In State Budget, Inaction Can Be Action

by David Gorn

The California Budget Project's appraisal of the governor's 2014 proposed budget finds the plan lacking in addressing several health care issues.

In his projections for state revenue and spending in the coming year, Gov. Jerry Brown (D) said the outlook was financially brighter but many health care budget cuts made in previous years were not addressed. According to Chris Hoene, executive director of the California Budget Project, a not-for-profit nonpartisan budget analysis organization based in Sacramento, that just doesn't make good fiscal sense.

"This budget has the same elements it had last year," Hoene said. In particular, he was concerned that the rate cut for Medi-Cal providers remained in place.

"And that doesn't make any sense because we should be incentivizing providers to take care of people in the expansion," he said. "There's a two-steps-forward, one-step-back aspect to this budget."

A 10% Medi-Cal rate cut was passed two years ago as an emergency budget reduction when the state faced a tsunami of red ink. Now that the fiscal waters have calmed, Hoene said, it's important to make sure the state is ready for this year's Medi-Cal expansion, when one million to two million Californians will join the system and will need providers to care for them.

"From a policy point of view, we should be doing the opposite. The whole thing doesn't gibe with expanding Medi-Cal," Hoene said. "It's fair to say that's the concern across the budget, that a hole was cut into services, and that hole is basically being left in place, at a time when the governor is projecting higher than expected revenues."

Hoene expects the Legislature to push for restoration of those Medi-Cal rates. But he added that, in politics, when someone as powerful as the governor sounds a note of fiscal caution, that can put pressure on legislators to follow suit.

"I think that's the danger, if the legislators accept the governor's frame on the world," Hoene said. "He's presenting an austerity view, at the same time as projecting revenue growth of 6.2%. The challenge for legislators is to push the governor, to say, 'That was the deal, we made emergency cuts and now the emergency is over.' "

Hoene said it's likely this could be the start of a long discussion that could continue through scheduled passage of the budget in June.

"It seems to me there's plenty of room for budget negotiation. This is just an opening salvo," Hoene said. "And it looks to me like there is room to maneuver here. Everybody had hoped the governor would move more than he did. But this isn't a situation where [the governor and legislators] are diametrically opposed. Advocates might be able to find a middle ground."

If not, he said, the emergency cuts made in the past few years are likely to become permanent, and become an official policy change in California.

"Really, if not now, then when are you going to do that?" Hoene said of replacing funds cut during the budget crisis. The fact that the governor hasn't mentioned restoring those cuts sends a strong signal to legislators, he said.

"It would be nice if there were a plan, if the governor said we couldn't do provider rate cuts this year, but we'll work toward that in 2015," Hoene said. "That would be great. But we don't have that."


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