California Legislature Passes State Budget for 2018-19

June 15, 2018

By Elia Gallardo

On June 14, 2018, the California Legislature met the June 15 constitutional deadline to pass a state budget. The 2018-19 fiscal year (FY) budget passed by the Legislature increases state funding for higher education, child care, and social service programs for low-income and homeless Californians. The budget also fully funds California’s Rainy-Day Fund ($13.8 billion), a reserve created to stabilize state finances during economic downturns and creates a new $200 million reserve for Medi-Cal and CalWORKs, in the event of a future economic decline. Demand for the two safety-net programs always increases during bad economic times.

Reflecting a guiding principle of the Brown Administration to avoid committing the state to long-term spending while revenues are up, which may be difficult to sustain in years when revenues drop, the 2018-19 budget includes many one-time augmentations, including some affecting health care programs.

Highlighted below are health-related provisions included in the 2018-19 state budget.

While the Senate and Assembly versions of the budget included multiple augmentations aimed at covering specific subgroups of the remaining uninsured, including low-income seniors and some undocumented adults, and proposals to improve affordability in Covered California, the final budget compromise left all of them unfunded. The lack of funding to address coverage and affordability issues leaves the task of addressing the remaining uninsured to the next Governor. For more information on the strategies proposed in 2018, see ITUP’s latest issue brief and blog.

Evaluating Health Reform Options and System Costs

Council on Health Care Delivery Systems. The budget allocates $5 million in one-time funding to create the Council on Health Care Delivery Systems (Council). The accompanying legislative language tasks the five-member independent Council (two legislative and three gubernatorial appointees) with developing “options for advancing progress toward achieving a health care delivery system in California that provides coverage and access through a unified financing system.” The language allows the Council to establish advisory committees and lays out in some detail the issues the final plan must address. The Council must provide the first status report on January 1, 2020, and every six months thereafter, and submit the final plan to the Legislature and the Governor on or before October 1, 2021.

Options for Providing Financial Assistance in Covered California. The budget directs Covered California to develop options for administering financial assistance for low- and middle-income Californians to help them access affordable coverage. Legislative language tasks Covered California with exploring assistance options for low-income individuals spending significant amounts of their household income on coverage, even with federal financial assistance, and for individuals with incomes up to 600 percent of the federal poverty level ineligible for federal assistance. Covered California must provide a report to the Legislature with at least three options on or before February 1, 2019.

Health Care Cost Transparency Database. The budget includes $60 million for the Health Care Cost Transparency Database, to collect and aggregate data on health care costs to inform future policy decisions, reduce disparities and reduce costs. Legislative language tasks the Office of Statewide Health Planning and Development (OSHPD) with convening a Review Committee of health care stakeholders to advise on the development and long-term sustainability of the database, including types of data recommended for collection, entities required to report data, and the governance structure for operation. Requires OSHPD to submit a report to the Legislature no later than July 1, 2020, including a business plan for long-term sustainability of the database without state funding.

One-Time Investments in Mental Health Services

The budget infuses new, one-time state funding to support mental health services for the homeless, children, and criminal justice diversion, including:

  • $500 million for emergency aid related to homelessness, principally in the form of block grants for local governments. Language requires funding to be expended on one-time uses that address homelessness, including, but not limited to, prevention, criminal justice diversion programs to homeless individuals with mental health needs, and emergency aid.
  • $50 million for counties to establish multi-disciplinary teams supporting intensive outreach, treatment, and related services for homeless people with mental illness.
  • $113.1 million to implement a mental health diversion program focused on reducing the number of Incompetent to Stand Trail referrals to the Department of State Hospitals. (Under California law, a defendant is generally determined mentally incompetent to stand trial if, because of his or her mental health condition, the defendant cannot understand the court proceedings or assist counsel in their defense.)
  • $10 million (Mental Health Service Act (MHSA) funds) to implement a three-year “All Children Thrive” pilot program addressing childhood trauma.
  • $10 million for the Workforce Education and Training (WET) program, supporting stipends for psychiatric nurse practitioners and social workers in training, and residency and training slots for psychiatric mental health nurse practitioners.
  • $1 million (MHSA funds) for scholarships to enroll primary care physicians in medical shortage areas to enroll in a University of California (UC) primary care psychiatric fellowship program.
  • $4.3 million (MHSA funding) ongoing to support suicide hotlines.

Other Health Care Investments in the Final Budget

  • Sets aside $1 billion in Proposition 56 tobacco tax funding in a non-budget item for Medi-Cal provider rate augmentations to be appropriated in a future bill.
  • Multi-year funding through 2021-22 ($8.4 million in 2018-19) to eliminate treatment caps in the Breast and Cervical Cancer Treatment Program (BCCTP). The BCCTP provides full-scope Medi-Cal coverage to eligible low-income women diagnosed with breast or cervical cancer who require urgently needed treatment. Currently, the BCCTP caps treatment for breast cancer at 18 months and treatment for cervical cancer at 24 months, regardless of medical need. Going forward, services will be provided for the duration of treatment, providing the woman remains otherwise eligible.
  • $40 million for Graduate Medical Education within the UC system.
  • Funding and positions for implementation of SB 17 (Hernandez), Chapter 603, Statutes of 2017, which requires health plans and insurers to report specified prescription drug cost information and to notify the state of proposed rate increases for prescription drugs, as specified.
  • Nearly $4 million for collection and analysis of data on long-term services and supports, and a pilot expansion to improve data collection on children and youth, through the California Health Interview Survey.

As of this writing, the Budget passed by the Legislature is awaiting final consideration and signature by the Governor.