CEO Message

Budget Proposal Offers Solid Start to Rebuild Health Care System

This post has been archived and contains information that may be out of date.

For all of you who are on the front lines working extraordinary hours to respond to the unbelievable spread of omicron over the past several weeks, it might have been easy to overlook the Monday release of Gov. Gavin Newsom’s 2022-23 budget proposal, which includes a slew of important health care initiatives. 

At a high level, the budget contains much-needed funding for California’s health care system — resources that will be vital if we are to begin to rebuild our shattered health care foundation. We will provide details in the coming weeks regarding proposals that will reshape health care payment and delivery in the coming years. 

There is much to digest in this package, and while the resources proposed for investments in a stronger health care system — expanded coverage, COVID-19 emergency allocations, behavioral health care, and workforce development — are a promising start, the structure of the Office of Health Care Affordability continues to remain a concern, as it is imperative that all sectors in the health care landscape play a role in reducing costs for Californians. Also, the proposal to mandate use of community benefit resources could dilute local expertise in determining the best way to serve individual regions. We will be taking a hard look at both proposals.  

A few notable items in the budget:  

Fighting COVID-19: $2.7 billion, more than half of which would be approved in an emergency appropriation request so it could be used in the coming weeks and months — much-needed resources to continue to battle this pandemic. The largest component of the package is $1.2 billion to bolster COVID-19 testing, including expanding hours and capacity at testing sites, distributing millions of at-home antigen tests, and supporting the state’s testing facilities. There is also $614 million to distribute critical personnel resources for health care systems to help protect front-line workers and bolster hospital surge capacity and staffing vaccination sites. Remaining funds will be used for outreach and public education to get more Californians vaccinated and boosted, increased public health efforts at the California-Mexico border, and to expand contact tracing. 

Investments in the Care Economy Workforce: $1.7 billion over three years to expand the state’s health and human services workforce. This includes training to increase the state’s workforce of nurses, social workers, emergency medical technicians, behavioral health care providers, and community health care workers. The governor’s budget includes many of our workforce proposals, and we support this package. 

Expansion of Medi-Cal to All Income-Eligible Californians: $820 million in fiscal year 2023-24 — and $2.7 billion ongoing — to expand full-scope Medi-Cal coverage to beneficiaries ages 26-49, regardless of immigration status, starting no sooner than Jan. 1, 2024. CHA has long supported coverage for all, and this is the final step to make it so in California. 

New Medi-Cal Benefit for Behavioral Health: $1.4 billion to support Medi-Cal community-based mobile crisis services, related to mental health and substance use disorders. The new Medi-Cal benefit is expected to be implemented as soon as Jan. 1, 2023, and will focus on reducing the impact of untreated behavioral health conditions in emergency departments and psychiatric facilities.  

Medi-Cal Provider Equity Payments: $400 million in one-time funding for providers focused on advancing equity and improving quality in children’s prevention, maternity, and integrated behavioral health care.   

California Advancing and Innovating Medi-Cal (CalAIM): $2.8 billion to implement initiatives related to CalAIM, a broad delivery system and payment reform effort building on Whole Person Care, the Coordinated Care Initiative, Health Homes, and public hospital system delivery transformation.  

Office of Health Care Affordability: $30 million to support the establishment of an Office of Health Care Affordability, housed within the Department of Health Care Access and Information (HCAI), which will also be responsible for the Health Care Payment Database. The office will be charged with increasing transparency on cost and quality, developing cost targets for the health care industry, enforcing compliance through financial penalties, and improving market oversight of transactions that may adversely impact market competition, prices, quality, access, and the total cost of care. In addition to lowering the rate of cost growth, the office will promote health care workforce stability and innovation, report on the quality of care and equity in services on the entire health care system, advance payment models that reward high-quality, cost-efficient care, and promote investments in primary care and behavioral health. 

Community Benefit Requirements: The administration proposes to require nonprofit hospitals to demonstrate how they are making investments in local health efforts, specifically community-based organizations that address the social determinants of health. Additionally, the administration proposes statutory changes that direct that 25% of a nonprofit hospital’s community benefit dollars go to these efforts, while giving HCAI enforcement authority. 

As we analyze these proposals and their potential impact on hospitals’ ability to deliver care for their patients and community, we are acutely aware that we must first navigate the omicron surge — whose spread is increasing cases exponentially and could overwhelm the health care system in the coming days or weeks.  

Many thanks to the CEOs and government relations leads who shared their experiences with us last week so we can learn about conditions on the ground and continue to share that information with state health leaders. 

Please continue to stay safe, stay strong, and we will share more on these budget proposals as our analysis is completed.