Despite Budget Resolution, Medi-Cal Crisis Endures
Three months late, governor Schwarzenegger has finally signed a budget. Unfortunately, the governor and legislators missed the chance to wrangle Medi-Cal, the state’s Medicaid program, under control.
The budget agreement held the line pretty well on this gargantuan program for the short term appropriating 14.5 billion for 2008-2009 versus $14.2 billion last year. But that’s not the whole story: total Medi-Cal spending will be more than twice as much, $39.4 billion, because the federal government pays the state for most of it.
But Medi-Cal’s long-term spending trend is still out of control: Between 1997-1998 and 2006-2007, MediCal spending increased at an annual rate of 7 percent, nearly doubling. And fully one third of this increase was due to increased enrollment. Because of the federal matching payments,
But Medi-Cal does no favors for providers: In 2003, Medi-Cal paid physicians only 59 percent of what Medicare (itself a poor payer) paid, on average. And the situation got worse when
The governor and legislature must be pretty confident they will prevail: The budget extends the 10 percent payment cut until March 1, 2009, after which providers will get some relief.
Or maybe not: even if the federal court decision stands, and blows up the roll-back, the state couldn’t pay providers what the judge demands anyway. In fact, the “annual” budget doesn’t really even cover the whole fiscal year. There will have to be a special election (likely next March or June) to authorize borrowing $5 billion against future lottery receipts.
So, despite years of out-of-control spending, Medi-Cal still fails both providers and patients. At its core, the problem is not a budgetary crisis: it’s a crisis of government dependency.