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Health Access |
Home February 23rd, 2005
The Hon. Arnold Schwarzenegger The Hon. Kim Belshé Dear Governor Schwarzenegger, and Secretary Belshé, As organizations representing California health care consumers and providers, we, the undersigned, write to strongly urge you to use your voice and influence with our federal policymakers to protect California’s fiscal health and the health of its residents. We ask that you take firm and public positions opposing cuts or caps in Medicaid and aggressively pursue the fair share of tax dollars paid by Californians. We need your leadership, as the Governor of California, to speak out against Medicaid cuts and caps that would do disproportionate harm to the health care system of our state and to use your ability to bring in much-needed additional dollars to California’s health care system. The Proposed Medicaid Budget Cuts Under the President’s proposed FY 2006 budget, Medicaid--which accounts for approximately 44 percent of total federal revenue received by states and local governments--would be cut by a minimum of $60 billion over ten years. According to an analysis by the Center on Budget and Policy Priorities (CBPP), these cuts would come from:
Most of these cuts would have severe impacts on our state’s health care system. Nationally and in California, Medicaid spending is less expensive than private health insurance. On a per person basis, average Medicaid costs are 30 percent less for adults and 10 percent less for children than private insurance. Medicaid also has been growing more slowly than private insurance. Between 2000 and 2003, acute care Medicaid costs per enrollee grew by 6.9 percent nationally, compared to private insurance premiums increases of 11 to 13 percent. California already has the lowest cost per beneficiary in the country. Proposals to cap funding would allow no room for population growth, coverage of people in an economic downturn, increased costs in health care, or public health emergencies. With respect to enrollment, Medicaid does what it was meant to do – provides a safety net for individuals and families. The federal government must do its part in helping Californians during economic downturns, public health crises, terrorist attacks, or natural disasters that impact the economy and people’s ability to secure employment with health benefits. Caps would remove the inherent flexibility in the program to deal with these changes. Medicaid Cuts or Caps Will Hurt California’s Economy Cuts or caps in federal Medicaid dollars can have a detrimental impact on the State’s economy. Federal Medicaid dollars flow to local communities and contribute to local economies by creating jobs, financing the purchase of medical supplies and other goods and services, thereby generating additional state and local tax revenues. Specifically, California will spend just over $36.9 billion in 2005 on Medi-Cal, with the federal government contributing more than $18.7 billion of these funds. Medicaid’s economic multiplier effect means that for each $1 million that California invests in Medicaid, nearly $2.3 million in new business activity and more than 18 newly created jobs results. Medicaid Cuts Or Caps Will Add To California’s Uninsured In California, close to 4.9 million (15.6% of the population) people under the age of 65 were uninsured in 2003. This includes 1.18 million (10.2%) children under age 21, and 2.67 million (27.3%) Latinos. Medi-Cal has played a significant role in covering 6.7 million individuals and family members, while employer-based health insurance has eroded. Medi-Cal may be the only option for many working families. California data from 2000-2003 shows that 11% of nonelderly families on Medi-Cal have at least one full-time worker in the household; another 21% have a household member who is working part-time. Private industry is not picking up the cost of health care for these workers, and it is unlikely to do so if Medi-Cal eligibility were cut. Lack of affordable health coverage and access to timely health care makes it more difficult for children to be successful in school and for adults to consistently participate in the workforce, which also hurts the State’s ability to compete in a national and global economy today and in the future. Medicaid Cuts or Caps will Destabilize California’s Health Care Infrastructure and Endanger the Health Care Safety Net In California, private and county hospitals, children’s hospitals, rural providers and community health centers, long-term care providers (in both institutional and community-based settings), mental health facilities and managed care plans, all rely heavily on Medi-Cal payments. California already provides among the lowest Medicaid reimbursement rates to its providers. Federal DSH payments already are capped. Any further reductions or caps in payments that help support the health care infrastructure for private and public pay patients and the uninsured, alike, will force yet more hospitals, emergency rooms, trauma centers and clinics to close their doors. This endangers every California resident, but with particular harm imposed on the most vulnerable, including children, seniors and persons with