Senate budget version rejects health care cuts in May revise

Facing a June 15 deadline to pass a state operating budget, the Legislature is quickly working to find ways to make up for California’s estimated $54.3 billion budget deficit. The Senate budget committee approved its version of the budget on Thursday, signaling a major deviation from Newsom’s May revise – particularly when it comes to health care spending.

Newsom’s May Revise was about $19 billion short of his $222 billion January proposal due to the economic impacts of COVID-19. His budget relied on significant cuts to program expansions and spending increases, including major changes to Medi-Cal.

The Senate’s proposal rejects the majority of these program cuts, choosing instead to take more money from reserves and delay payments to public schools.

 

Image: Legislative Analyst’s Office

 

Both versions of the budget rely on trigger solutions — cuts that become necessary if the state doesn’t receive additional federal funds – but they differ on the details. The May revise would cancel $14 billion in budget cuts if the state receives additional federal aid by July 1.

The Senate’s budget assumes the federal funds will come but will turn on additional cuts if the funds aren’t received by September 1, with the cuts going into effect October 1.

“There is growing confidence that the federal government will act and the trigger solutions contained in the Senate Version will not be implemented,” reads a Senate Budget and Fiscal Review Committee memo.

“Under the Senate Version the most draconian cuts – to schools and health and human services – are taken off the table and instead replaced with other solutions that have always been intended to be used prior to draconian cuts being implemented,” it continues.

The Senate version rejects several of the proposed health-related cuts included in Newsom’s budget including cuts to affordable housing funds and cuts to child care rate increases. The funding package also rejects Newsom’s proposal to reinstate the Senior Penalty in Medi-Cal and it protects one-time investments for local homelessness programs, clean water programs, and other priorities.

The Senate proposal also brings back Newsom’s January proposal to expand Medi-Cal to seniors 65 and older regardless of immigration status. Newsom withdrew this proposal in his May revise. The Senate proposes delaying the start date of this coverage to January 1, 2022.

Senators chose to reject all proposed trigger cuts to health programs included in the May revise. The budget rejects the proposed elimination of optional Medi-Cal benefits like dental, optometry, physical therapy, and speech therapy, and rejects the elimination of the multipurpose senior services program (MSSP) benefit and community-based adult services (CBAS).

 

 

The budget rejects cuts to previously approved programs like the Medi-Cal medical interpreters pilot project, funding for behavioral health counselors in emergency departments, and the black infant health program.

If trigger solutions are needed, the Senate budget would increase the Managed Care Organization (MCO) tax to generate $1 billion.

In addition, information from the Legislative Analysts Office (LAO) says the Senate packages uses LAO’s caseload estimates for Medi-Cal and CalWorks. LAO projects less growth in the number of people qualifying for these aid programs than what is assumed in Newsom’s budget, resulting in $3.6 million in savings.

“I hope that the proposal and ideas that the Senate puts forward have a positive impact, particularly when it comes to addressing the budget shortfall in a manner that does not make conditions worse for our vulnerable California residents,” said Sen. Holly Mitchell, the Senate budget chair, during Thursday’s committee meeting.

The Assembly has not yet released its budget proposal.