Governor Makes a Major Retreat on Medi-Cal Cuts

Gov. George Deukmejian retreated from his goal of paring $150 million from the state’s Medi-Cal program Monday, with the Health and Welfare Agency announcing that the Administration now hopes to cut just $37 million in the upcoming budget year.

The action, in the form of a brief press release issued while Deukmejian was in Phoenix at a meeting of southwest governors, was accompanied with few details about how the $37 million in savings would be made.

Clifford Allenby, secretary of the Health and Welfare Agency, said details of the Medi-Cal proposal would be released within days. He said the original goal of $150 million just could not be met.

“We wanted to set our goal as high as we could to put as much pressure on ourselves as we could,” he said.

Savings Plan

The Health and Welfare Agency hopes the relatively small savings in the upcoming fiscal year will translate into savings of $500 million over the next five years in the $5-billion Medi-Cal program, which finances health services for 3 million needy Californians.

Allenby said the state program is one of the lowest-cost public health programs of its kind in the nation, conceding what legislative critics have been insisting for months: that Medi-Cal is a “good buy,” providing medical services at lower cost than many private insurance companies provide.

Any cuts the state makes in support of its Medi-Cal program are matched dollar for dollar by cuts in federal assistance.

Deukmejian had listed restructuring the $5-billion Medi-Cal program as a major goal in his proposed $39.3-billion state budget for the 1987-88 fiscal year that will begin July 1.

It immediately touched off a political firestorm in the Legislature.

Democrats have been battling the proposed budget cuts for months, insisting that Medi-Cal had been decimated in recent years by earlier budget cuts.

Budget committees in both the Assembly and Senate, currently working on their own versions of the governor’s budget, have already restored the proposed $150 million in budget cuts.

Assemblyman Bruce Bronzan (D-Fresno), co-chairman of a legislative task force on Medi-Cal, applauded the governor’s action.

“I think the governor was a victim of some very bad advice,” said Bronzan, who has been leading the Medi-Cal fight in the Assembly. “Once it came out that the Medi-Cal program is not a Cadillac program, but a program on the verge of collapse, the Administration realized the advice it originally received was inaccurate and off the mark. It’s the most cost-effective program of its kind in the country.”

Deukmejian also has been fighting a losing battle in the courts to cut the Medi-Cal budget.

A move to cut $18.7 million from the program by reducing payments to doctors and other Medi-Cal providers by 10% has been blocked by a federal court.

The brief announcement Monday referred only to general steps that Administration officials were taking to cut the health program.

Billed as “a comprehensive Medi-Cal reform package,” it was outlined in only 11 paragraphs on two typewritten pages.

Basically, the Administration is moving to push more Medi-Cal recipients into managed health care programs, such as health maintenance organizations, where the state would contract for blanket coverage instead of allowing patients to choose their own doctors and pay on a per-visit basis.