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By Chris Megerian
January 9, 2015

The state’s mountain of medical bills threatens to undermine Gov. Jerry Brown’s fiscal goals

California’s budget, which bounced back after years of deficits, is now being squeezed by rising healthcare costs for the poor and for retired state workers.

The mountain of medical bills threatens to undermine Gov. Jerry Brown’s efforts to strengthen state finances — his central promise of the past four years.

Enrollment in the state’s healthcare program for the poor, known as Medi-Cal, has exploded by 50% since President Obama’s signature law took effect. Although the federal government picks up most of the tab, state costs have also been growing, and faster than expected.
Providing the security of health coverage to so many Californians who need it is the right thing to do. – Governor Jerry Brown

Meanwhile, the annual bill for healthcare for public retirees — a benefit promised decades ago — has more than doubled in the last decade. Current and retired workers have accumulated $71.8 billion in healthcare benefits as of June last year, and the state has set aside almost nothing to cover the costs.

Brown faces both challenges and more as he prepares to release his new budget proposal Friday.

University of California officials say more funding is necessary to avoid a tuition increase that the governor opposes. State roads need tens of billions of dollars in overdue maintenance. And some of Brown’s fellow Democrats are already pushing for more services for the poor.

The governor, however, has repeatedly pledged to keep a tight leash on spending. In his inaugural address Monday, he said the budget is balanced “more precariously than I would like.”

California has reaped $1.2 billion more revenue than expected in the first five months of the current fiscal year, according to the latest administration statistics. But higher healthcare costs could chew up much of the extra money.

“Providing the security of health coverage to so many Californians who need it is the right thing to do,” Brown said Monday. “But it isn’t free.”

Over the next year, total Medi-Cal enrollment is expected to reach 12.2 million, he said — about one-third of the state’s population. It was less than 8 million in 2013.

Even though costs are increasing, advocates for the poor say the state has not allocated enough money to provide healthcare to those who are still struggling years after the recession. Payments for Medi-Cal services were reduced during years of budget crises, making doctors more reluctant to participate in the program.

Restoring that money, which was $300 million last year, would help ensure that poor Californians receive the healthcare they have been promised, said Assembly Speaker Toni Atkins (D-San Diego).

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