Say a Little Prayer

The Legislature’s Budget Conference Committee is scheduled to consider health issues on Thursday. However, uncertainty in Washington threatens $1.9 billion in funds assumed in the Governor’s, Senate’s, and Assembly’s budget plans. Loss of these funds would exacerbate the state’s already gaping $17.9 billion budget gap.

Both houses of the Legislature have already rejected many of Governor Schwarzenegger’s most severe reductions, including the elimination of the CalWORKs Program, restriction of health services for Medi-Cal patients, and copayments for health services for Californians enrolled in Medi-Cal. Funding for these items was restored on the assumption that federal funds would help prop up the state’s budget through June 2011. At least 29 other states have made the same assumption.

Until quite recently, Congressional action to extend aid, which was initially provided as part of the American Recovery and Reinvestment Act of 2009 (ARRA), seemed certain. The ARRA boosts the federal government’s share of Medicaid spending from the historical 50 percent to 61.59 percent, thereby lowering the state’s share to 38.41 percent. This frees up state funds to help balance the budget. The enhanced funding expires December 31, 2010 under current law. Legislation moving through Congress originally extended this higher level funding level through June 30, 2011 – the end of the state fiscal year.

In late May, however, the House dropped the extension. On Tuesday, the Senate leadership released an amendment to the House bill that would restore the extension of federal aid to states, but if Congress fails to approve an extension, state lawmakers will be forced to find even more “solutions” to close an even wider gap in the budget.

In a related matter, it appears the US Senate will not restore another provision deleted by the House that would have extended COBRA subsidies for workers who remain unemployed. Under COBRA, people who lose their jobs can maintain their employer-based health coverage, but they pay the full cost of the premium, plus 2 percent for administrative costs. The ARRA created a temporary tax credit equivalent to 65 percent of health premiums, allowing unemployed workers to continue their coverage for 15 months while paying 35 percent of the premium. The loss of this subsidy will likely force many of the long-term unemployed to drop health coverage at a time when labor market conditions remain bleak.

— Hanh Kim Quach

Bookmark and Share