The Alan Katz Health Care Reform Blog

Health Care Reform From One Person's Perspective

Proposed Health Care Cuts: California Tragedy or Political Ploy?

Posted by Alan on January 11, 2008


The impact of Governor Arnold Schwarzenegger’s proposed budget cuts on health care programs for California’s most vulnerable populations is tragic. No other word describes it.

In January 2007 the Governor and legislative lawmakers were putting forward proposals to expand coverage for low-income residents, increase reimbursements to doctors serving Medi-Cal patients, and reduce the number of uninsured. A year later and they’re debating budget cuts that will move the state in the opposite direction on all those fronts and more.

There are so many draconian cuts in the Governor’s proposal, not just concerning health care, but impacting virtually every service the state provides, that they border on unbelievable. OK, they are unbelievable. Which raises some questions: is this what the Governor really wants? Or is this part of his long campaign to revamp the way California’s budget is made and executed?

Since his election, Governor Schwarzenegger has sought to fix the state’s ineffective budget process. The legislature rejected his first proposal, voters turned down his second. Now he’s back for the third try and some are wondering if the budget he proposed yesterday is designed more to gain support for his reforms than to balance the budget.

Sacramento Bee columnist Dan Walters puts it this way “[The] cuts, coupled with a very hard line on raising taxes, may be laying the groundwork for some kind of grand budget deal next summer in which he would agree, albeit reluctantly, to raise taxes of some kind to ease the impact on schools, prisons, parks, health services and so forth in return for Democrats’ accepting his long-sought constitutional amendment that would grant governors more power to unilaterally balance income and outgo.”

It takes a two-thirds vote of the legislature to pass a tax increase, however, and Republican lawmakers have pledged to oppose one. At the same time, the GOP also wants a constitutional amendment to force California to live within its means. Would enough Republican legislators support a compromise budget package that contains new taxes (or closes existing loopholes) if part of the deal was a strong constitutional amendment on the budget? Mr. Walters think they might and an argument can be made that they should.

Republicans frequently lament the failure of government to act in a more businesslike way. They point to state spending and programs that, once launched, are never reviewed again, state budgets balanced through gimmicks, and a lack of accountability for problems. All are behaviors that would be intolerable in the private sector — or would lead to a going-out-of-business sale.

But it’s inconsistent to call for government to act in a business-like way only when it’s convenient. And when companies face financial crises, their management puts every option on the table. Nothing is off limits. They evaluate every possible cost reduction and every opportunity to increase revenues.

Republicans should take a hard line against tax increases — that’s what they’re there for. But setting a high bar for justifying taxes and ruling out the possibility that any tax increase could be justified are two different things. The first is good business; the latter isn’t.

For a budget deal to come together, Democrats have to break with their traditional response to problemss, too. Not every state program is needed. Not every public service should be expanded. The state can’t tax its way out of this crisis. Governing means setting priorities and making tough decisions. Again, their role is to set a high bar for justifying cuts, especially on programs that comprise the state’s safety net. But they can’t rule out making any reductions anywhere.

Governor Schwarzenegger pegged the state’s deficit at $14.5 billion. In reality it’s even bigger and balancing it will be even harder. Unfunded obligations for retiree health care exceeds $1.2 billion. If the Governor’s health care reform proposal goes through, he says the state will need to raise a minimum of $14 billion to fund it — that figure probably understates the actual cost.

The budget cuts the Governor proposes to make to health care programs are tragic. Avoiding them will require leadership and wisdom from both sides of the aisle. Lawmakers will either rise above easy, ingrained responses and meet this challenge or  the state’s neediest citizens will suffer. That’s the reality.

One Response to “Proposed Health Care Cuts: California Tragedy or Political Ploy?”

  1. Meg McComb said

    Alan,

    Do you believe Californians will vote for a $14 billion health plan when we are facing the budget crisis of equal magnitude?

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