Gov. Arnold Schwarzenegger (R-Calif.) today is expected to outline a bleak prognosis for the budget of running the nation's most populous state and the impact the funding will have on citizens' healthcare access.
In his address before the California legislature, Schwarzenegger is expected to outline an expected $14 billion deficit for the year.
That could affect funding for the state's existing healthcare programs and throw a curve at state legislators and voters, who would be asked to fund the additional cost of the healthcare reform package passed by the state's Assembly just before the end of its 2007 session.
The reform package, the result of an agreement between Schwarzenegger and Assembly Speaker Fabian Nunez, would require all Californians to prove that they have health insurance.
The plan still needs approval in the state's Senate and by the state's voters, who would be asked to pass a referendum on the initiative.
Political experts are expecting the governor to declare a fiscal crisis in the state this week and ask state agencies to reduce state spending. State law requires California to have a balanced budget and gives the governor authority to make budget cuts to achieve that balance when the state is encountering certain emergencies.
Senate leader Don Perata has requested an independent fiscal analysis of the reform plan, and consumer groups already are weighing in with predictions of what could happen.
Last week, the Foundation for Taxpayer and Consumer Rights wrote a letter to the legislative analyst conducting the fiscal study to suggest that she consider cost overruns that the group said had affected a similar reform initiative in Massachusetts.
"Proponents will argue that a provision in (the California bill) to cap insurer overhead and profit at 15 percent will control costs… but without rate regulation, (the cap) actually may drive up premiums rather than control them," a letter to analyst Elizabeth Hill stated.
The group contends Massachusetts is predicting a cost overrun for its program of $147 million for the year ended July 30, 2008, and extrapolating those results for a state the size of California could result in extra costs of $1.75 billion, it said.
The group also pointed to much lower-than-predicted employer contributions in Massachusetts, as well as higher premium costs and lower benefits than expected.
Dealing affirmatively with the reform initiative, however, could help the state deal with its fiscal crisis, contends Anthony Wright, executive director of Health Access California in an article published on the Health Access Weblog. The group is a statewide healthcare consumer advocacy coalition encompassing more than 200 groups.
"The proposed budget cuts that we will see will likely attempt to lessen the number of people enrolled in public programs, either through direct eligibility cuts, or indirectly by placing administrative burdens in place, like imposing quarterly status reports, or eliminating outreach efforts," Wright predicted.
"Such efforts may reduce the pressure on the budget, but they only exacerbate the actual problem, that those people still need care and coverage," he added. "Raising the revenues for health reform would actually help resolve the problem, which in turn would reduce the pressure on the general fund."