California Budget Proposal Includes Medicaid Cuts

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Aides to California Gov. Arnold Schwarzenegger on Wednesday released a proposal to address the state's budget deficit in part by cutting funds for Medi-Cal and other health care programs, the Sacramento Bee reports (Yamamura, Sacramento Bee, 1/1).

Medi-Cal is the state's Medicaid program. The state faces a projected $40 billion budget deficit over the next 18 months. Schwarzenegger's plan calls for borrowing, tax increases and spending cuts to close the deficit and provide a $2 billion reserve. Schwarzenegger plans to submit his official budget language to the state Legislature this week.

Schwarzenegger proposed cutting $744.2 million from Medi-Cal spending by:

* Eliminating coverage for dental, psychological, optometry and other services;

* Limiting benefits for some documented immigrants;

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* Increasing the income eligibility requirements to pre-2000 levels;

* Reducing hospital reimbursement rates by 10%; and

* Scaling back cost-of-living increases for county-based administration of Medi-Cal services (Sacramento Bee, 1/1).

The governor's proposal also contains elements of state Republican lawmakers' budget proposal, including a plan to ask state residents to approve reallocating funds for mental health services and early childhood health care and education programs to the state general fund (Yamamura, Sacramento Bee, 1/1). The plan would shift Proposition 63 funds for mental health services to mental health managed care services. Schwarzenegger estimates that the proposal would save the state $226 million. In addition, Schwarzenegger proposed eliminating the state First 5 Commission and shifting its funds to the state general fund for children's programs.

The move also would shift half of the funds currently held by 58 county First 5 commissions to the state general fund. The governor projects that the plan would save the state $275 million (Sacramento Bee, 1/1). Both plans would require voter approval, likely in a special election that the governor could call this year (Yi et al., San Francisco Chronicle, 1/1).

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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