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California Legislative Beat

California Budget Watch (Part 3 of 4): California’s Newly Enacted Budget Contains Impactful Healthcare Initiatives That Will Help Increase Healthcare Access

On June 27, 2019, Governor Newsom signed AB 74, the Legislature’s final budget with no line item changes related to health care. Previously, we glimpsed at the Governor’s May Revise and the Legislature’s final proposal. While not much has changed, we recap and delve deeper this month into specific programs under the enacted budget that could impact healthcare access and costs.

 

Final Allocations for New Healthcare Programs

While many different healthcare initiatives are included in the enacted budget, we focus our discussion specifically on programs laid out in the enacted budget that aim to 1) increase access to health insurance, 2) increase healthcare workforce, 3) increase benefits, and 4) increase provider payments.

1. To expand the pool of Medi-Cal recipients or to simply encourage Californians to buy health insurance, the enacted budget includes:

2. To increase the health care workforce, the enacted budget includes new investments such as:

3. To create new (or restore) benefits to assist Californians, the enacted budget includes funding for:

4. To increase provider payments and positions, the enacted budget includes funding for:

 

Implications of the Newly Enacted Budget

The initial impact of the budget has already been felt. Citing the new state subsidies and the restoration of the individual mandate, Covered California just announced an astoundingly low 0.8% rate change in 2020. For context, Covered California premium rates increased 8.7% in 2019 and 12.5% in 2018.

Other implications will take some time. For example, increased loan repayment and scholarships will help increase and retain rural and other necessary providers in California. Many regions in California do not have enough doctors. Loan repayment programs and scholarships under this budget will help recruit additional mental health providers and rural providers.

In addition to increasing the healthcare workforce, increased benefits and funding for healthcare initiatives will also help increase healthcare access. The restoration of benefits, in particular, will most certainly be welcomed. According to a Health Affairs study, the elimination of a Medicaid benefit (dental coverage, in that instance) led to increased use of emergency departments, increased costs, and disproportionate effects on young adults, members of racial/ethnic minority groups, and urban residents. The restoration of benefits under the new budget will provide greater access and lower costs.

Lastly, increased provider payments, whether it be supplemental payments or increased rates, will further increase healthcare access. One study found that the largest increases in reimbursements correlated with the largest increases in the availability of primary care appointments. Another study also supported the finding that higher reimbursement rates would improve access to health care. Although other studies caution that higher fees alone do not increase healthcare access, California’s targeted increases in provider payments may help improve access to health care in places like free-standing pediatric subacute facilities or hospital-based pediatric physician services.

 

After the Governor approved the budget, the Legislature passed a pair of trailer bills, SB 78 and SB 104, to implement the budget. Be sure to tune in next month as we wrap up the 2019 Budget Watch with an in-depth discussion on how the Legislature intends to implement the value-based payment program, the individual mandate, the subsidies for the individual market, and more!

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