Tell Us How the Medi-Cal Cuts Will Affect You

What These Cuts Really Mean

The Governor’s proposed 2008-9 budget would cut more than $2 billion in funding from Medi-Cal, the program that provides health care to low-income families in California. These cuts will impact not just those families enrolled in the program who rely on it for health care, but all Californians as described below.

Low-income families will lose access to health care.

California’s Medi-Cal rates are already among the lowest in the country, frequently below the cost of providing care. If funding drops even further, providers and hospitals will be forced to take fewer or even no Medi-Cal patients, costing Medi-Cal patients invaluable access to health care. Regular access to health care providers is essential in order to increase preventive care and manage chronic conditions. For example, lower reimbursement rates have been shown to decrease the number of preventive care physician office visits. Further, lack of access to a physician as a result of low reimbursement rates has been shown to increase the rate of avoidable hospitalizations.

The hidden tax on insured Californians will increase.

If Medi-Cal gets cut, other Californians will be forced to pick up the tab for the health care costs of those who cannot afford preventative care. As uninsured patients seek care in ERs and other higher-cost forums, those costs will be passed on to Californians with insurance. According to the Governor’s estimates, each privately insured Californian pays a “hidden tax” of $455 per individual and $1,186 per family every year to offset the uninsured and the effects of Medi-Cal under-funding.

Emergency rooms will be pressured.

Decreasing provider rates will put pressure on California’s already overburdened emergency system as Medi-Cal beneficiaries who can’t get access to primary and preventative care seek these services in the Emergency Department. Medi-Cal enrollees are already over-represented in Emergency Rooms because they can’t find a doctor. Medi-Cal enrollees are about 15% of California’s population, but about 27% of ER patients. A recently released study in the journal Health Affairs showed that wait times in emergency rooms increased by 36% in just 7 years. The study suggests that this is due largely to compromised access to primary care services and suggests that access to these services needs to be expanded to reverse the longer wait time trend.

California will forfeit over $1 billion in federal matching funds.

The proposed cuts would result in California giving up about $50 million in federal funds in the current year and $1.1 billion in federal funds in the budget year. The last thing we should be doing in a fiscal crisis is giving up federal dollars.

Health care will shift to higher-cost settings.

Reducing the level of support available from community based caregivers for the elderly, disabled and other vulnerable populations will force additional people into higher cost settings. For example, if rates are slashed, home health agencies may be forced to close their doors, sending Medi-Cal enrollees into higher cost settings. A Medi-Cal beneficiary, who receives a home health visit every day, costs about $2,300 a month, in an acute care setting a single day of service would cost more than a month in a home health environment.

Local economies could suffer.

In areas where a hospital, clinic or health plan is a major part of the local economy, resulting reductions in staffing, wages, vendor contracts, etc. will be felt by the entire community. This is particularly true in California’s rural communities, which are already struggling economically.