California Budget Proposal Includes Reductions To Health Care

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California Republican lawmakers on Monday released a plan to address the state's projected $41.8 billion budget deficit in part by redirecting funds for mental health services and children's health care, the Los Angeles Times reports (Rau, Los Angeles Times, 12/16).

The $22 billion plan is an effort by state Republicans to avoid tax increases by raising $6.5 billion of new revenue for the general fund and reducing spending by $15.6 billion over the next 18 months. Under the plan, $6 billion in new revenue would be directed to the state's general fund by asking voters in a special election to alter Proposition 63, a 2004 measure that funds mental health services for homeless adults, and Proposition 10, a 1998 tobacco tax increase that pays for health care and education programs for young children (Yi, San Francisco Chronicle, 12/16). The transfer of funds would include $2.1 billion from First 5 California Children and Families Commission, which administers proceeds from the tobacco tax (Los Angeles Times, 12/16).

In addition, state Republicans have proposed cutting more than $3 billion from Medi-Cal, health services, and programs for low-income residents, the elderly, and people who are blind or have disabilities. Medi-Cal is California's Medicaid program. The $3 billion cuts include taking $716 million from Medi-Cal and would include decreasing hospital reimbursement rates, eliminating certain benefits and reducing eligibility (Sanders, Sacramento Bee, 12/16).

Aaron McLear, a spokesperson for California Gov. Arnold Schwarzenegger (R), said the Republicans' plan is "simply a rehash of the tax cuts that have been on the table for months with some borrowing on top of that," adding, "It's not a negotiated compromise.

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Until Republicans and Democrats negotiate with one another, our problem continues to get worse." State Assembly Budget Committee Chair Noreen Evans (D) criticized the plan as balancing the budget "on the backs of poor children and the mentally ill." According to the San Francisco Chronicle, Evans plans to convene a committee hearing on Tuesday to consider the Republican plan, which likely will be rejected if brought to a vote (San Francisco Chronicle, 12/16). State Assembly Speaker Karen Bass (D) on Monday said Democrats plan to introduce a new budget proposal that includes about $9 billion in new revenue and $8 billion in cuts (AP/Boston Globe, 12/15).

Healthy Families Funding

In related news, the First 5 California Children and Families Commission voted to provide $16.8 million to the state Managed Risk Medical Insurance Board to help the board avoid capping enrollment in Healthy Families, the Times reports. MRMIB administers Healthy Families, California's version of SCHIP. The funding from First 5 will be used specifically for Healthy Families coverage for children younger than age six. The funds will permit Healthy Families to continue enrolling children in the program through the end of the fiscal year in June 2009. MRMIB is expected to accept the funding on Wednesday at a meeting that had been scheduled to vote on a proposal to cap enrollment in Healthy Families (Los Angeles Times, 12/16).

According to the San Diego Union-Tribune the First 5 vote was "a pre-emptive move," in light of Republican legislators' proposal to reallocate First 5 reserves to the state general fund (Sweeney, San Diego Union-Tribune, 12/16).

Reprinted with permission from kaisernetwork.org. You can view the entire Kaiser Daily Health Policy Report, search the archives, and sign up for email delivery at kaisernetwork.org/email . The Kaiser Daily Health Policy Report is published for kaisernetwork.org, a free service of The Henry J. Kaiser Family Foundation. © 2007 Advisory Board Company and Kaiser Family Foundation. All rights reserved.

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