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Budget Proposal Sustains Health Programs Even as Deficit Demands Vigilance 

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Yesterday, Gov. Gavin Newsom released his 2024 budget proposal, one that includes a myriad of fixes to patch a deficit that the Department of Finance projects to be nearly $38 billion (previous deficit estimates from the Legislative Analyst’s Office had pegged the shortfall at $68 billion). 

CHA has completed an initial overview of the proposal and how it might impact health care and hospitals. We’ll share a more detailed analysis next week after taking a closer look. 

At first glance, it seems key health care programs have avoided any major direct hits, and the budget preserves critical managed care organization (MCO) tax investments as well as Medi-Cal rates. Still, the need to solve a $38 billion deficit will make it difficult to secure more resources to shore up struggling hospitals beyond this year’s Medi-Cal payment increases through the MCO tax and significant additional funding for behavioral health through the Proposition 1 ballot initiatives. 

Even with a reduced deficit projection, this year’s budget shortfall remains a reflection of the great challenges facing California’s economy now, and in the years to come. In such an environment, every sector — education, transportation, environment, and more — will be fighting over the same finite pool of resources to keep themselves whole.  

For hospitals, as this proposal makes its way through the Legislature, this will mean continued vigilance to protect necessary, fundamental investments in health care. We may have to work to ensure investments in things like greater access to behavioral health services, preserving emergency care, and protecting care in remote rural communities are not sacrificed. 

Stay tuned for a deeper dive on the budget proposal and how hospitals will need to respond to make sure that health care — a basic human need for every Californian — remains at the forefront of our state’s priorities.