May 24, 2013
Expanding Medicaid to parents and childless adults who are currently excluded — a change that could extend health coverage to hundreds of thousands of low-income Californians next year — is a cornerstone of federal health care reform. While there is broad agreement among policymakers that California should adopt this expansion of its Medi-Cal Program, there has been considerable debate over how the expansion should occur, as we explained in our recent Medi-Cal chartbook. Governor Brown settled one point of contention last week when he endorsed, in his May Revision, a state-led expansion of Medi-Cal, dropping his January proposal that left open the possibility of counties taking the lead.
At the same time, however, the Governor’s May Revision maintained his proposal to link the Medi-Cal expansion to a major “realignment” of fiscal and programmatic responsibilities for human services programs from the state to the counties. Under this proposal, additional county costs for three programs — CalWORKs, CalWORKs child care, and CalFresh — would be funded by redirecting to those programs most of the state dollars that counties currently use to provide health care to low-income, uninsured (“medically indigent”) residents. The Governor assumes that counties will no longer need these dollars as many medically indigent adults newly enroll in Medi-Cal under the expansion. The Governor therefore proposes to use these county “savings” — which would be determined based on a formula negotiated with lawmakers and counties — to reduce the state’s General Fund costs for human services programs dollar-for-dollar. Using the Administration’s version of the formula, the May Revision estimates that $300 million would be redirected from counties’ health care infrastructure in 2013-14, followed by shifts of $900 million in 2014-15 and $1.3 billion in 2015-16 — a total of $2.5 billion over three years.
From our vantage point, the Governor’s proposal raises three major concerns:
- The Governor has not provided a policy rationale for pursuing a new state-to-county realignment. State policymakers periodically transfer responsibility for public services from the state to the counties, and vice versa, in an effort to improve service delivery and outcomes and align fiscal incentives with program responsibility. However, the Governor has not offered a clear policy justification for pursuing a new realignment that encompasses CalWORKs, child care, and CalFresh. The Administration has provided few details about the realignment concept, and evaluating the benefits and costs of the proposal (for both low-income families and counties) would require considerable time — time that lawmakers don’t have given that they must work out the details of the Medi-Cal expansion within the next two to three weeks. Also, the Governor’s proposal adds unnecessary complexity to the already-challenging decision of how to implement the Medi-Cal expansion, as the Legislative Analyst’s Office (LAO) has pointed out.
- The Governor’s proposal would shift too much funding — too quickly — from county health care services. The Governor proposes to redirect $300 million from counties concurrent with the Medi-Cal expansion in 2014, with the annual amount shifted escalating to more than $1 billion within a couple of years. This rapid increase is attributable to both the structure of the formula (as proposed by the Administration) and the fact that all of the county “savings” would accrue to the state’s benefit, with no savings set aside for counties to reinvest in local health care services and infrastructure. The California State Association of Counties argues that “redirecting this money now will force counties to cut critical public health and safety net services and will reduce funding available to care for the remaining uninsured.” This is why we’ve suggested that policymakers take a “wait and see” approach regarding the appropriate level of state funding for indigent health care services. It’s unclear how the Medi-Cal expansion will affect the use and the cost of the county health care safety net in the coming years. As this picture comes into focus, lawmakers — armed with better information — can consider whether and how to shift any county savings that result from health care reform. In the meantime, policymakers could consider adopting the framework proposed by Health Access, under which the state would encourage counties to repurpose their Low Income Health Programs to serve the many Californians — an estimated 3 to 4 million — who are expected to remain uninsured even after health care reform is fully implemented.
- The size of the proposed fund shift does not square with the Administration’s assertion that these dollars are needed to offset new state costs for Medi-Cal. The Administration’s primary justification for shifting dollars from county health care services is that the state “cannot afford” to both increase its spending on Medi-Cal and continue the current level of funding for county indigent health care. This argument has struck many advocates as curious because the federal government will fund the entire cost of the Medi-Cal expansion through 2016, at which point the state’s share of costs will increase to 5 percent in 2017 and gradually rise to a maximum of 10 percent in 2020. However, the Administration also argues that the state will have new costs for currently eligible Californians who are expected to newly enroll in Medi-Cal starting next year as a result of various eligibility simplifications now required by federal law. Yet the cost of these new enrollees is expected to be relatively small over the next few years. Using “moderate-cost assumptions,” the LAO estimates that the state’s cost for this already-eligible group will be roughly $100 million in 2013-14, rising to about $360 million in 2015-16. (The Administration has released larger estimates, but the LAO suggests those projections are “likely too high.”) In short, if the purpose of redirecting dollars from county health care services is simply to offset state Medi-Cal costs that are attributable to health care reform, then any amounts shifted would have to be significantly below the Governor’s proposed $2.5 billion over three years — and no higher than $100 million in the first year alone.
The federal government’s commitment to initially fund 100 percent of the cost of the Medi-Cal expansion gives California a historic opportunity to extend health coverage to hundreds of thousands of low-income adults while also ensuring that the county health care safety net remains strong for the millions of Californians who will continue to rely on it in the years to come. California is not faced with an either/or proposition; we can do both.
— Scott Graves
May 1, 2013
In a major opinion piece in the New York Times this past Sunday, Stanford University professor — and 2013 CBP conference speaker — Sean Reardon discusses the growing academic achievement gap between children in the wealthiest families and other children. As Reardon explains, the achievement gap between high-income students (those from families at the 90th percentile of the US income distribution) and lower-income students (those from families at the 10th percentile) has widened substantially during the past few decades.
