Expanding Medi-Cal: We’re Not Starting From Scratch

December 21, 2012

California isn’t starting from square one as the state moves toward expanding Medi-Cal coverage to most low-income adults under age 65, pending approval in 2013 by state lawmakers and Governor Brown. Under a 2010 agreement with the federal government, California established a temporary, county-based Low Income Health Program (LIHP) that is building a bridge to an expanded Medi-Cal Program in 2014. LIHP provides health coverage to uninsured adults ages 19 to 64 who meet citizenship or immigration requirements and are excluded from Medi-Cal under current eligibility rules. The income of participating adults cannot exceed 200 percent of the federal poverty line (a limit equal to $22,340 for an individual in 2012), although counties generally may — and in many cases have — set lower eligibility thresholds. County participation in LIHP is voluntary; counties that opt into the program have half of their LIHP costs paid by the federal government. As of September 2012, more than 500,000 low-income Californians across 50 counties were enrolled in LIHP.

LIHP provides vital health care services to low-income adults who otherwise would be uninsured. It’s also bringing substantial federal dollars — projected to reach nearly $3 billion — into California’s health care sector and the broader state economy. But even more, LIHP is helping to prepare California for the expansion of Medi-Cal as envisioned in the federal health care reform law. This is because nearly all of the adults enrolled in LIHP — along with many other low-income Californians — would be newly eligible for Medi-Cal under the expansion. In fact, state officials are already planning for the transition of eligible LIHP enrollees to Medi-Cal effective January 1, 2014. At that point, the federal government will pay 100 percent of the cost of coverage for this new group of Medi-Cal beneficiaries through 2016, with the state picking up a small share of the cost in subsequent years. So, for anyone wondering when the Medi-Cal expansion will begin in California, LIHP provides an answer: It’s already under way. It’s now up to state policymakers to maintain the current momentum and propel the expansion — a key component of federal health care reform — across the finish line.

— Scott Graves

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New CBP Report: Congress Should Maintain States’ Flexibility To Expand SNAP Food Assistance

August 13, 2012

A new CBP analysis examines deep cuts that Congress is considering making to the federal Supplemental Nutrition Assistance Program (SNAP, formerly food stamps). Known as CalFresh in California, this program provides food assistance to nearly 4 million low-income individuals across the state, over three-fifths of them children. The need for food assistance has increased due to the Great Recession and its aftermath. Since mid-2007, when the economic downturn started in California, CalFresh enrollment has risen steadily and nearly doubled.

As part of the reauthorization of the federal Farm Bill, the US House of Representatives is considering slashing SNAP funding by more than $16 billion over the next 10 years, largely by eliminating the flexibility that states have to broaden SNAP eligibility to more low-income working families. This change would end SNAP food assistance for roughly 2 million to 3 million low-income individuals in 40 states, including California.

The cuts under consideration in the House would jeopardize improvements that California has made – or is considering making – to CalFresh. For instance: as we’ve blogged before, a bill now in the Legislature – AB 1560 – would bring more low-income individuals into CalFresh by both simplifying eligibility rules and creating a direct link between CalFresh and the Medi-Cal Program. The proposed House cuts to SNAP would prohibit this effort to expand access to CalFresh and would reduce nutrition assistance at the worst possible time: with many families still struggling in the wake of the worst economic downturn since the Great Depression.

– Steven Bliss

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A Federal Balanced Budget Amendment Would Threaten the Economy and Force Deep Program Cuts

November 18, 2011

To Californians accustomed to hearing about big budget challenges in Sacramento, debates in Washington, DC, over how to balance the federal budget may seem unconnected to our daily lives. In fact, federal budget decisions have a significant impact on the Golden State. Federal dollars support an array of programs and services that touch the lives of all Californians, as we show in our new Policy Basics. For example, of the more than $330 billion in federal funds spent in California in federal fiscal year 2010 – which ended September 30, 2010 – more than one-third (36 percent) paid for Social Security and Medicare benefits, and another 12 percent supported an array of programs that provide assistance to millions of Californians, such as unemployment insurance (UI), CalFresh food assistance, and veterans benefits.

The importance of federal spending in California helps put into perspective the debate in the House of Representatives this week over whether to amend the US Constitution to require a balanced federal budget each year. While the balanced budget amendment (BBA) was defeated in the House today, the Senate is required to vote on the BBA by the end of the year as part of the “debt-ceiling” deal reached in August. A BBA “would threaten significant economic harm,” according to a recent report by the Center on Budget and Policy Priorities (CBPP). Why? Because it “would force policymakers to cut spending, raise taxes, or both just when the economy is weak or in recession – the exact opposite of what good economic policy would advise.”

