LAO Rejects Governor's Plan To Cut Funding For Health Care For Low-Income Californians

Main Category: Public Health
Article Date: 21 Feb 2008 - 4:00 PDT

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The California Medical Association concurred with the State Legislative Analyst's Office recommendation that the Legislature reject cuts to doctors who treat low-income patients because the cuts will reduce patients' access to care and won't solve any budget deficit problems.

"The LAO is saying what we've said all along - these cuts will compromise critical access to primary care for low-income families, pushing them into more expensive forums for care and driving up costs for everybody,"" said Richard Frankenstein, M.D., President of the CMA. "Cutting funding for health services, particularly when it costs California valuable federal matching funds, is neither humane nor financially sound."

The Legislative Analyst recommended today that the Legislature reject the Governor's proposal to reduce payments for providers in the Medi-Cal program, which covers health care for low-income families. The analysis also says the Governor and Legislature need to prioritize any cuts to access, and avoid some of the cost shifting that will naturally occur as patients utilize more expensive services.

"The rate reductions proposed by the Governor, in our view, could further limit access to primary care in Medi-Cal and other … programs," the LAO said in its analysis. "Furthermore, these rate reductions may cause a shift to the utilization of costlier sources of care, diminishing the net savings to the state."

The report comes on the heels of a hasty vote last Friday by both the Assembly and Senate, which voted to approve $1 billion in cuts to health care funding after only two hearings. The Governor signed off on the cuts.

Today's analysis notes the financial impact already felt by providers who see Medi-Cal patients, pointing out that even as medical costs have continued to increase, physicians have not received any rate increases since 2001.

Slashing payments for health care in California also means matching federal dollars get left on the table. California receives a dollar in federal matching funds for every Medi-Cal dollar spent. Even without the cuts, current Medi-Cal rates are some of the lowest in the nation, and are, on average, 60% of Medicare and less than 50% of commercial rates. Under Medi-Cal, a primary care.

The California Medical Association represents 35,000 California physicians in all modes of practice and specialties.

California Medical Association