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California is currently working to reduce Medi-Cal spending by billions per year, by restructuring Medi-Cal and securing a waiver allowing California to operate Medi-Cal free of federal guidelines.

In a truly stunning KQED FM program, "California Report," Budget Analyist Elizabeth Hill said that even if Schwarzenegger's budget goes through unchanged, deficits would be eliminated for only 16 months and then come roaring back and last indefinitely. The 05-06 budget would have a $7 billion annual deficit, which would slowly decrease to about $5 billion annual deficit in 08-09. which is the last year of her forecast.

The "California Report" then interviewed public hospital Emergency Room doctors, who said that if Schwarzenegger's current mid-year cuts went through, Medi-Cal would cease to exist as we know it.

Finally, the program turned to California Department of Health Services director, Kim Belsche, who agreed that the Schwarzenegger cuts are painful. However, she said there is good news in this story, because the cuts are only temporary.

The reason this years' cuts are temporary is that Schwarzenegger plans to get waivers exempting California from federal operating requirements for Medi-Cal. Once California is exempted from federal requirements for who is covered and what services are provided, the state will have much more flexibility to deal with the huge shortfalls Elizabeth Hill expects in future years. In other words, if you think this year's cuts are bad, you haven't seen anything yet. Listen to the program (8 minutes.)

In March and April, 2004, the State Department of Health Services (DHS) has been convening "Medi-Cal Redesign Workgroups." which are billed as opportunities for providers, advocates, and community groups to provide input into the restructuring. In fact, DHS's plan is already formed and is slowly being revealed. This tremendously elaborate Workgroup process is a ruse to try to convince the State Legislature that Medi-Cal advocates approve of the plan. See the Med-Cal Redesign Workgroup website. In fact, advocates are voicing opposition to the process and to the overall plan.

After the phony workgroup process is completed, DHS will present its restructuring plans to the California Legislature in Mid-May 2004. The Schwarzenegger Administration plans get the waiver plan through the legislature in October, 2004 and submit it to Washington, which is expected to approve the waiver request by the beginning of 2005. The Schwarzenegger Administration plans to have the restructured Medi-Cal in operation by June 2005.

Elements of DHS's Medical Restructure

Part of the proposed Medi-Cal restructuring involves "Tiered Medi-Cal," which will require recipients above the poverty line to pay premiums, higher co-pays, and 20% payment on materials like glasses, hearing aids and prostheses, and services like physical therapy and hospice. Read more about Tiered Medi-Cal.

The other part of the proposed Medi-Cal restructuring involves forcing new clases of recipients into managed care. The proposal to force aged, blind, and disabled recipients into managed care seems to be stalled in the Assembly. However, the State is still planning to force managed care on recipients in rural counties where there has never been Medi-Cal managed care, and where HMOs abandoned tens of thousands of Medicare managed care patients because the profits were insufficent. April 13 2004 Health Access Update


In addtion to the state plans, the Federal Government is working to restructure Mediciad in order to greatly reduce its payments to states and absolve itself of responsibility for who gets covered and what services are available. "Block Grants" would allow the Federal Government to basically freeze its payments to states, as opposed to the unlimited cost-sharing that occurs now. With huge increases in the elder population expected, these Block Grants would strangle Medicaid. Read more about Block Grants.

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