Media Statement

California Hospitals Acknowledge Enormity of State’s Budget Crisis, Urge Balanced Solutions
Proposed Medi-Cal “cost sharing” will result in greater financial losses for hospitals

California’s ongoing budget crisis requires major sacrifices from every person, organization and agency that receives state funding. The May revision of Governor Arnold Schwarzenegger’s budget once again brings into sharp focus the continuing enormity of the situation. The state has no good options left to address a projected $20 billion budget gap for the coming fiscal year.

All of the cuts contained in the 2010-2011 May budget revision are distasteful to everyone. The Governor is faced with an impossible situation. Particularly concerning to hospitals, however, are the “cost sharing” proposals for beneficiaries enrolled in the Medi-Cal program. While hospitals support efforts to make Medi-Cal more efficient, it’s important to acknowledge that California hospitals lost $4.6 billion last year in treating Medi-Cal patients. It’s unrealistic to assume that most Medi-Cal patients will be able to afford a $50 copayment for an emergency room visit or $100 per day for inpatient hospital stays as projected in the May budget revision. These individuals are already at the low end of the economic scale and do not have the financial resources to cover such unplanned expenses. As a result, hospitals will face greater losses when they treat Medi-Cal patients.

Also adding to the financial pressures on hospitals is the proposal to freeze hospital payment rates for Medi-Cal patients at the current level. California already ranks nearly last in the nation when it comes to funding health care for Medicaid patients. Freezing payment rates at their current level when the cost of delivering care continues to rise further tightens the vice on hospitals’ ability to provide services to Medi-Cal patients.

California’s hospitals recognize that sacrifices are necessary in this difficult budget year. Solutions are needed over the long-term which take into account both the revenue and expense sides of the budget ledger.