Reardon partly attributes this growing divide in academic achievement to increased income inequality in the US and, relatedly, to the fact that affluent families are spending more of their resources — financial and otherwise — on their children’s preparation for school, in light of the higher-than-ever stakes of educational success. One way to close the achievement gap between higher-income children and their peers, notes Reardon, is to level the playing field by ensuring that all young people enter school ready to learn:
Maybe we should take a lesson from the rich and invest much more heavily as a society in our children’s educational opportunities from the day they are born. Investments in early-childhood education pay very high societal dividends. That means investing in developing high-quality child care and preschool that is available to poor and middle-class children. It also means recruiting and training a cadre of skilled preschool teachers and child care providers. These are not new ideas, but we have to stop talking about how expensive and difficult they are to implement and just get on with it.
Reardon’s piece underscores that broad access to child care and preschool programs among low-income families is one of the keys (though not the only key) to addressing the achievement gap between affluent children and their less-well-off peers and, in turn, reversing the trend toward greater income inequality. In light of the past generation of widening inequality in California, it is troubling that state policymakers have cut annual support for child care and preschool by about $1 billion — or almost one-third — in the past several years. As California’s fiscal picture improves, policymakers should seek to rebuild the state’s investment in high-quality child care and preschool programs that allow low-income parents to work and that also provide critical developmental opportunities for children from lower-income families.
Additional details on Professor Reardon’s research can be found in his presentation from our March 2013 annual conference. Read his presentation slides.
— Steven Bliss
March 26, 2013
Last week, the CBP and the Women’s Foundation of California jointly released a report showing that women are not sharing equally in the state’s emerging economic recovery and that recent cuts to key public services and systems threaten pathways to economic opportunity for women — especially low-income women. One of the report’s major points is the deep reduction made to state funding for child care and preschool programs in the past several years. State policymakers have cut annual funding for subsidized child care and preschool programs by more than $900 million since 2007-08, resulting in the elimination of more than 110,000 child care and preschool slots. At a joint hearing of the Assembly Budget Subcommittees on Health and Human Services and Education Finance last Wednesday, we highlighted these cuts while discussing the importance of child care and preschool programs for low-income families.
Prioritizing support for child care and preschool programs is especially critical in light of the changing nature of the US workforce — in particular, the large number of mothers of young children entering the labor force in recent decades. As discussed in our testimony at last week’s joint hearing, the share of women working or looking for work that have children age 5 or under has risen substantially since 1975, from 39.0 percent to 64.2 percent — an increase of nearly two-thirds. Additionally, in 2010, more than 30 percent of women in the workforce with young children were single mothers, meaning that the stakes of creating economic opportunity for women are as large as ever.
Subsidized child care and preschool programs are especially important for low-income women, given that child care is one of the most expensive items in a household budget. In 2011, in Los Angeles County, full-time care for an infant in a child care center was, on average, $11,499 annually. When women struggle to afford child care, it presents one additional barrier to securing employment.
Low-income women who do have access to child care assistance have a greater chance of maintaining employment, increasing earning potential, and becoming financially independent. Boosting state support for child care and preschool is a prime example of the kind of strategic public investments that can support women’s economic advancement and security. Policy choices made today will determine whether we work toward widely shared prosperity and healthy families over the long-term.
— Kristin Schumacher
April 4, 2012
More than 60,000 children could lose access to child care and preschool in the coming fiscal year under the Governor’s proposed budget, according to a recent CBP report. The Governor’s proposed cuts come at a time when single mothers, many of whom rely on affordable child care to work, have been left behind by the emerging recovery.
A new CBP analysis of US Census Bureau data shows that single mothers in California continued to experience declines in employment and earnings last year, while married parents’ employment slowly began to rebound. The share of single mothers with jobs fell from 58.8 percent in 2010 to 56.8 percent in 2011, and was down by more than 12 percentage points from a recent peak of 69.2 percent in 2007. The drop in 2011 marked the fourth straight year of decline and brought single mothers’ employment rate to the lowest level since 1995, two years before California enacted welfare reform. By comparison, the employment rates for married parents increased slightly between 2010 and 2011, rising from 85.5 percent to 85.8 percent for married fathers and from 57.1 percent to 57.5 percent for married mothers. Even single mothers who were employed in 2011 fell further behind: Their typical inflation-adjusted earnings declined that year for the fourth year in a row. In total, single mothers’ inflation-adjusted median hourly wage fell by 8.4 percent between 2007 and 2011. That drop erased all of the hourly wage gains single mothers made prior to the Great Recession.
Single mothers in California continue to struggle in the face of a weak job market. Cutting child care and preschool funding would only leave them further behind.
– Samar Lichtenstein
March 30, 2012
Child care and preschool are essential in helping parents find and retain employment as well as in preparing children for success in school. Such programs are especially important now, particularly for lower-income parents, as California’s families face the toughest job market in decades. A new CBP report, Playing With Our Future: Key Facts About California’s Child Care and Development Programs in the Aftermath of the Great Recession, takes an in-depth look at the economic and policy context of the Governor’s proposed cuts to state spending on child care and preschool. The report shows that:
- Nearly one out of four California children lives in poverty, and many families – including single mothers and their children – continue to face economic uncertainty in the aftermath of the Great Recession.
- The Governor’s Proposed 2012-13 Budget would cut funding for both child care and preschool by more than 20 percent, after adjusting for inflation, causing more than 60,000 children to lose access to these programs in the coming fiscal year.
- Child care and development spending would drop to 1.2 percent of total state spending in 2012-13 under the Governor’s proposal, down from 2.0 percent in 2007-08.
- State funding for afterschool programs has not been cut in recent years – and would not be reduced under the Governor’s proposal – because it is protected by Proposition 49 of 2002, which prohibits the state from reducing afterschool funding without voter approval.
Read Playing With Our Future here.
– Steven Bliss