Imperial Valley News

Template Tools

You are here : Home

Todays is : Tuesday, 09 February 2010

Latest News

"After more than a year of hard work on health care reform, we have made amazing progress and are very close. Groups that traditionally have not been on the same page on this issue joined forces and today we stand here together united in a common goal," said Governor Schwarzenegger. "We all know heartbreaking examples of people losing coverage because they are out of work or their insurance company has cut them off. They live in fear of being one illness away from financial disaster. Our plan fixes that by requiring insurers to sell to everyone. And more importantly, by pushing our reform past the finish line, Californians will be healthier and our economy will be stronger."

The Governor visited Long Beach Memorial Medical Center, which illustrates one of the main reasons why we need to fix our broken health care system: California pays some of the lowest Medi-Cal rates in the nation. Long Beach Memorial Medical Center reports losing $28 million last year alone treating Medi-Cal patients. Hospitals up and down the state have been canceling contracts to treat Medi-Cal patients. Three have canceled contracts just this month and many doctors won't even consider treating Medi-Cal patients because state payments don't fully cover their costs.

Participants joining the Governor today at Long Beach Memorial Medical Center included:

Barry Arbuckle, chair-elect, California Hospital Association, and president and chief executive officer with Memorial Care Medical Centers

Matt Kinley, chair of the Board, Long Beach Chamber of Commerce

Danny Curtin, director, California Conference of Carpenters

Dr. Jay Cohen, chair-elect of the Board, California Association of Physician Groups

If comprehensive health care reforms were already in place:

California's health care system would have $4 billion in new federal funds.

General Fund pressure on the Medi-Cal program would be reduced.

California would expect to see higher productivity, wages and tax revenues.

Increased Federal Government Contribution

The Health Care Security and Cost Reduction Act does not rely on new General Fund dollars. Instead it redirects existing funds and creates a new, dedicated revenue stream that generates nearly $14 billion in funding to reform our broken health care system and strengthen our economy. It secures $4 billion in new federal funds that California is eligible for under current law, but is leaving on the table today.

Reduced General Fund Pressure

The Act reduces pressure on the General Fund and the state's second-largest expenditure: Medi-Cal. Medi-Cal represents one of the fastest growing programs in state government, increasing from $7.5 billion General Fund in 1998 to $14.3 billion General Fund in the current budget year.

Reforms will reduce long-term budget pressure by reducing the burden on the General Fund to finance rising Medi-Cal hospital rates. Hospital costs are the largest driver of Medi-Cal cost increases. Hospitals are canceling their contracts with Medi-Cal because of low reimbursement rates. California's health care reforms increase and stabilize hospital rates by bringing Medi-Cal payments up to Medicare payment levels.

Constitutional spending requirements, formula-driven programs and the volatile nature of the state's income tax system all contribute to California's structural budget deficit. The Act includes built-in mechanisms to ensure that health care reforms are financially self-sustaining and have a positive impact on our structural budget problem.

Under the Act, the state Director of the Department of Finance must certify that there is enough revenue for a three-year period in order for the entire Act to go into effect. Once the Act is enacted, regular updates on these reforms will be provided in the Governor's January Budget and the May Revision. In addition, the state will engage in early and systematic evaluation at each step of implementation to identify the reform's impact on state costs, delivery systems, quality of care, and overall progress in moving toward universal coverage.

The Secretary of Health and Human Services, in collaboration with other state agencies and external experts, will track and assess the effects of health care reform. They will submit this assessment to the Legislature and update it every two years. It gives the state flexibility to manage costs. Under these reforms, the state will have flexibility to make adjustments, reduce costs and alleviate the need to reach for additional state resources.

Public hospitals will gain approximately $500 million a year in new revenue from health care reform. Today, every county must provide health care to many of the uninsured, generally using only county funds. Further, public hospitals face increasing costs for covering the uninsured and federal reimbursement for this coverage is either flat or expected to decline. Without structural change these public hospitals may not be financially viable.

This legislation addresses chronic illnesses, which, according to California Healthcare Foundation, account for 83 percent of national health care spending. The Act addresses chronic conditions by providing broad access to preventive care; targeting obesity, diabetes, smoking; and enacting "Healthy Actions" programs.

Greater productivity, wages and tax revenues

The Act will also have a positive impact on the economy through increased productivity and minimizing the costs that insured pay to cover the uninsured. In 2003, the Institute of Medicine estimated that America's health insurance gap reduces national economic productivity by $65-$130 billion dollars annually.

California has approximately 15 percent of the nation's uninsured, so the economic productivity loss could be estimated at about $10 billion - $20 billion - and more productivity means higher tax revenues. Coverage of the uninsured will reduce the "hidden tax," helping to contain the rate of premium growth that employers experience on an annual basis. The New America Foundation has estimated that the average California family pays an additional $1,186 in premiums each year to cover the hidden tax for the uninsured alone.