6% of the state’s doctors. State support of community health workers and last year’s funding boost for the UC-PRIME program are important signs of progress, but much more action awaits.

Win #3: A Major New Lever to Curb Growing Health Care Costs

Excessive inflation is a top priority right now, but it’s been baked into the health care economy for a long time. As Anthony Wright of Health Access California says, “If gas prices went up at the same rate as health care prices over the last couple of decades, we wouldn’t be seeing $5 to $6 a gallon, we’d be seeing $30 to $40 a gallon.” With the new budget, the state will have a powerful new tool to help curb the unsustainable growth in health care costs. The budget includes $30 million to establish the Office of Health Care Affordability to analyze data on health care cost drivers and establish industrywide growth targets to ensure affordability for consumers and purchasers. The office also will set and enforce targets designed to increase primary care and behavioral health investment, promote use of alternative payment models, and help ensure that California has the health care workforce to meet the needs of 40 million Californians.

For the last three years, CHCF’s annual statewide health policy survey found that the cost of health care drove half of Californians to skip or postpone some type of health care in the previous 12 months. The solutions developed by the Office of Health Care Affordability can’t come soon enough.

Win #4: Rolling Out California’s First Statewide Health Data Exchange

A key driver of both high health care costs and worse outcomes is the extreme fragmentation of California’s health care system, and nowhere is this more evident than in the disjointed nature of health data systems. On July 1, the California Health and Human Services Agency rolled out a new statewide data sharing agreement that applies to health insurers, providers, and hospitals. This new data exchange policy has huge implications for CalAIM’s efforts to adopt a whole-person approach to care for Medi-Cal enrollees with high needs. It will enable the state to more easily measure racial and ethnic health disparities and to track progress toward health equity. And it will allow state and local agencies, hospitals, and other providers to work together more effectively in a public health emergency.

The budget includes $250 million over multiple years for implementation of the statewide data exchange. Of that, about $200 million supports infrastructure development for providers for electronic health record systems and improved data collection and exchange. The other $50 million will be spent on technical assistance and direct support of small, underresourced providers to help them participate in data exchange. It’s worth noting that most of the implementation dollars for data exchange come out of a separate $700 million allocation for “equity and practice transformation payments.” Even though full details are still forthcoming, this line item represents another promising opportunity to address racial inequities in health care.

That funding is a start, but on its own won’t be enough to get California’s small providers ready to participate. It also leaves out county behavioral health and public health agencies that will need to upgrade their systems to meaningfully participate. There also are outstanding questions about how the exchange will be governed, an issue critical to assuring that decisionmaking will be guided by what is in the public interest. Notwithstanding these challenges, the state’s progress on data sharing is a monumental achievement and a solid foundation to build on in the future.

Looking Ahead: Strengthening California’s Community-Based Organizations

Community-based organizations (CBOs) play a crucial role in reducing health inequities and advancing racial justice in our communities. Providing the resources they need to do this work has proved challenging.

Many community stakeholders were disappointed that the proposed Health Equity and Racial Justice Fund was not funded in this year’s budget. Recent state policies, including CalAIM, acknowledge the pivotal role CBOs play in advancing health and health equity. Nevertheless, it is clear that there is more to do to guarantee that these partners have the financial resources they need to carry out their vital work — not only in health, but in housing, criminal justice, and education.

While the full implications of the 2022–23 budget are still surfacing, it is already clear that the spending plan creates game-changing opportunities for our state. It supports the march toward universal coverage, the construction of a health care workforce aligned with the state’s geographic and social needs, the drive to make health services more affordable, and the imperative to break down health information silos. Successful execution will require thoughtful planning, community engagement, and committed action. If we all work together, this budget should deliver key building blocks for a healthier and more just California.

Kara Carter

Kara Carter is senior vice president of strategy and programs at the California Health Care Foundation, where she develops strategies, provides overall guidance, and leads the program teams in the development, execution, and assessment of CHCF’s work. In this role, Kara provides thought leadership and support to CHCF’s grantmaking programs and priorities, as well as CHCF’s program-related investments and learning and impact functions. Read More

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