California Medicaid Crisis: State Budget Deficit & Healthcare Cuts

1. Stan Rosenstein Former California Medicaid Director Retired December 22, 2008 Current State of California Medicaid (Medi-Cal)January 9, 2009

2. California’s Budget • Continuing deficits at a record growing pace • Revenue has declined $15.1b, 14.7% • Workload Spending in FY 2009 has increased $1.5 b, 1.5% • $14.8 billion current Fiscal Year deficit • $41.6 billion by June 30, 2010 if unchecked • Total Budget was $104 billion • California in a fiscal emergency • Will run out of cash and issue IOUs in February • Several special legislative sessions to make current year budget cuts • Negotiations continue

3. Medi-Cal Profile Assistance to Medicare Beneficiaries 1,029,763 aged and disabled — 23% of CA’s Medicare beneficiaries Health Insurance Coverage 4,877,900 children and adults, 1,067,000 persons with disabilities, 658,000 aged. MEDI-CAL: $36 billion in 2008 Long-Term Care Assistance 62,400 nursing home residents; 62% of CA’s long-term care services Support for California Health Care System 23% of total CA health spending

4. California Medicaid Spending Facts • Second largest nationally in terms of dollars expended • Lowest nationally in per enrollee spending • Covers most optional benefits • Extremely concentrated among a small segment of the enrollee population. • Seniors and non-elderly adults with disabilities account for 25% of beneficiaries and 61% of expenditures

5. Medi-Cal Spending Facts (cont.) • Sixty percent of all Medi-Cal expenditures in 2003 went to benefits for only five percent of enrollees • Forty percent of all FFS Medi-Cal expenditures in 2003 went to benefits for only two percent of enrollees

6. Medi-Cal Expenditures Continue to Grow • $1.085 billion state GF increase in 2009-10 • Caseload increases due to: • Number of people on TANF • Number of families enrolling in Medi-Cal • Growing number of people on SSI Growing cost of care, especially for hospitalizations

7. Reductions that have already occurred • Provider rate reductions • Range from 10 percent down to 5 or 1 percent on March 1, 2009 • Mid year status reporting for children and reduction of continuous eligibility from 1 year to 6 months • Elimination of Part B Medicare payments for Medically Needy enrollees with a share of cost

8. Changes Proposed • Elimination of optional benefits for adults including dental and optometry • Reduction in coverage of parents by reducing income level and redefining under-employment for 2 parent families • Reduction in the income level for non-share of cost coverage for seniors and people with disabilities • Restrictions in coverage for immigrants • Reductions in payments for the uninsured to public hospitals.

9. Impact of 2003 and 2004 FMAP Relief • During 2001-02 recession states were in a similar situation, but far less severe • State were facing significant budget reductions • The proposed Medi-Cal reductions were greater than today • Relief was front loaded to maximize benefit • Congress adopted a maintenance of effort that prevented states from reducing eligibility levels or increasing county funding • California was able to use this relief to eliminate the most difficult cuts to both eligibility and optional benefits