CHA News

Governor’s Revised Budget Makes Important Coverage Investments, Fails to Include Vital Medi-Cal Funding

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Yesterday, CHA issued a news release on Gov. Newsom’s revised 2019-20 state budget. CHA applauds the Governor for making investments that improve Californians’ health and well-being, including: ongoing support for expanding Medi-Cal coverage to young adults, regardless of immigration status; imposing a state-level individual coverage mandate; broader premium subsidies for low and middle-income families; and significant investments in behavioral health.

At the same time, California’s hospitals are disappointed that the revised budget proposal fails to include important, voter-approved Proposition 55 funding for the Medi-Cal program.

“When Proposition 55 was enacted in 2016, it was with the explicit promise to voters that up to $2 billion a year would be used to strengthen access to care for children and families covered by Medi-Cal,” said CHA President/CEO Carmela Coyle. “Yet, despite a $21.5 billion surplus, the Governor’s revised budget doesn’t include any of this funding. Legislators can — and must — do better for our kids and families.”  

Additional details of the health-related provisions in the revised budget include:

Pharmacy Benefit

CHA remains concerned about the Administration’s proposal to restructure pharmacy services in the Medi-Cal program, maintaining the pharmacy transition to fee-for-service per January’s Executive Order. Scheduled for Jan. 1, 2021, the transition of pharmacy services from Medi-Cal managed care to a fee-for-service benefit is estimated to reach savings of $393 million by 2022-23 but would result in a loss of 340B Drug Discount Program savings for many hospitals that participate in the 340B program.

Health Care Coverage

The Governor’s January budget proposed increasing subsidies for individuals with incomes between 250% and 400% of the federal poverty level. The May revision expands that by offering subsidies to individuals between 200% and 250% of the federal poverty level. It also maintains financial assistance to qualified individuals with incomes between 400% and 600% of the federal poverty level. The expanded subsidies, as well as the individual mandate proposed in the January budget, are proposed to begin Jan. 1, 2020. 

Health Care Workforce

  • The budget revision invests $100 million from the Mental Health Services Fund for the new 2020-25 Workforce Education and Training five-year plan. The plan provides a framework of strategies that state and local governments, community partners, educational institutions, and other stakeholders can pursue to address the shortage of qualified mental health professionals in the public mental health system.
  • It also allocates an additional $120 million in Proposition 56 funding for the Medi-Cal loan repayment program, which is for both physicians and dentists. All awards are required to make a five-year commitment to maintain a patient caseload of 30 percent Medi-Cal beneficiaries or more. The funds will be available over the next several years.
  • Additionally, the revised budget adds $20 million to January’s proposed $100 million for supportive housing and other services for whole person care, which provides comprehensive, tailored care to California’s most vulnerable patients in local pilots throughout the state.

Now that the revision has been released, budget subcommittees in both houses will continue to meet over the next few weeks to review and approve or change the Governor’s budget, followed by meetings of the full budget committees and the joint Budget Conference Committee. Negotiations between the Governor and legislative leaders will proceed rapidly in an effort to resolve major differences between the Governor’s budget and the Legislature’s. The Legislature will pass the budget by June 15, and the Governor must sign the budget by June 30.

Image courtesy of the Governor’s Office.