Big Bite Out of California’s Health System Passed by Senate Budget Committee

[courtesy of California Progress Report]

• Senate Budget Committee Approves Major Provider Rate Cuts
• Cuts to doctors, hospitals, other providers, managed care plans to begin July 1
• Other cuts may need to be revisited for 2008-09

By Anthony Wright
Executive Director of Health Access California

The Senate Budget Committee on Wednesday evening passed a series of bills that would eliminate the $3 billion shortfall in this year’s budget and leave it with a cushion of $1 billion. Additionally, it shrinks the 2008-09 deficit from $11 billion to $7 billion.

Lawmakers and the governor are acting hastily on the budget this year because the state is expected to beginning running out of cash this spring and could begin defaulting on its loans and payments by the beginning of the fiscal year.

To ease the impact of cuts for 2008-09 and to begin making progress toward reducing the deficit, it was seen as important for lawmakers and the Governor to agree to cut some programs mid-year. Gov. Arnold Schwarzenegger, when he unveiled his budget last month, had proposed 10% across the board cuts to all departments. For a quick one-page fact sheet on the health cuts proposed by Governor Schwarzenegger, visit the Health Access website at:
http://www.health-access.org/preserving/Docs/Budget%20Fact%20Sheet%20013008.pdf

Senators approved SB 1x, the budget line items with budget reductions, and SB 3x, the health services "tralier bill" portion of the budget cuts, on a party line vote, with Democrats voting in favor, and Republicans abstaining. Other bills contained cuts on education, human services, transportation, and other areas of the budget.

THE HEALTH CUTS: The biggest blow would be borne by providers who serve Medi-Cal recipients, and Medi-Cal managed care plans. Rates would be reduced by 10 percent for a total savings of $544 million. The rate reductions would not take place until July 1, the start of the fiscal year.