Governor’s Budget Proposal – Health Analysis

January 9, 2015

It’s Budget Day! Governor Brown released his proposed budget this morning for 2015-16. Before we dive deep into the details of the health budget, here are the most noteworthy proposals:

  1. Annual enrollment periods for Medi-Cal – currently, Medi-Cal managed care members can change their plan once a month, in contrast to Covered California, in which consumers can generally only change plans during annual open enrollment. The current Medi-Cal policy allows for maximum member choice but disrupts continuity of care and care management efforts. The Budget proposes limiting Medi-Cal plan selection to a 90-day annual open enrollment period, creating savings of $1.6 million. If implemented, this would be a big change for Medi-Cal members, plans, and providers.
  1. The CCI may be put on the chopping block – the Coordinated Care Initiative has had a rough start, with 69% of dual-eligibles opting out of Cal MediConnect (more than double initial projections) and a 4% tax on managed care plans that funded the CCI was recently nixed by the Feds. There is concern that without the tax revenue the program will not be cost-effective, which would require the state to discontinue the CCI. The Budget specifies that if cost-effectiveness is not achieved by January 2016, then the program will cease operations.

A quick summary of the Medi-Cal budget:

Out of the $95 billion total Medi-Cal budget, General Fund spending on Medi-Cal will increase by 4.3% in 2015-16, to a total of $18.6 billion. Estimates for the Medi-Cal caseload have increased from nearly 12 million members to 12.2 million (although there were as few as 7.9 million members in 2012-13) in 2015-16, accounting for 32% of the state’s total population. While the federal government has picked up most of the tab for new Medi-Cal enrollees, the Budget estimates net costs of $14.3 billion in 2015-16 for the Medi-Cal expansion.



Other very fascinating proposals (and lack thereof):

The Budget makes no changes to Medi-Cal provider rates. The federal bump ended in December and a 10% primary care rate cut kicked in in January.

Counties will receive an additional $150 million to conduct Medi-Cal eligibility determinations.

Members of state limited benefit programs (like CCS, AIM, GHPP, and Every Woman Counts) will be required to seek full-scope Medi-Cal or Covered California before they can receive services from non-comprehensive programs.

$300 is million allocated to pay for high cost Hepatitis C drugs like Sovaldi for Medi-Cal members, AIDS Drug Assistance Program (ADAP) participants, California state inmates, and state hospital patients.

Treatment for kids in Medi-Cal with Autism Spectrum Disorder (a new benefit, as required by the Feds) will cost $190 million in 2014-15 and $320 million in 2015-16.

Implementation of overtime for IHSS workers is on hold pending a federal court decision, but the 7% cut to authorized IHSS hours will be restored.

The pediatric palliative care pilot project has been deemed a success and will expand to seven new counties.

A new managed care tax will replace the tax that was recently deemed impermissible, relieving a $1.1 million General Fund offset.

Recertification of Drug Medi-Cal providers is expected be completed by November.


The full budget can be read here.