Divvying up California healthcare funds

Demonstrators representing doctors, hospitals and unionized healthcare workers rallied against a 10% cut in the amount the state pays for Medi-Cal reimbursements, at the Capitol in Sacramento.
(Rich Pedroncelli / Associated Press)

The 2010 federal healthcare law will make health coverage available to millions of the uninsured, but it won’t reach all of them. In California, county health officials and the Brown administration are now tussling over how much to spend on the remaining uninsured, and on county health programs in general. Gov. Jerry Brown wants to reclaim some of the state tax dollars that counties have been spending because there will be fewer uninsured to care for, and that’s not unreasonable. But the state should be careful not to undermine the counties’ efforts to protect public health, nor should it deny them the ability to care for more people in a more cost-effective way, if they choose.

Since 1991, the state has been sending a portion of the sales taxes and vehicle license fees it collects to the counties for health-related spending. Of the roughly $1.5 billion they receive today, about half is spent on public health programs — for example, food safety inspections, flu vaccinations and anti-smoking campaigns — and half is spent on caring for indigent residents without insurance.


Thanks to the 2010 law, more than half a million of those Californians are expected to gain coverage through Medi-Cal, largely at the federal government’s expense. Most counties rely on contractors to provide care, so it shouldn’t be too hard to calculate how much the Medi-Cal expansion cuts the counties’ expenses. But for counties that operate their own hospitals and clinics, including Los Angeles, the math is considerably more complex.

Rather than waiting to see how much the Medi-Cal expansion actually reduces the costs incurred by counties, the Brown administration wants to reclaim $300 million up front. It also wants to calculate future savings in a way that, according to some healthcare advocates, would prevent counties from expanding their healthcare programs, adding physicians or offering basic health plans to more of the uninsured.

It’s worth remembering that even after Medi-Cal expands, millions of Californians will be left without insurance. Some will be low-income workers who can’t afford it even with the new federal subsidies. Others will be new immigrants, or those in the country illegally, who aren’t eligible for state or federal help. If the counties can’t provide low-cost preventive and coordinated care to these residents, they will be left to treat them at high cost in emergency rooms.

The influx of federal healthcare dollars shouldn’t be a windfall for counties. But the state shouldn’t go too far in the other direction either. The Brown administration seems eager to use the additional federal aid to divert tax dollars from county health programs to other social services. The goal instead should be to end up with higher quality and more efficient care for as many Californians as possible.