Health Care Hold Up: Why Obama Won’t Give California Its Medi-Cal Bailout

Senator Barbara Boxer promised that California would get $11 billion in federal “stimulus” cash, which the embattled Golden State could use for a Medi-Cal bailout. But now President Obama is holding back almost $7 billion at the urging of the Service Employees International Union (SEIU).

The union was upset at Governor Schwarzenegger’s decision to shave a relatively meager $74 million from Medi-Cal’s spending on home-health workers for its dependents. These 300,000 home-health workers contribute millions of dollars to SEIU coffers, of which much flowed uphill to you-know-who’s presidential campaign last year. Governor Schwarzenegger’s proposed wage cut from $12.10 to $10.20 per hour would be a direct hit on union revenues.

The Los Angeles Times reports that on April 15, the SEIU had a conference call with federal Administration officials, an intervention that California Secretary of Health and Human Services Kim Belshé described as “unusual,” “atypical,” and “outside any norm.” There’s more going on here than a simple hold-out of bailout money.

The program in question, In-Home Supportive Services (IHSS), descends from a 1950s program that allowed low-income, house-bound patients to receive subsidies for home-health services from anyone they preferred, even a family member. As the decades rolled on, the program became more bureaucratized and was gradually taken over by Medi-Cal.

In 2000, the state enacted the “IHSS/Quality Assurance (QA)” initiative, with such features as social worker training, state/county quality assurance monitoring, and development of hourly task guidelines. In other words, more state control over whom the house-bound patient hires to come into her/his home to provide the health services.

A 2004 federal waiver allows California to use Medi-Cal funding to reimburse services provided by relatives, not unionized workers. Patients’ control over their home-health care, however, has been quietly slipping away. A 2006 federal Medicaid rule-change appears to have made it more difficult for home-bound Medi-Cal dependents to pay their share of costs to caregivers directly, but encouraged them to pay other third parties instead, as part of a change to how caregivers submit time sheets.

The SEIU obviously believes the political time is right to monopolize the home-health workforce, and the stimulus hold-up must be seen as part of a larger campaign, with consequences. After all, making more people dependent on government for health care only hurts them when they can’t get the services they need. That’s what will happen in California, despite Governor Schwarzenegger’s cheerleading.

The governor has a squad of lobbyists in Washington DC but Team Obama keeps kicking the Golden State in the teeth. Despite giddiness over the American Recovery and Reinvestment Act, California will likely end up with a bailout of only about $8 billion, more than a quarter less than the $11 billion recklessly promised by Senator Boxer. Because of that initial claw-back, Medi-Cal beneficiaries will likely lose dental and podiatry services, starting July 1.

Even illegal immigrants are finally getting the squeeze. In February, Sacramento and Contra Costa counties voted to stop providing health services to illegal immigrants – a trend other counties will surely follow, especially in response to the latest news from the White House.

Back in February, Governor Schwarzenegger didn’t join Governor Sanford (R-SC), Governor Perry (R-TX) and a few others who rejected some of the loot. They honed in on specific boondoggles such as “green buildings,” but they also suggested turning down Medicaid matching funds.

Meanwhile, self-direction of Medicaid dollars by Medicaid beneficiaries has been demonstrated to improve their quality of life since at least the 1990s, when scholars started measuring the effect of such waivers. It would be a shame if, in exchange for bailout dollars, Governor Schwarzenegger gave the SEIU complete power over supplying home-health workers to vulnerable Medi-Cal patients. Let’s hope that this time he sticks to his guns.

Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.

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