The absence of a bright line between those health care policies that should be considered in the Legislature's special session and those that may arise in the regular legislative session presents interesting challenges to the governor and lawmakers. What is clear is the number and breadth of pending health policy issues.
The passage of Prop. 30 -- combined with the Supreme Court's decision upholding the Affordable Care Act and the results of both the state and national elections -- create certain imperatives.
While Prop. 30 will help put the state in a better fiscal position, at least for the short-term, it is not a permanent solution. Further, California cannot grow itself out of the structural deficit.
Consequently, programs and obligations that annually increase state expenditures must be addressed. The major cost drivers are public employee compensation (salaries and benefits), education and health care. All three categories are important.
Each cost driver must be addressed in constructive, innovative ways if the state is to achieve long-term economic viability. Another challenge is the burdensome regulatory environment, which is regressive and oppressive.
Key health care issues that must be addressed this year include:
Basic Health Program: The ACA authorizes states to establish a BHP to provide low-cost health care coverage to individuals who meet specified income criteria before the ACA's coverage expansion begins on Jan. 1, 2014. Approximately 800,000 Californians with incomes between 133% and 200% of the federal poverty level would be eligible to enroll in a BHP. Legislation to create a BHP in California failed to pass in the last legislative session.
There are conflicting viewpoints on whether a BHP should be established. Some people believe that providing this population with coverage immediately should be a top priority. Others are concerned that a BHP will siphon off healthier individuals who would otherwise enroll in the state's health benefits exchange, leaving the exchange with sicker individuals and higher costs. Research has produced conflicting conclusions to these questions.
Covered California: Formal implementation of health care reform will be launched when the open enrollment process for the state's exchange begins in October. The Legislature should monitor policies and progress of Covered California and ensure that the goals of the ACA are achieved and that a balance is maintained between government and the private sector to gain maximum benefit of both.
Coordinated Care Initiative/Duals Demonstration: The ACA authorized demonstration projects aimed at improving the coordination of care for people who are eligible for both Medicare and Medicaid. There are approximately 1.2 million dual eligibles in California, and 380,000 of them reside in Los Angeles County.
Many questions remain about the state's proposed dual eligible demonstration project, including the size and structure of the initiative, passive enrollment and "out-opt" provisions, separation of Medicare and Medi-Cal funds and payments, appeals processes, duration of the demonstration, and how savings are determined. Once the federal government and the state reach an agreement in the anticipated memorandum of understanding, implementing legislation will likely be required to capture the final terms of the agreement.
Medi-Cal Hospital Fee Program: The current Medi-Cal Hospital Fee Program expires Dec. 31, 2013. The supplemental funds generated by the fee program cover less than half of the Medi-Cal payment shortfalls to hospitals. In 2012, the Medi-Cal payment shortfall will exceed $5 billion.
The California Hospital Association has sponsored three hospital fee programs since 2009 and likely will sponsor a fourth in 2013. This will require action by the Legislature.
Other Issues: Regardless of what happens at the federal level, many legislative and regulatory matters create a full plate for the Legislature and governor. Beyond the public arena in the private sector, market changes are occurring at an exponential rate and will influence public policy.
The confluence of existing laws, legislative actions, regulatory rules and market forces is producing the most dynamic period in history. The challenge to all of us is, "Do we have the vision, ingenuity, commitment to innovation and collaboration, and discipline to take advantage of this once-in-a-century opportunity?"