Poor’s Care Costs Illegally Shifted to County, Court Says

A California Court of Appeal ruled Friday that the state illegally shifted the costs of indigent health care to the counties and that state officials must provide up to $400 million annually in added funding to aid hundreds of thousands of low-income adults.

The three-member panel held unanimously that the Legislature violated the state Constitution in 1982 by transferring financial responsibility for care to the counties without providing enough funding for adequate services.

Under the so-called Gann Amendment, added to the Constitution in 1980 under Proposition 4, the state may not avoid the amendment’s spending limits by shifting the costs of new programs or higher levels of services to the local government.

The appeals court, ruling in a case from Alameda County, held that the shift of a large portion of the costs of medical indigent care to the counties constituted a “state-mandated new program” and that the counties must be reimbursed for the costs they were forced to assume.

Lawyers in the case and state officials agreed that the decision, if upheld, could result in hundreds of millions of dollars annually for Los Angeles and other counties currently hard-pressed to provide health services for the poor.

“The state will be obligated to rectify this tremendous under-funding of medical care for literally hundreds of thousands of people in California,” said Lois Salisbury of Public Advocates Inc. in San Francisco, an attorney for a group of taxpayers and aid-seekers who challenged the fund-shift in a lawsuit.

Salisbury said that in 1982, when the shift first occurred, the state provided about $520 million annually to the counties, representing about 70 cents of every dollar to be spent on indigent health care. Now, only $450 million annually is being provided, the state’s share has dwindled to 40 cents on the dollar, and many counties are unable to provide adequate care, she said.

Health care officials throughout Los Angeles County applauded the ruling, saying that the state’s decision to shift the burden onto the county has contributed largely to the breakdown in the trauma system and created overcrowding at emergency rooms and community health clinics.

Robert Gates, the county’s health department chief, said that if the state were to restore the funding, it would return approximately $150 to $200 million annually to the county’s financially strapped health care system.

State Deputy Atty. Gen. Asher Rubin, representing the state officials named as defendants in the taxpayers’ suit, called the ruling “a shocking blow” to the legislative process. The appeals court improperly interfered with the Legislature’s prerogative to establish a new system of financing care in the wake of the Gann Amendment, he said.

“This is a decision that has tremendous fiscal ramifications for the state,” Rubin said. “We’re talking about hundreds of millions of dollars a year. . . . But you have to bear in mind the money ultimately will come out of the pockets of the taxpayers or the hides of other state programs. There’s no free lunch. This decision does not generate new money.”

Rubin said state officials plan to appeal the ruling to the state Supreme Court. If it is appealed, state high court action in the case could come by this spring.

Attorneys in the case said that if the ruling is not overturned, the state could meet the requirements of the decision either by providing additional funds directly to the counties or offering medically indigent adults coverage under the state’s Medi-Cal program.

Times staff writer Kenneth J. Garcia in Los Angeles contributed to this report.