Report: California's Economic Recovery Could be Jeopardized If Medi-Cal Cuts Are Implemented

$2 Billion Economic Hit Possible, 36,000 Jobs at Risk If Cuts Are Implemented

SACRAMENTO, Calif., May 10, 2013 /PRNewswire-USNewswire/ -- California's fragile economic recovery could be dealt a severe setback if pending Medi-Cal payment cuts to hospitals are implemented, according to a newly released economic issue brief prepared by the California Hospital Association (CHA).

"The consequences of these payment cuts go far beyond the direct impact to hospitals," said CHA President/CEO C. Duane Dauner.  "These cuts also will be a massive job killer, with a statewide economic aftershock."

According to CHA's analysis, which comes just five days before Gov. Jerry Brown releases his revised 2013-2014 budget, 36,000 jobs could be lost statewide.  These are direct-care, well-paid positions at hospital-based skilled-nursing facilities, plus related jobs in the goods and services industries.  In addition, the CHA analysis found, the overall ripple effect stemming from these cuts could result in a $2 billion economic erosion to the state's economy.   

The proposed Medi-Cal cuts to health care providers stem from legislation enacted in 2011 (AB 97).  Although the payment reductions amount to a 10 percent reduction for doctors and most other health care providers, the cuts are much deeper - averaging 25 percent or greater – for hospital-based skilled-nursing facilities.  These impacts would be felt just as our state's health care system is entering a period of tremendous change and uncertainty as California prepares to implement the federal Affordable Care Act (ACA) next January.

Among the other "hidden consequences" of these payment cuts, according to the report, is the likelihood that the expected "savings" to the state General Fund may not materialize at all. Simply cutting the payments to Medi-Cal providers does not mean that the obligation to provide care to Medi-Cal patients will go away.  These patients are among the most vulnerable in our society.  The state will still have to pay for their care.  Because many of the affected patients need specialized, complex medical care, they may have to be placed in higher-cost acute care facilities, causing the state to lose all of its expected savings – several times over.  

CHA, along with a broad coalition of other health care providers, is urging lawmakers and the Brown Administration to support two bills now making their way through the Legislature - AB 900 (Alejo) and SB 640 (Lara). These two bills would reverse these devastating Medi-Cal cuts and help ensure that California's economic recovery continues to move forward.

A link to the CHA report can be found here.                                                                       

SOURCE California Hospital Association