Medi-Cal: Impacts of Governor Brown’s Proposed 2017-2018 Budget

Quick Jump

I. Introduction
II. California’s Proposed Budget and Federal Uncertainty
III. Potential Effect of the Budget on Access to Primary Care in California

A. Budget for Primary Care Graduate Medical Education
B. Budget Allocations of California’s Tobacco Tax

IV. External Analysis and Discussion


I. Introduction

Medi-Cal is California’s Medicaid program and offers free or low cost health coverage for children and adults who meet certain eligibility requirements. Currently, Medi-Cal provides coverage for about 14 million Californians.  This includes an increase of about 5 million Californians covered under the Affordable Care Act’s Medicaid Expansion.

Governor Jerry Brown’s proposed budget for 2017-2018 allots $105.3 billion for the support of California’s Department of Health Care Services’s programs, including Medi-Cal.  This is an increase of approximately $1 billion from last year’s budget.

II. California’s Proposed Budget and Federal Uncertainty

The proposed budget is built upon the assumption that the state will continue to receive federal funds under the existing Medicaid system. In other words, the budget allotment is dependent upon the federal government continuing to provide dollar for dollar matching funds for California’s Medicaid programs.

The federal government has recently discussed sweeping changes to Medicaid and a massive general tax reform, either of which would have serious impacts on California’s budget.  Should a bill like the American Health Care Act become law in the future, California could stand to lose millions of dollars in federal money for its Medicaid programs. According to the Governor’s recent budget report, “many of the proposed changes [being discussed by the Trump administration and Congressional leaders] could have serious and detrimental effects on the state’s economy and budget. At this point, it is not clear what those changes will be or when they will take effect.”  If the Affordable Care Act were to be repealed in its entirety, California would need to find a way to pay for the Medicaid Expansion or make drastic cuts to the program.

III. Potential Effect of the Budget on Access to Primary Care in California

Some groups, including the California Medical Association (“CMA”), have raised concerns with other parts of Brown’s proposed budget that may impact the delivery of care to Medicaid recipients.

A. Budget for Primary Care Graduate Medical Education

The CMA is concerned with the state’s delay in implementing its expansion of primary care graduate medical education (“GME”) in medically underserved areas.  GME is the “hands-on” training that new doctors must receive in order to obtain their licenses and many Medicaid recipients receive care from these trainees. In 2016, the California legislature passed a budget that increased funding ($100 million over three years) for GME in primary care education and also increased funding for primary care clinicians in underserved areas.  Several key health care provider organizations supported this funding measure, including the CMA, California Academy of Family Physicians, California Hospital Association, American College of Physicians, Osteopathic Physicians and Surgeons of California, California Primary Care Association, California Children’s Hospitals Association, and Planned Parenthood Affiliates of California.

Under the 2017-2018 budget proposal, the state would indefinitely halt funding of the GME expansion.  Health care provider organizations are concerned because meeting the primary care needs of the growing California Medicaid population is already difficult.  According to a 2013 report, California’s ratio of primary care physicians participating in Medi-Cal is approximately 35-49 per 100,000 enrollees. This falls far below the federal government’s recommendation that the ratio should be closer to 60-80 per 100,000 enrollees to meet actual needs. According to the CMA, the proposed cuts are “short-sighted and reckless, and would exacerbate [California’s] already serious access to care problems.”

Governor Brown has not publicly addressed these concerns.  However, as health care organizations begin to speak against the proposed budget, the governor may address these concerns in the upcoming months.

B. Budget Allocations of California’s Tobacco Tax

Health care organizations are also concerned about the allotment of California’s new tobacco tax.  This tax is expected to generate anywhere from $1.2 billion to $1.8 billion in its first year.

Governor Brown has indicated that additional funds allotted for Medicaid will go towards paying for typical year-to-year increases in the program’s cost.  However,  some health care providers are concerned that the proposed budget does not properly allocate those funds according to the law.  According to some organizations, the language of the tobacco tax measure requires that the additional funds be used to improve provider payments — particularly among those who provide Medi-Cal services.

With anywhere from $710 million to $1.3 billion at stake for California’s Medicaid program, a battle over this tax may be on the horizon.

For a more detailed examination of the new tobacco tax, you can view our article here.


IV. External Analysis and Discussion

Budget Summary Introduction
Governor’s Budget Summary 2017-2018
January 2017

Budget Summary: Health and Human Services
Governor’s Budget Summary 2017-2018
January 2017

California Doctors Again Press for More Money to Treat Poor Patients
Kaiser Health News
March 30, 2017

CMA Fights GME Cuts in Brown’s Proposed Budget
California Medical Association
February 6, 2017

Opinion: California Cuts to Medical Training Harm Patients
The Mercury News
February 23, 2017