Furthermore, if the votes to raise revenues cannot be found – a likely prospect – then the federal budget would have to be balanced through cuts alone. As a result, the CBPP estimates that a BBA could force deep reductions across a range of programs. Social Security, for example, could be cut by almost $1.2 trillion between 2018 and 2021, which we estimate would mean a reduction of roughly $110 billion to income support for millions of California retirees and people with disabilities. An estimated $750 billion reduction to Medicare between 2018 and 2021 would translate into an $83 billion cut in California, affecting millions of California seniors.

A persuasive case against the BBA was recently made by Rep. David Dreier, a 16-term, conservative Republican from southern California. Dreier, who supported a BBA in 1995, reminded his House colleagues this week that Congress managed to balance the federal budget in the late 1990s without amending the US Constitution. “I was wrong,” Dreier said of his support for a BBA in 1995. “Two short years later, we balanced the federal budget … without touching that inspired document, the US Constitution.” Recent experience in California also argues against a BBA. California’s restrictive budget rules – which hamstring fiscal policymaking – show that changing the budget process will not bring a budget into balance. Our nation, like our state, needs significant new revenues to responsibly balance its budget.

– Scott Graves

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Can Our Economy – and Our Communities – Withstand Deep Cuts to Federal Spending?

July 29, 2011

New data released today show that the national economy is recovering too slowly from the Great Recession to boost job growth. National gross domestic product (GDP) – the total of all goods and services produced in the US – increased by just 1.3 percent during the second quarter of this year, following a meager 0.4 percent increase in the prior quarter – well below the 2.5 percent growth rate that economists say is needed just to keep unemployment where it is.

What’s more, these numbers suggest that the economy may not be able to withstand the major cuts in federal spending that some policymakers are calling for in the debate over Congressional action aimed at avoiding default. These cuts – which could include slashing Medicaid, Medicare, Social Security, and food assistance – couldn’t come at a worse time. Millions of workers are still unemployed and are struggling to make ends meet in the wake of the recession. Federal spending cuts would further weaken economic growth, and that means little to no job growth. As economist Paul Krugman recently blogged, government spending cuts – at the federal, state, and local levels – are a major factor behind stagnant economic growth.

As federal policymakers discuss a viable way to avoid default, it is critical that they provide adequate support for core social services and avoid forcing deeper cuts at the state and local levels. A truly balanced approach to fiscal policy is necessary not only to maintain critical public services and structures, but also to pave the way for a broad, sustained economic recovery that benefits all individuals and families.

– Steven Bliss and Alissa Anderson

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Federal Reductions Could Mean Deep Cuts For Medi-Cal

July 7, 2011

It has been one week since California enacted a rare on-time and lean budget. For those of you longing for a months-long fiscal fight, look 2,700 miles eastward to the nation’s capital where discussions about reducing the deficit, increasing the federal debt ceiling, and passing a federal budget have been heating up.

As part of efforts to balance the federal budget, President Obama unveiled his “Framework for Shared Prosperity and Shared Fiscal Responsibility” in April, which would reduce Medicaid spending by $100 billion over the next 10 years and could result in additional cuts to Medi-Cal, further weakening the program. To achieve this reduction, the Obama Administration proposes to:

  • Restrict states’ ability to use taxes or fees paid by health care providers to draw down federal funds. California, along with 45 states and the District of Columbia, imposes fees and taxes on health care providers to provide additional state dollars that are then used to draw down federal matching funds. In 2010-11, California imposed fees and taxes on hospitals, long-term care facilities, and managed care plans, enabling the state to draw down an estimated $2.5 billion in federal funds. President Obama’s 2012 budget, released in February, proposed to reduce the maximum assessed tax on providers from 6 percent of revenues in 2014 to 3.5 percent in 2017 and beyond. The Administration’s April framework would also restrict the amount of federal funds that could be obtained using provider taxes and fees, though the framework did not specify an amount.
  • Change the way federal payments for Medi-Cal are calculated. In general, the state and federal governments each pay 50 percent of the cost of Medi-Cal. For some services, however, such as family planning, the federal government pays a greater share. Under the President’s framework, the various federal matching rates would be “blended” to create one rate. Calculating California’s “blended” rate would require federal officials to make a number of projections – including how many adults will enroll in Medi-Cal as a result of the federal health reform law – without any actual experience.

Together, these proposals would mean only one thing: fewer federal dollars for Medi-Cal. With fewer federal dollars, the state would be forced to spend more to maintain current services or cut Medi-Cal even further. The CBP has documented that reductions to Medi-Cal since 2008-09 have totaled $2.7 billion – the state is already providing fewer services at greater cost to individuals enrolled in the program. Further reductions would result in even greater harm for 7.4 million Californians who rely on Medi-Cal.

– Hanh Kim Quach

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