A new five-year deal struck by Gov. Arnold Schwarzenegger to provide a projected $3.3 billion in new federal funding for healthcare for the state's poor met with criticism from California's public hospitals.
The agreement with HHS gives California a five-year waiver from federal rules covering Medicaid hospital payments, allowing California to continue contracting with a select group of 230 hospitals for services instead of paying all 500 California hospitals. State officials say that in negotiating the waiver, they were able to convince the federal government to provide an additional $671 million a year over five years for Medicaid services.
But the California Association of Public Hospitals and Health Systems said the deal would not provide safety-net hospitals with enough funding to compensate for rising healthcare costs, leading to limited access for Medicaid recipients. The association also said the state might not be able to qualify for all the federal funding because it requires matching funds counties might not have. The group estimated the deal would ultimately bring in only a third of the projected $3.3 billion.
Public hospitals account for just 6% of California hospitals, yet provide more than half the hospital care for the state's 6.5 million uninsured.