State Budget Woes May Hamper Health Care Reform

The new health care reform bill signed into law this week by President Obama has been lauded by youth advocates for its mandate to provide insurance to children and young adults. But Richard Cordova, the president and CEO of Childrens Hospital Los Angeles is worried about the state's ability to pay for the new federal mandates.

"California is in an unusual predicament," he said. California has passed the budget on time in only three of the last 20 years, which creates annual problems for medical providers.

"The medical program in the state's budget has a more immediate impact on us than the federal legislation," Cordova said.

CHLA receives 70 percent of its reimbursements from Medi-Cal, the state version of Medicaid*.

Medi-Cal already strains the state budget, costing some $14 billion a year. When the health care law goes into effect, more people will be covered, and more money will need to be spent. Under the current system, the federal government puts in only one dollar for every dollar California pays, a ratio Cordova says is among the lowest in the country.

"You have to be concerned about an unfunded mandate," he said.

Cordova is familiar with unfunded mandates. In 2008, voters authorized Prop 3, which provided $1 billion to children's hospitals around the state for capital improvements, but the legislature refuse to authorize the treasury bonds.

CHLA would have received $98 million for the new hospital that they are in the middle of building. That project was delayed for a year.

The state financial crisis also forced CHLA to freeze salaries for its workers, and there were layoffs last year.

Funding issues aside, Cordova believes that the law is a step in the right direction. Medical school loan forgiveness could help staunch the "massive shortage" of pediatricians and pediatric specialists. The law extended the re-authorization for the Children's Health Insurance Program for another two years. There is an emphasis on primary care and prevention, and, of course, 21 year-olds won't be pushed out of the family insurance nest.

"We've had several cases here where a patient is approaching 21, in the middle of his chemotherapy, and all of a sudden, his coverage stops," Cordova said.

Under the new law, those tragedies could be prevented, but in California, there are still questions about who will pay for it.





*An earlier version of this story mistakenly stated that Medi-Cal is the state version of Medicare. It is the state version of Medicaid.

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Medi-Cal is the state version of Medicaid, not Medicare

Medi-Cal is the state version of Medicaid, not Medicare