Governor Proposes Painful Cuts to Health Care Programs to Close Budget Shortfall

With so many Californians losing jobs and health insurance because of the pandemic, the state estimates 2 million more people will sign up for Medi-Cal coverage this year, bringing the total caseload in the health care program for low-income Californians to 14.5 million people.

To pay for the increase in enrollment, Gov. Gavin Newsom wants to cut back on some of the benefits patients will receive and the rates doctors will get paid to see them.

“There are areas where we clearly can’t do what we wanted to do,” Newsom said during a press conference on Thursday. “We wanted to make more progress with the January budget. Unfortunately, that progress will be delayed.”

Services like vision care, podiatry, hearing aids, and speech and physical therapy will no longer be covered by Medi-Cal under the governor’s revised budget. Dental services will also be greatly reduced.

Many of these benefits had just been restored – letters went out to recipients in January that some were now available again – after they were cut in the last economic downturn.

“We spent a lot of time trying to work our way out of the hole that we dug 10 years ago during the Great Recession,” said Anthony Wright, executive director of Health Access California, an advocacy group. “And we're looking to repeat the exact same mistakes of making these cuts that have these unintended consequences throughout the health system.”

The governor is also proposing to reroute $1.2 billion raised from the state’s tobacco tax. Instead of increasing payments to doctors and clinics that treat Medi-Cal patients, as the money was intended when it was passed by voters in 2016 as Proposition 56, the state would like to redirect it to fund the growth in general Medi-Cal costs.

Doctors groups, which spent millions to help pass the tobacco tax, say this cut to reimbursement rates will create more pressure and uncertainty on physician practices at a time when many are already facing big drops in revenue because of canceled surgeries and appointments. Doctors say this could force them to limit the number of Medi-Cal patients they see.

“This budget will widen the inequality gap between those on public and private insurance at a time when more Californians are struggling, and an additional 2 million low-income Californians will be dependent on Medi-Cal,” said Dr. Peter N. Bretan, president of the California Medical Association. “The governor’s proposal will make it harder for those patients to get the care they need when they need it.”

In addition to the cuts in services and reimbursement rates, the state is also scrapping various plans to expand and protect Medi-Cal coverage for seniors, in particular, for undocumented adults over age 65, which was one of the governor’s main goals in bringing the state closer to universal health coverage. Undocumented children and young adults will still be eligible.

Tens of thousands of older Californians who are blind and disabled and earn between $16,332 and $17,609 per year will not be able to get Medi-Cal coverage, as was originally proposed in the governor’s January draft budget. And a policy that would have prevented the state from taking Medi-Cal beneficiaries’ homes or estates as payment was rescinded, serving as a deterrent for some seniors to sign up, said Health Access’ Anthony Wright.

“These are cuts to senior care and coverage that are really troubling,” he said, “especially since seniors are the most at risk population in this COVID-19 crisis.”