disabilities. Medicaid Cuts or Caps Leave the State Holding the Bag With fewer federal revenues, California would have to decide if it will make drastic cuts in the Medi-Cal program or increase the state’s share of California’s health care costs. People and their health needs do not simply “go away” because the program is cut. Should federal dollar cuts result in Medi-Cal eligibility or service reductions, the newly underinsured and uninsured would depend on expensive emergency care, straining both the safety net and the state’s coffers. The people cut from the program are unlikely to be able to purchase private insurance, so the costs would not be shifted to the private sector. Should federal dollars be capped, state allotments would be “frozen in time” leaving the states to shoulder the burden of increased costs of health care or increased demand in the program during economic downturns or other crises. Even with fewer federal dollars, the State may still be held accountable for providing services to medically vulnerable groups, such as seniors eligible for both Medi-Cal and Medicare. Nationally, about 42 percent of all Medicaid spending for benefits is for elderly and disabled individuals who are dually eligible. Medicaid Cuts Or Caps Will Hurt Other California Budget Priorities It is important to recognize that Medi-Cal, in addition to providing health insurance to over five million people in the state, plays a crucial role in supporting other California budget priorities. For example, Medi-Cal supports the health components for children in Early Intervention, Special Education, and Foster Care. California would not be able to take advantage of programs like the Early Treatment for AIDS Act, which, if enacted in federal law, would allow states to get a federal match for treatment of people with HIV/AIDS before their conditions become disabling. California Already Does Not Get Its Fair Share Reductions in federal Medicaid contributions will mean that California will get even less than what it needs and deserves. While the State has a disproportionate number of low-income and uninsured residents, it does not receive its fair share of federal funds as compared to other states. California has a higher proportion of low-income people than the U.S. as a whole. In the U.S., 17 percent live below the federal poverty level (FPL). In California, the figure is 19 percent. In the U.S., 36 percent live below 200 percent of FPL, as compared to 39 percent in California. At 18% of its population, California’s uninsured rate is higher than the national average of 16%. Despite the relatively large number of Medi-Cal programs to cover low-income people, 67% of the non-elderly uninsured in California have incomes below 200% of the poverty level, compared to 65% nationally. California pays more in federal taxes than it receives back in federal funding. The Tax Foundation issued a study last fall showing that California’s adjusted share of federal money received compared to taxes paid fell from a high of $1.08 in the early 1980s to only 78 cents in 2003. In other words, for every dollar that California pays in federal taxes, the State only receives 78 cents back, leaving us ranked at number 43 among the states. According to the Center on Budget and Policy Priorities, California also received about 20% less in per capita Medicaid funds than the national average in fiscal year 2004. California ranks 38th in the nation in terms of federal Medicaid revenue per capita. The unfair allocation of federal Medicaid dollars to California will be compounded by the proposed significant reductions in discretionary programs. California’s discretionary program grants under the President’s FY 2006 budget proposal, not counting Medicaid, would be cut by $986.4 million, which is an inflation adjusted cut of $1531.9 million, between FY 2005 to FY 2006. In addition, the federal budget freezes state SCHIP allotment, at a time when California is exceeding its allotment to cover children in the Healthy Families program. We also need your leadership to ensure that California continues to get enough to cover all those eligible but uninsured. Working Together for California Our organizations are committed to working with you, as Governor of California, to oppose federal efforts to cut or cap the Medicaid program; and to support other efforts to increase federal funds for the state’s health care system. While our organizations may have different positions among ourselves and with your Administration on a number of issues, we all agree that Medicaid cuts and caps are bad for the Medicaid program and bad for California. In particular, we would appreciate it if you were able to:
For more information, please contact Anthony Wright at Health Access California at (916) 442-2308, Angela Gilliard at Western Center for Law and Poverty at (916) 442-0753 or any of the undersigned. We have scheduled a meeting with your Secretary of Health and Human Services and Director of Health Services for February 25 th, 2005. We look forward to working together on this crucial issue. Sincerely, Anthony Wright, Health Access California cc: Secretary Kim Belshé, Health and Human Services Agency Webmaster: webmaster@health-access.org |
