CA State Budget Proposal: 2019-20

On January 10, 2019, Gov. Gavin Newsom released the proposed 2019-20 state budget which includes a $144 billion general fund, which is a 4 percent increase over the $138 billion spending plan former Gov. Jerry Brown signed in June.  In remarks this morning, the governor indicated much of the increased spending would go to one-time projects rather than ongoing expenditures.  He also discussed continuing to set money aside in the “rainy day fund.”

The proposed budget will be debated and refined over coming months in the Legislature with a final budget due June 15, 2019. This proposal will be revised as part of the “May Revise” (in mid-May) once California’s revenues are better able to be estimated.

Specific to health issues, please note the following proposals:

  • Increase subsidies through Covered California for individuals with incomes between 250 and 400 percent of the federal poverty level and expand subsidies to individuals with incomes between 400 and 600 percent of the federal poverty level. The increased subsidies will be funded by revenues generated by establishing a state individual mandate, modeled on the federal requirement enacted as part of the ACA.
  • Young immigrants without legal status would be able to enroll in Medi-Cal until age 26. This expansion will provide full-scope coverage to approximately 138,000 undocumented adults in the first year.
  • Using the state’s purchasing power to achieve a single-payer system for prescription drugs in California. The Budget proposes to transition all pharmacy services for Medi-Cal managed care to a fee-for-service benefit to increase drug rebate savings and help the state secure better prices.
    • This proposal could affect the 340B program in which several district/municipal hospitals participate.  The DHLF is working with CHA and other 340B stakeholders so eligible entities can continue to receive the important discounts from this program while complying with administrative restrictions related to double counting the discounts. More information on 340B will be provided as the details become known.
  • To help address the increasing need for public mental health practitioners, the Budget proposal includes $50 million General Fund (one-time expenditure) to increase training opportunities for workforce programs.
  • The Budget proposal includes $25 million to better detect and intervene when young people have had, or are at high risk of experiencing, psychosis. These one-time grant funds will be used for projects that demonstrate innovative approaches to detect and intervene.
  • As you know, California’s 1115 Medicaid waiver includes the Medi-Cal Whole Person Care Pilots, which coordinate health, behavioral health, and social services needs of Medi-Cal beneficiaries. Many of these pilots specifically target the homeless and mentally ill population. This Budget proposal includes a one-time augmentation of $100 million to provide counties or local entities with funding for supportive housing services for individuals who are homeless or are at risk of becoming homeless, with a focus on people with mental illness. The funds will be available for expenditure through June 30, 2025.
  • Continuing efforts established in the 2018 Budget Act, the Budget proposal includes $3.2 billion for supplemental payments and rate increases for physicians, dentists, family planning services, Intermediate Care Facilities for the Developmentally Disabled, HIV/AIDS waiver services.

It also is worth noting that this proposal doesn’t appear to include any funding for Medi-Cal as part of Proposition 55 (the extension of the high-income earners’ tax).  The proposition included a complex formula that could result in some funding for Medi-Cal after other obligations (i.e., education, etc.) are met.  This will be a point of advocacy for the hospital industry as, due to the budget surplus, there could or should be funding available based on the statutory formula.

As noted above, this proposal will be revised and debated over coming months and the DHLF staff and advocacy team will be monitoring the issues of importance to California’s district/municipal public hospitals and will keep you apprised of developments.

If you have any comments or questions on the proposed 2019-20 state budget, please feel free to let me know.

~ Sherreta

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