Supreme Court To Weigh In on California’s Budget

On Monday, the US Supreme Court heard arguments on three cases that will have direct implications for the state budget and more than 7 million Californians who rely on Medi-Cal coverage for access to health care. At issue are three cases filed as a result of recent state budget cuts that sought to reduce payments to providers, and whether health care providers and patients can sue the state for failing to comply with federal Medicaid laws.

In 2008 and 2009, the state reduced Medi-Cal provider payments by an amount ranging between 1 and 10 percent as part of efforts to close budget gaps. Patients and providers of Medi-Cal services both sued the state on grounds that the reductions would diminish access to care. The reductions were subsequently blocked by the courts, which ruled that the state had adopted the reductions without “provid(ing) any evidence that the (state) had considered the impact … on quality and access to care.” The issue before the US Supreme Court is not whether the state reduced payments appropriately, but whether providers and patients have a right to sue to enforce the federal law.

The lawsuit has split top Democrats. The Obama Administration has sided with the state, arguing that private lawsuits to enforce the Medicaid law should not be permitted. On the other side, Democratic leaders in Congress, including House minority leader Nancy Pelosi, filed a brief supporting the ability of private parties to sue if they felt federal Medicaid law was being violated.

California’s payments to providers are already among the lowest in the nation. In 2011-12, the state – again – adopted 10 percent Medi-Cal provider payment reductions, though those reductions are pending approval at the federal level and could be affected by the Supreme Court’s decision. Low provider payments are cited as the primary reason why physicians and other providers are discouraged from participating in the program. Patients already report difficulty finding a physician who accepts Medi-Cal. In 2008, 57 percent of all physicians were accepting new Medi-Cal patients. Reducing provider payments further would make this situation even more acute.

— Hanh Kim Quach