Healthcare Cuts Blocked by Key Budgeting Panel

In the first confrontation with Gov. Arnold Schwarzenegger over his proposed state budget, a pivotal Senate subcommittee on Monday rejected his plans to cap enrollments and create waiting lists for some Californians who depend on the state for healthcare.

In a series of votes in which majority Democrats were at times even joined by conservative Sen. Tom McClintock (R-Thousand Oaks), the five-member subcommittee rejected Schwarzenegger’s proposed cuts in such life-or-death programs as those offering medications for HIV and AIDS patients, surgeries for youngsters with catastrophic illnesses, and Healthy Families insurance for children of low-income workers and immigrants in need.

“You don’t save money by making people sicker,” said Sen. Wes Chesbro (D-Arcata), subcommittee chairman and the Senate’s chief budget-writer.

Chesbro charged that the governor’s program would result in far higher costs to taxpayers because waiting-list patients would migrate to Medi-Cal and county hospitals as their health deteriorated.

The subcommittee’s three Democrats -- Chesbro, Sen. Gilbert Cedillo of Los Angeles and Sen. Deborah Ortiz of Sacramento -- were joined by McClintock in rejecting most of the proposed caps and waiting lists and in boosting funding for the drug program for HIV and AIDS patients.

But McClintock broke with the Democrats to vote against emergency Medi-Cal services for undocumented immigrants and for prenatal services for certain legal immigrant women. The committee’s second Republican, Sen. Bruce McPherson of Santa Cruz, was absent.

In throwing out the caps and waiting lists, the Senate budget subcommittee on health and human services lashed out at the administration for demanding cuts at the same time officials failed to collect and efficiently spend at least $20 million in payments from drug companies that sat unused in an apparently forgotten Department of Health Services account.

The subcommittee noted that the Legislature for two years had approved the hiring of 15 employees at the Department of Health Services to track down and collect at least $150 million in cash rebates owed to the state from drug companies.

But much of that money remains uncollected, and the governor’s budget indicates the administration plans to collect only about $15 million next year.

A department spokesman said officials believe that most of the outstanding debt cannot be collected because it was caused by bookkeeping errors made by pharmacies, the state or federal agencies. But the spokesman said the department intends to collect all that it is rightfully due in the next year.

At a crowded hearing, Chesbro made it clear that aside from “simple human compassion,” the Senate plans to squeeze maximum “efficiencies and cost-containments” from the state Department of Health Services before any caps and waiting lists for sick people are considered.

“It is clear that we will be sending people to a life of disability and eventually death if they are put on waiting lists,” Chesbro said, as the committee rejected the governor’s plans to limit enrollments and install waiting lists in the HIV-AIDS drug program for low-income working Californians.

The subcommittee also defeated spending caps and waiting lists proposed for California Children’s Services, Healthy Families, Genetically Handicapped Persons and Medi-Cal for legal immigrants who lost their Medicare eligibility as a result of federal welfare reforms, and for undocumented immigrants who receive emergency Medi-Cal assistance.

No top-level officials from the administration appeared before the lawmakers to defend the governor’s proposal, but spokesman H.D. Palmer of the Department of Finance said the subcommittee’s actions dealt a blow to the governor’s efforts to balance the budget by cutting costs rather than reducing services.

“The simple math is the Legislature will have to come up with a like amount of savings to offset what the Senate did today,” he said.

The Senate subcommittee’s action signaled where the upper chamber, led by a Democratic majority, will stand on the issue of caps and waiting lists. Many more confrontations lie ahead before the July 1 start of the new fiscal year, as Democrats press for a combination of cuts and tax increases and the governor demands that only cuts be used to eliminate the state’s projected $17-billion budget shortage.

McClintock, one of the Legislature’s toughest critics of government spending, warned that “arbitrary” caps create inequities among recipients and a “ground for injustices.” He said stricter eligibility requirements should be enacted instead.

Committee aides said Schwarzenegger’s cuts in the life-saving drug program for HIV and AIDS patients could easily be spared as a result of the discovery by the subcommittee staff of more than $20 million in drug rebates that were found in an apparently neglected account of the health department. The sum would more than offset the reductions in the drug program, they noted.

The governor has said that no current participants in the drug program, or any others targeted for similar reductions, would lose services. However, enrollments would be permanently frozen to their levels in January 2004, and applicants would be put on a waiting list. They would be accepted as openings occurred, without regard to how sick they might be.

The drug program would be restricted to 23,891 patients, and a projected 1,392 applicants would be placed on a waiting list over the next year, according to the subcommittee. The administration estimated that this would save the state about $275,000 during the next fiscal year, starting July 1.

The caps on Medi-Cal were proposed for programs that pay full services for low-income legal immigrants and emergency aid for illegal immigrants, and a relatively small program that treats women with breast and cervical cancers.

The total savings were estimated by the legislative analyst’s office at about $17 million.

But Legislative Analyst Elizabeth G. Hill, who opposed capping most programs, warned that establishing a new bureaucracy to maintain the waiting lists probably would consume any savings. And Hill warned that people with identical health issues would be treated unequally if some remained in untouched treatment programs but others had to wait without regard to the severity of their conditions.