Provisions in the new national health care reform law could make it difficult for Gov. Arnold Schwarzenegger (R) to follow through on some of his proposed cuts to state health insurance programs to rein in California's mounting $20 billion budget deficit, New America Media reports.
The health care reform law includes a "maintenance of effort" provision requiring states to maintain their Medicaid and Children's Health Insurance Programs. Medi-Cal is California's Medicaid program, and Healthy Families is the state's CHIP program.
Schwarzenegger has proposed eliminating several social service programs, including Healthy Families, unless the federal government provides the state with an additional $7 billion. So far, the federal government has pledged only $3 billion.
If Schwarzenegger attempts to follow through with his proposed cuts, California would have to forgo all federal Medicaid funding, amounting to billions of dollars annually, according to Kelly Hardy, policy director for the national advocacy group Children Now.
Schwarzenegger and state lawmakers are examining the new federal law to determine what it will mean for the state financially.
At a press conference last week, Schwarzenegger said, "My concern about the federal government's health care reform is only how do we fund it, because they have shifted the funding from the federal government and ... it will cost us $3 billion more."
Health Access Executive Director Anthony Wright said that federal health care reform will benefit, not burden, the state. He said, "The federal government will, over the course of the next 10 years, provide $33 billion to help cover low-income Californians."
Under the new law, the federal government will cover 100% of the cost of new Medi-Cal beneficiaries for the first three years, gradually reducing its share to 90% by 2020. In addition, the federal government will increase its share of funding for Healthy Families to 88%, 23% more than its current share.
The state might receive additional assistance from an extension of a provision in the 2009 federal economic stimulus package that increased the federal matching funding for Medi-Cal from 50-50 to 60-40 (Nguyen, New America Media, 3/29).