CHA News Article

Governor Releases State Budget Proposal for FY 2013-14

Gov. Jerry Brown released Jan. 10 his proposed fiscal year (FY) 2013-14 state budget, which reflects $97.7 billion in spending, including the creation of a $1 billion reserve. The projections used to develop the 2013-14 budget are expected to achieve balanced budgets in future years, but only by a narrow margin. Under the Governor’s proposal, the state’s debt is expected to be reduced by $4.2 billion.The budget proposal includes steps to implement federal health care reform; however, CHA is concerned that some provisions may impact the sustainability of hospital services. The budget continues to rely on hospital fee program funding, and includes hospital rate reductions that were previously proposed but not implemented.

Nearly one-third of the reserve would be funded by raking off $310 million from private hospitals through the Medi-Cal hospital fee program. Hospitals previously agreed with state elected officials that this money would be used to help the state pay for children’s health care coverage. These hospital funds should be used to ensure access to medically necessary hospital services for all Californians.

Also included in the proposed state budget is a plan to recoup hundreds of millions of dollars from hospitals that operate skilled-nursing units that provide complex medical care for elderly patients. CHA is very disappointed the state is taking this position, which results from a recent court ruling based on previously legislated cuts (AB 97, 2011). If implemented, access to care will be compromised. These hospitals are already reimbursed by Medi-Cal at rates below cost, and some hospitals may be forced to close these units.

Part of the budget proposal includes a delay in the schedule for implementing the Coordinated Care Initiative (CCI).  The CCI includes a managed care approach for individuals eligible for both Medicare and Medi-Cal, known as dual-eligibles. Enrollment of dual-eligibles will begin in September 2013 and will be phased in over 12 months in Orange, San Diego, San Bernardino, Riverside, Alameda, and Santa Clara counties. In Los Angeles County, the phase-in will take place over 18 months; in San Mateo County, all beneficiaries will be enrolled at once.  

The proposed budget also includes a plan to expand the Medi-Cal program in accordance with the broader definition of eligible individuals pursuant to the Affordable Care Act (ACA).  Under ACA, the federal government will initially pay for 100 percent of the costs for newly eligible individuals. The state outlines two potential methods for the expansion — a state-based option or a county-based approach. As many as 2 million people are expected to be newly enrolled in Medi-Cal under this expansion. 

CHA has long supported the goal of universal coverage; California hospitals look forward to continuing their partnership with state and federal officials and other stakeholders to achieve expanded coverage and access to cost-effective care.