2008 California Budget Crisis
Health Impact on People with Disabilities
This document was produced from information created by the California Budget Project for more information about the budget crisis visit www.cbp.org.
Fiscal Emergency – The Governor declared a Fiscal Emergency and ordered a special session to consider mid-year budget cuts. The Legislature now has until February 23rd to consider the Governor’s proposed reductions. It’s unclear what the Legislature must deliver by February 23rd to fulfill the provisions of Prop 58 (the provisions of which were used for the first time to declare a fiscal emergency); however the Governor’s proposal assumes enactment of his proposed current year cuts by March 1, 2008. If the Legislature fails to deliver by February 23rd Prop 58 prohibits them from acting on any other bill or adjourning in joint recess until such legislation is passed.
The Governor released his Proposed Budget for the 2008-09 fiscal year on January 10. The budget addresses a shortfall estimated at $14.5 billion. The gap would be closed by reducing spending in most state programs and departments by 10 percent. The Governor also proposes to sell an additional $3.3 billion in Economic Recovery Bonds (ERBs) under the authority granted by Proposition 57 of 2004. This would exhaust the $15 billion authority granted by the voters. The Proposed Budget also uses a $2 billion accounting gimmick that would book receipts of income tax revenues in 2008-09 that would otherwise be recorded in 2009-10. This, of course, would reduce revenues available in 2009-10 by an equivalent amount.
The magnitude of the proposed reductions and the policy changes necessary to achieve them are significant, even as compared to the sizeable shortfalls of the early years of this decade and the early 1990s. In his budget press conference, the Governor reiterated his opposition to increasing taxes to help close the budget gap. However, in response to questions from the media, the Governor appeared to leave the door open to a larger tax increase as part of an eventual budget package.
Proposed cuts Impacting the Health of People with Disabilities
Medi-Cal
The Governor’s Proposed Budget allocates $36 billion ($13.6 billion General Fund) for the Medi-Cal Program. This reflects a decrease of $915.9 million ($678.7 million General Fund) from the 2007 Budget Act level. The Governor proposes to:
Reduce payments to most Medi-Cal providers by 10 percent, for savings of $33.4 million in 2007-08 and $720.9 million in 2008-09. Physicians, other medical providers, certain hospitals, some long-term care facilities, and managed care plans would receive reduced payments. Reductions also would affect service providers in the California’s Children’s Services Program, the Child Health and Disability Prevention Program, and the Genetically Handicapped Persons Program as well as county mental health programs.
Eliminate dental and other benefits for Medi-Cal recipients, for savings of $10 million in 2007-08 and $133.9 million in 2008-09. The elimination of dental benefits would affect only adult beneficiaries and would result in savings of $115 million in 2008-09. Other benefits that would be eliminated include acupuncture, audiology, optometry, optical, chiropractic, podiatry, psychology, speech therapy, and incontinence creams and washes.
Require eligibility for Medi-Cal services to be re-determined four times annually, for estimated savings of $92.2 million in 2008-09. Currently, eligibility is reevaluated annually for children and semi-annually for adults. At the same time, the Governor proposes to reduce payments to counties to determine eligibility for and administer the Medi-Cal Program, for savings of $75.8 million in 2008-09.
Stop paying Medicare Part B premiums for certain beneficiaries who are enrolled in both Medi-Cal and Medicare, for savings of $4.2 million in 2007-08 and $50.1 million in 2008-09. The Governor proposes to eliminate Part B premium assistance for Medi-Cal “share-of-cost” beneficiaries whose monthly medical expenses are not high enough to meet their “spend-down” requirement. Delay payments due to certain Medi-Cal providers, managed care plans, counties, and Regional Centers in June, July, or August by one or two months.
In-Home Supportive Services (IHSS)
The budget proposes an across-the-board 18% reduction in domestic and related services to take effect July 1, 2008 for all clients in receipt of those services. These services include non-medical services such as meal preparation and clean-up, laundry, food shopping and errands. The reduction is estimated to impact 96% of IHSS recipients.
Reduce the number of hours provided for certain non-medical domestic services – including meal preparation, laundry, and errands – for state savings of $109.4 million in 2008-09. The average IHSS recipient receives 37 hours of domestic services per month, which would decline to an estimated 30.4 hours per month under the Governor’s proposal. More than nine out of 10 of the state’s approximately 390,000 IHSS recipients (96 percent) receive domestic services.
Reduce funding for county operation of the IHSS Program by 10 percent for state savings of $10.2 million in 2008-09. In addition, this proposal would increase from 12 months to 18 months the period in which counties must reassess the condition of IHSS recipients.
Mental Health Services Act (Prop 63)
Revenues related to the Mental Health Services Act are projected to decrease by $177.2 million statewide in the current year and by $105.2 million in the budget year impacting available funds for local Mental Health Services Act programs.
AIDS Program
Reduce funding for AIDS programs by $11 million in 2008-09. This reduction includes a $7 million cut in the AIDS Drug Assistance Program by discontinuing the coverage of several classes of drugs and a $1.6 million reduction in support for local programs that provide HIV education and prevention.
Regional Centers
Reduce state support for Regional Centers, which purchase and coordinate services for persons with developmental disabilities, by $235.1 million by extending policies intended to contain costs, such as freezing payment rates for specified program categories. In addition, the Governor proposes to freeze payment rates for all remaining providers with whom the Regional Centers negotiate, for savings of $14.2 million in 2008-09, and reduce state support for the Supported Employment Program by $7.7 million by reducing the reimbursement rate for job coaching services.
Healthcare Insurance
Reduce support from Proposition 99 funds for the California Healthcare for Indigents Program by $12.8 million; for the Major Risk Medical Insurance Program, which serves individuals who are medically uninsurable, by $4.3 million.
