Revised State Budget Released

May 13, 2014

Today Governor Brown released a summary of the revised 2014-15 state budget. General fund revenues increase by over $2 billion. Major fund increases go towards reforming and upgrading teacher pension contributions, paying down the “wall of debt,” funding drought relief, and contributing to the Rainy Day fund. Here are the highlights of the May revise changes to health funding from the January proposed budget.

Medi-Cal enrollment is expected to exceed the original estimate of 10.1 million in 2014-15, increasing to 11.5 million. This is a 46% increase in enrollment compare to pre-ACA membership (7.9 million), and will now represent approximately 30% of the state’s population.

While most (1.6 million) of the newly and soon to be enrolled in Medi-Cal are newly eligible under the ACA, about 800,000 were previously eligible for Medi-Cal but unenrolled. The total increase in funding for the new eligibility categories is $6 billion. The newly eligible enrollees are fully funded by the federal government for three years, declining to 90% by 2020. The State is responsible for half of the cost of the previously eligible but unenrolled beneficiaries, costing $1.2 billion in state General Funds.

General Funds allocated to the Health and Human Services Agency increased from $28.8 billion planned in January to $29.6 billion, a 2.7% increase in funding from 2013-14.

The behavioral health expansion will cost $191 million in General Funds. $2 million is allocated for administrative costs incurred by counties improving mental health and supportive services for children and youth in foster care.

$187.2 million is allocated for Medi-Cal managed care rate increases.

Delays in Medi-Cal redeterminations, scheduled to begin June 1, will cost $68.8 million.

The May Revision allocates $2 million for a pilot program for pediatric vision services, in which mobile providers will contract with school districts to provide eye exams and glasses for Medi-Cal children.

The redirection of $300 million in health realignment funds will continue as planned for the 2013-14 budget year. The redirection of county realignment funds in 2014-15 will be $175.1 million less than previously anticipated. The total impact on county health is $725 million for the coming year.

The Major Risk Medical Insurance Program (MRMIP) will be terminated on January 1, 2015. Enrollment has already fallen by half and the budget assumes that the 3,000 remaining members will enroll in Covered California during the next open enrollment period. Managed Risk Medical Insurance Board [MRMIB] programs will be transferred to the Department of Health Care Services effective July 1, 2014.

New Hepatitis C drugs will be added to the AIDS Drug Assistance Program (ADAP) formulary, at a cost of $26.1 million in federal funds. Additional cost-sharing assistance will be available for ADAP enrollees to offset copays and deductibles in Covered California starting January 1, 2016.