What a difference six months makes.
All the goodwill and carefully crafted coalitions built during Californias attempt to pass comprehensive healthcare reform last year have dissolved into bitter fights over millions in proposed healthcare budget cuts and a legal battle over provider rate reductions.
Corporations that once championed Gov. Arnold Schwarzeneggers healthcare reform plan (Feb. 4., p. 6), such as the California Hospital Association, Health Net, the AARP and Catholic Healthcare West, are now railing against the governor through print and television ad campaigns, planned rallies and media conference calls.
On July 1, a 10% Medicaid (known as Medi-Cal in the state) provider rate cut went into effect. Initially unveiled in the governors budget proposal in January, just after healthcare reform fell apart, the rate cut was approved by the state Legislature one month later. Providers, including the California Medical Association and state hospital association, sued the state on May 5 to stop the cuts. The state attempted to move the lawsuit to federal court, but lost that motion last month. A hearing date is now set for July 25 in Los Angeles County Superior Court.
We are very concerned that if these cuts take effect, we will have providers dropping out of the Medi-Cal program, said Jan Emerson, spokeswoman for the California Hospital Association, which has launched a television and print ad campaign decrying the governors health spending reductions, along with a Web site, savemyemergencyroom.org.
Most providers wont feel the effects of the rate cuts until August or so, Emerson said, because state lawmakers havent yet passed a budget.
With an estimated $17 billion budget hole starting July 1, the new fiscal year, lawmakers havent reached a consensus as to how to meet that shortfall. Healthcare services, including hospitals, physicians, dentists, long-term-care facilities and adult day programs, are facing between $1.1 billion and $1.5 billion in cuts, including the Medi-Cal 10% rate reduction, according to Schwarzeneggers budget plan.
Those cuts include $22 million for inpatient services provided by hospitals that dont contract with Medi-Cal, $48 million in hospital disproportionate share funding, and $54 million for some public hospitals through the states Safety Net Care Pool. Hospitals are also estimating that patient eligibility and benefit changes to Medi-Cal, such as rollbacks in income requirements and new rules for immigrants, could cost them another $96 million.
Democrats, who hold the majority of seats in both houses, are proposing $11 billion in new taxes, which Republicans said they wont approve. Passing a budget requires a two-thirds majority in the state Legislature.
While physicians and other providers will continue to get paid through the budget stalemate, as required by law, institutional providers such as hospitals and community clinics will not. The state has an emergency fund of $2 billion to keep those payments coming through a budget impasse, but state Controller John Chiang estimates that the fund will run dry by the end of July.
Insurer Health Net, also a champion of the governors healthcare reform plan, has extended $5 million in no-interest, six-month bridge loans to a consortium of 13 safety net clinics in the Central Valley so they can keep their services open during the budget stalemate.
Most physicians wont feel the impact of the budget impasse or the rate cuts immediately, but some are already taking steps to ensure it doesnt hit their bottom line too hard, said Ned Wigglesworth, spokesman for the California Medical Association. Weve already heard of doctors stopping taking new Medi-Cal patients starting July 1, he said.
The California Medical Association did not take a position on the governors healthcare reform proposal, which passed in the state Assembly in December 2007 but failed to make it out of a key state Senate committee a month later. But the association is teaming up with other groups that did champion the healthcare reform bill to protect their reimbursement rates, including the AARP, Catholic Healthcare West, Health Net and Kaiser Permanente.
Those groups might not be teaming up to fight the budget cuts if it werent for the coalition-building around healthcare reform that happened last year, said Anthony Wright, executive director of Health Access, a consumer group. The reason why we are talking is we are talking about the prospect of healthcare reform in the future.
The governor, meanwhile, understands the impact of these budget cuts, said a spokeswoman, Lisa Page. Thats why he has made healthcare reform a priority.