CHA News Article

Governor, Legislature Negotiate Several Health Care Issues Ahead of June 15 Budget Deadline
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With the Legislature required to send the Governor a final budget no later than June 15, budget negotiations are in full swing at the Capitol. The budget conference committee will address the many discrepancies between proposals from the Senate, the Assembly, and the Governor, with plans to complete its work by the end of this weekend. 

Negotiations between the Administration and the Legislature are intense. Some of the key differences in health care-related budget items include:

  • Medi-Cal expansion to undocumented immigrants: The Administration proposes to expand Medi-Cal eligibility to undocumented young adults ages 19 to 25 for a total cost in the budget year of $98 million, and the Assembly concurs with the Administration. However, the Senate proposes to expand that proposal by including seniors ages 65 and older, and increasing eligibility by one year for younger adults beginning with age 26 in 2021, age 27 in 2022, and so on. The cost for the Senate proposal in the budget year is an additional $62.5 million. Expanded coverage in these proposals would begin no sooner than January 2020.
  • Health coverage mandate: The Administration proposes to require Californians to have health coverage or pay an annual tax penalty. The Senate approved as part of its budget an individual mandate, but the Assembly did not. The amount of financial assistance to provide to Californians to make their insurance more affordable remains a sticking point.
  • Premium assistance: The Governor proposes using $300 million a year in penalty revenue from the coverage mandate to expand subsidies for low and middle-income people earning up to 600 percent of the federal poverty level. He places a sunset on the assistance after three years, while maintaining the mandate. The Assembly approved using the penalty revenue to pay for expanded subsidies. The Senate proposes an additional $300 million per year over the Governor’s $300 million for premium assistance.   
  • Restoration of optional Medi-Cal benefits cut during the recession: The Governor has proposed restoring optical benefits for Medi-Cal beneficiaries beginning in 2020 at a cost of $33.4 million. The Senate approved this request and proposes an additional $21.1 million to restore additional benefits, including audiology, incontinence supplies, podiatry, and speech therapy. The Assembly approved the restoration of all recession-era cuts to Medi-Cal and proposes funding of $38.9 million per year. The proposals vary in whether the funding is from the state General Fund or Proposition 56, or a combination of the two.
  • Single-payer health care commission: The Governor proposed gutting the Council on Health Care Delivery Systems, which was created during last year’s budget and approved by Gov. Brown. Gov. Newsom wants to redirect the $5 million budgeted for the commission to a new commission – the Healthy California for All Commission, which would more narrowly focus on how California could create a universal, single-payer health care system. 
  • Mental health workforce development: The Governor proposed spending $50 million over the next six years to support mental health workforce development through existing loan repayment and scholarship programs administered by the Office of Statewide Health Planning and Development. The Senate adopted the Governor’s proposal but with an additional $1 million to provide loan repayments for former foster youth serving as mental health providers in public facilities or provider shortage areas. The Senate also approved $2.7 million of Mental Health Services Act funds for psychiatry fellowships. The Assembly adopted the Governor’s proposal, but proposes $750,000 for loan repayments for former foster youth and $2.7 to fund psychiatry fellowships.
  • Managed care organization (MCO) enrollment tax: The Administration did not propose to extend the MCO tax as part of the budget, but both the Assembly and Senate approved General Fund savings and extending the MCO tax in this year’s budget. This remains one of the greatest differences between the Legislature and the Administration and amounts to $1.4 billion this budget year, increasing to $1.8 billion in 2020-21 and 2021-22.
  • Trailer bill language to require the Department of Health Care Services (DHCS) to work with stakeholders and the Legislature to analyze the Governor’s proposed Medi-Cal pharmacy benefit transition: In January, the Governor issued an Executive Order to create a single drug purchasing system in California. The order also carves out the pharmacy benefit from the responsibility of Medi-Cal managed care plans and transitions the benefit into the fee-for-service delivery system, which will impact hospitals that participate in the 340B Drug Discount Program. CHA, along with the clinics and health plans, is asking the Legislature to adopt trailer bill language to require DHCS to provide the Legislature with a full analysis of this proposal and convene a stakeholder process. 
  • Proposition 55 tobacco tax investments: The Governor’s budget proposal continues 2018 supplemental payments and rate increases for physicians, dentists, family planning services, intermediate care facilities for the developmentally disabled, and home health. New proposed investments include $50 million for family planning services, $30 million for early developmental screenings for children to address social determinants of health, $22.5 million for adverse children experiences screening for children and adults in Medi-Cal, $15 million in training for trauma screenings, and $250 million to encourage Medi-Cal managed care plans to meet value goals in areas like chronic disease management and behavioral health integration, supportive housing, and other whole-person care social supports. Additionally, $250 million in Prop. 55 funds are proposed for loan repayment for Medi-Cal physicians and dentists. The Governor’s proposal sunsets at the end of 2021. The Senate and Assembly included these proposals in their budgets with modifications.
  • Whole person care: The Governor’s budget proposes $100 million for supportive housing services in the Whole Person Care pilot counties. The Senate approved the Governor’s requested funding, as did the Assembly. The Assembly also adopted a placeholder trailer bill to require DHCS to work with counties on the allocation methodology, target the funds, and ensure flexibility.

 

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