San Francisco Chronicle, Los Angeles Times Examine Proposed Medi-Cal, Government Structural Overhauls

CAL/AAEM News Service calaaem_news at
Thu Aug 12 19:57:45 PDT 2004

San Francisco Chronicle, Los Angeles Times Examine Proposed Medi-Cal, Government
Structural Overhauls

July 30, 2004 

The San Francisco Chronicle and the Los Angeles Times on Friday examined Gov. Arnold
Schwarzenegger's (R) planned overhauls of the Medi-Cal program and the state government.
According to the Times, the state government overhaul could save $32 billion over the
next five years (Nicholas/Salladay, Los Angeles Times, 7/30). The Medi-Cal reforms, which
could be unveiled as early as Monday, are expected to save about $400 million annually,
the Chronicle reports. Medi-Cal costs have increased by about 40% since 1999 because of
increased enrollment and higher overall medical costs (Berthelsen et al., San Francisco
Chronicle, 7/30). 

The Department of Health Services in January announced the launch of a yearlong effort to
reform Medi-Cal, which covers about 6.8 million California residents, as part of the
fiscal year 2004-2005 budget that Schwarzenegger proposed earlier this year. In March,
Secretary of Health and Human Services Kim Belshe said five working groups had been
formed to develop Medi-Cal overhaul plans and to provide state officials with input from
legislators, beneficiaries, local government officials, providers, health plans and
others directly affected by the reforms. Schwarzenegger must receive legislative approval
for the overhaul and a federal waiver, for which the administration plans to apply in
Medi-Cal Reform Details
Plans proposed by state health officials for the overhaul include increasing the number
of beneficiaries enrolled in managed care plans; dividing adult beneficiaries into two
different payment groups based on income; and eliminating coverage for some optional
benefits such as acupuncture and chiropractic care (California Healthline, 7/29).
According to the Chronicle, the reforms also will likely call for increased payments, "or
even a monthly premium," from beneficiaries but likely will not change eligibility
requirements. In addition, the changes are expected to restructure hospital reimbursement
methods. Hospitals might have to adhere to more stringent accounting guidelines for their
expenses, potentially reducing the amount of funds they receive from the government for
treating uninsured patients, the Chronicle reports (San Francisco Chronicle, 7/30). The
larger state government overhaul also would allow Medi-Cal applications to be processed
online or through the mail, according to the Times. 
Changes to Care Services in Government Structural Overhaul
Under the Schwarzenegger's planned "top-to-bottom overhaul of state government," the
state would reduce costs by "streamlin[ing]" its $26.4 billion in public health and
welfare programs, giving counties more power in the process and allowing private firms to
bid on programs currently operated by the state, the Times reports. The overhaul, which
will be detailed in a 2,547-page report to be presented to Schwarzenegger on Tuesday by
the governor's California Performance Review, would eliminate county child-support
agencies and force private contractors and state agencies to compete for contracts to
manage 1.8 million cases. The overhaul would move the Department of Managed Care under
the authority of the Department of Health and Human Services, as well as create a Center
for Public Health that would oversee all health care planning and risk assessment (Los
Angeles Times, 7/30). 
The governor on Monday is expected to submit the Medi-Cal reform proposal to the
Legislature, possibly "in the form of a waiver along with a bill that would change state
law to accommodate the changes," the Chronicle reports. Schwarzenegger may apply for the
federal waiver without legislative approval if lawmakers do not pass the plan by the Aug.
31 recess. The Chronicle reports that the time line for the full state government
overhaul "is much longer." Public hearings on the proposed overhaul will be held this
summer and fall before the final proposal is sent to the Little Hoover Commission for
review. If the commission approves the overhaul, the Legislature still could reject it
with a two-thirds vote in either house. 
According to the Chronicle, Schwarzenegger's staff said the Medi-Cal changes will "make
the system more cost-efficient without affecting the eligibility requirements." However,
some health care advocates have said the governor's proposal would add to the state's 6.4
million uninsured and further "damage the already struggling health safety net," the
Chronicle reports. "The need is growing, not shrinking, and yet they are shrinking the
resources," Rachel Kagan, a spokesperson for the California Association of Public
Hospitals and Health Systems, said (San Francisco Chronicle, 7/30). 

Source: California Healthline (

Cyrus Shahpar & Brian Potts 
Managing Editors, CAL/AAEM News Service 

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