Cuts Target Ill and Aging

As part of the budget-reduction package that he has proposed to close a huge shortfall this year, Gov. Gray Davis is urging lawmakers to cut an array of services to the elderly and ill, such as cutting back on syringes for diabetics and reducing payments to nursing homes that care for 200,000 aging and infirm Californians.

Educators were among the first to complain about Davis’ budget proposals, which include $3.1 billion in cuts to public school spending. But the Democratic governor also proposed $2 billion in cuts to welfare and health-care programs primarily for the poor. Health and human services spending cuts amount to his second-biggest target.

Lawmakers face stark choices when they arrive in Sacramento today to begin vetting Davis’ overall proposal to start filling the state’s $21-billion-plus budget gap by a combination of cuts and other adjustments that amount to $10.2 billion. Those represent the first move toward closing the budget deficit, which includes the estimated shortfall in this year’s budget as well as the projections for an even bigger problem for the next fiscal year, which begins July 1.

Under Davis’ plan, the University of California would lose $74 million and the California State University system would be cut $60 million. Transportation projects would be shelved, school districts would lose billions of dollars and state workers could face layoffs. Virtually every state department is facing reductions.

In health care, among Davis’ proposals are recommendations to eliminate payments for dental care and to stop paying for medical supplies such as rubber sheets for poor people. Many experts said infirm people need such supplies to remain in their homes and avoid going to nursing homes. Davis also urges a 10% cut in payments to nursing homes, after having embarked on a push two years ago to improve nursing-home care.

Davis wants the Legislature to act by the end of January. Once serious hearings begin, most likely next week, Davis’ fellow Democrats will mount the strongest opposition to overall health and welfare cuts. But Republicans are likely to oppose some specific cuts -- and nursing home care is one.

“Historically, nursing homes have been grossly underfunded,” said Sen. Dick Ackerman (R-Irvine), a budget committee member who like all but seven legislators voted for the nursing-home overhaul two years ago. “They don’t have enough nurses. They don’t have trained employees. People in nursing homes need that care.”

Several Democrats have said that they won’t consider cuts until a consensus emerges on tax hikes. Like Republican legislators, Davis is refusing to embrace tax hikes at least for now, instead focusing on cuts. Even so, the cuts Davis proposed Friday would fill less than half the budget hole.

“It looks like we’re being asked to do the heavy lifting,” said Sen. Don Perata (D-Alameda). Davis administration officials acknowledged that the cuts in nursing home payments and health services are tough ones.

“There are no good choices,” Davis press secretary Steve Maviglio said Sunday. “It is obviously the last resort.”

Although the proposed cuts to programs that serve the aging and sick are large, their precise impact is hard to gauge at this stage. Finance Director Tim Gage and Diana Bonta, director of the Department of Health Services, which regulates nursing homes, seemed uncertain Friday about the implications of a 10% cut in payments to nursing homes. Neither could say how much a 10% cut would save the state.

Bonta could not say whether nursing homes would accept fewer indigent patients if payments are reduced by 10%. And Gage could not say specifically how many people would lose health-care benefits if Davis’ proposals are enacted, other than to place the number at more than 200,000.

At an annual cost of $9.8 billion, the Medi-Cal program pays the health-care costs of 6.4 million indigent elderly and disabled people each month. Davis proposes to trim $167 million from Medi-Cal starting in the third quarter of the 2002-03 fiscal year. If spread over a full year, that could translate to nearly 7% of the total spent on Medi-Cal.

Davis Proposals

Davis is urging that:

* Income rules be changed. A family of four earning $18,000 a year is eligible for Medi-Cal now. Davis would lower that to $12,000, saving about $6.2 million in the fourth quarter and $118 million next year.

* Aid recipients be required to fill out eligibility forms once every three months, rather than once a year. The administration expects that recipients would fail to fill out the extra paperwork, and fall from the rolls. That would save $5 million for the remainder of the current year, and $85 million in the coming fiscal year.

* The state end payments for many so-called optional Medi-Cal benefits, saving $63.3 million in the final quarter of the fiscal year. One such benefit is dental care, costing $48 million a year. Medical supplies, such as syringes and test strips for diabetics, catheters and rubber sheets, also are considered optional.

* The state enact a 10% cut in Medi-Cal payments to physicians and others who provide care for elderly and disabled poor people, saving the state $90 million in the fourth quarter. The category includes payments to nursing homes.

The recommended cuts in those areas represent a departure for Davis. As part of his “aging with dignity initiative,” the governor in his first term increased state oversight of nursing homes, boosted payments to the facilities by 10%, and ordered pay raises and improved training for nursing home workers. At the time, nursing homes were receiving a flat $88 per patient per day.

The steps came in response to a 1998 federal report finding that problems in 30% of the state’s homes resulted in death or serious injury to residents. Many of the same problems were identified by a state watchdog agency in the early 1980s.

With small rate hikes granted earlier this year, nursing homes receive daily Medi-Cal payments ranging from $131.08 per patient in the Bay Area to $103.54 in Los Angeles. A 10% cut would lower payments to Los Angeles-area homes almost to the old levels.

“Where do you make that up?” Pat McGinnis, executive director of the California Advocates for Nursing Home Reform in San Francisco, asked, referring to a 10% cut in government payments. “You make it up by increasing the private payment rates ... and by not taking as many Medi-Cal patients.”

Patients often begin their nursing home stays by paying from their own pockets. But with homes costing about $5,000 a month, savings accounts become depleted, McGinnis said. Government payments account for some or all of the nursing home costs for 64% of the about 200,000 Californians a year who enter such facilities.

The California Assn. of Health Facilities, the main nursing home lobby organization, estimates that 160, or nearly 10% of the state’s nursing homes, are in bankruptcy.

Warning that more homes would become insolvent, Betsy Hite, spokeswoman for the group, said a 10% cut would average $13 per patient per day. Although the cut would save the state about $175 million over a full year, Hite said the federal government matches state payments to nursing homes. So a $175-million cut in state payments would result in a matching cut of $175 million from the federal government.

Health-care workers also would feel the impact of such cuts, their advocates said.

Nursing home workers earn as little as $8 or $9 an hour in the Los Angeles area, and simply cannot withstand a pay cut, said lobbyist Beth Capell, who specializes in health-care issues for clients such as the Service Employees International Union, which represents nursing home workers.

“A 10% cut is astonishing,” Capell said. “It will mean real wage cuts.”

Tax Hike Interest

Some Davis allies seem frustrated that the governor won’t reveal what, if any, tax hikes he might support, as he proposes his array of cuts. Others wonder if Davis, by suggesting that the state stop paying for such basics as rubber sheets or syringes, is trying to underscore the depth of the state’s budget situation -- and soften up opposition to tax hikes later.

In either case, some Democrats warn that they are wary of backing the governor in this area.

“This is a direct hit on seniors and the most vulnerable population,” Perata said.

“As a Democrat, I’m not in office to further exacerbate hardship on vulnerable people,” he said.