Gov. Jerry Brown

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Brown on Health Coverage: “Right Thing to Do. But It Isn’t Free.”

Gov. Jerry Brown is sworn in as California governor for the fourth time. (Andrew Nixon/Capital Public Radio)

Gov. Jerry Brown is sworn in as California governor for the fourth time. (Andrew Nixon/Capital Public Radio)

Jerry Brown was sworn into his fourth term as governor of California Monday morning. In a wide-ranging inaugural address (that doubled as a State of the State address), he included some brief remarks about the Affordable Care Act.

Here’s the text of what he said:

Along with education, health and human services constitute a major part of what state government does. And in the past few years we have made massive commitments in this area, which will require increasing levels of spending, the full extent of which is not yet known. For example, two years ago California embraced the Affordable Care Act, dramatically increasing its health insurance coverage under the Medi-Cal program. The state will enroll 12.2 million people during this new budget year, a more than 50 percent increase.

Providing the security of health coverage to so many Californians who need it is the right thing to do. But it isn’t free. Although the federal government will temporarily foot much of the bill, new state costs – now and more so in the future – will run into the billions.

Before we take a deeper look at his statements about Medi-Cal, let’s go back a year ago to last year’s budget. Then, Brown’s budget proposal included an additional $670 million for Medi-Cal, at least in part because of the expected additional costs due the expansion of Medi-Cal under the Affordable Care Act. Perhaps more importantly, “The Medi-Cal caseload is expected to be approximately 24 percent of the state’s total population,” the governor said when he released last year’s budget.

Speed forward a year. Obamacare sign-ups surged in California during 2014 and outstripped all estimates. Specifically in Medi-Cal, it’s not 24 percent of the population that is covered by the program, it’s closer to 33 percent.

While the ACA  pays for 100 percent of the people who are newly eligible for Medi-Cal, many people who signed up in 2014 were already eligible before the ACA expansion. They just had not enrolled. With all the hoopla around the ACA, plenty of those previously-eligible people signed up. Many refer to this as the “woodwork” effect.

Estimates are of the 2.4 million people who signed up for Medi-Cal by Mar. 31, about 800,000 of them were previously eligible. The federal government funds those people at the non-expansion rate of 50 precent. That’s why in the May revision of his budget, Gov. Brown included an additional $1.2 billion to fund the caseload.

Brown closed his brief remarks about health with a remark about the state’s costs “in the future.” The federal government is funding 100 percent of the Medi-Cal expansion only through 2016. Come 2017, the match will start to drift down and ultimately end at 90 percent. Yes, this is still a generous federal outlay. But 10 percent of billions of dollars is a lot of money.

The governor is expected to release his budget proposal on Friday.

Governor’s Budget Includes $670 Million for Medi-Cal; Preserves Provider Rate Cuts

(Justin Sullivan/Getty Images)

(Justin Sullivan/Getty Images)

The governor’s budget is out and for the first time in years, California is expecting a multibillion dollar tax surplus. The governor is proposing a $8 billion in increased spending, with $670 million earmarked to expanded benefits under Medi-Cal.

The expanded benefits include mental health, substance use disorder, adult dental, and specialized nutrition services.

In his proposal, Brown noted that Medi-Cal is the “budget’s second largest program.” In keeping with his approach to being fiscally prudent, Brown included a warning about health care inflation and implementation of the Affordable Care Act. From his budget: Continue reading