Newsom’s budget cuts would hit Californians most vulnerable to coronavirus

Shirley Madden, 83, relies on a caregiver and her two grown daughters to remain living at home — and not in a nursing home.

Her daughters, 55-year-old Carrie and 60-year-old Kristy Madden, both use wheelchairs and need a second caregiver to help them navigate their own daily lives.

But that critical caregiving support, along with other healthcare benefits for millions of Californians, could be scaled back to help plug a massive budget deficit triggered by the coronavirus.

California Gov. Gavin Newsom has proposed sweeping budget cuts to safety-net healthcare programs ― including Medi-Cal, California’s Medicaid program for low-income people ― just as enrollment is projected to spike because of record job losses related to the pandemic.

Healthcare experts fear the cuts could also jeopardize billions of dollars in emergency federal health funding allotted to California.

“I understand there’s a pandemic, and it’s really bad and everybody is hurting,” said Carrie Madden of Chatsworth. Carrie and her sister have muscular dystrophy, and their mother is a heart attack survivor who struggles with dementia.

Madden’s fears are compounded by the COVID-19 crisis, which has hit older people and those with chronic health conditions the hardest. She doesn’t want her mother, her sister or herself to end up in a nursing home or other long-term care facility — the settings with the most outbreaks of COVID-19.

“This is the wrong approach,” she said. “This will make disabled people end up in nursing homes.”

States across the country are eyeing Medicaid cuts to balance their budgets, in part because healthcare is usually the second-biggest portion of state spending, after education. They also project that more people will sign up for the public healthcare program as the number of unemployed Americans hits astronomical heights. More than 20 million Americans filed for unemployment in April, raising the jobless rate to at least 14.7%, the worst since the Great Depression.

New York approved Medicaid cuts that will take effect after the federal emergency ends, while Georgia has instructed all its agencies to reduce spending by 14%.

In California, where almost 2.9 million people have filed for unemployment in the past two months, Newsom described the proposed budget cuts as “prudent” and “strategic,” a huge pivot from the grand plans he unveiled earlier this year to expand healthcare to some of the neediest residents.

To address an estimated $54-billion deficit in the 2020-21 state budget, Newsom proposes a $205-million cut — or a 7% reduction in caregiver hours — to the In-Home Supportive Services program the Maddens rely on. The program, primarily funded by Medi-Cal, pays caregivers to make meals for people who need help to live independently, as well as do their laundry, bathe them, administer medical treatments and keep their homes clean.

The list of Newsom’s other proposed cuts is lengthy: He would scale back or eliminate other programs intended to keep low-income seniors and people with disabilities in their own homes, such as adult day healthcare and support from social workers. He proposes to make it easier for the state to collect posthumous payback from deceased Medi-Cal enrollees ages 55 and older for a broad range of medical costs through the controversial “Estate Recovery Program.”

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He suggests reinstituting stricter income requirements for some older people and those with disabilities to qualify for free Medi-Cal.

And he is calling on lawmakers to remove $54.7 million in “optional” Medi-Cal benefits, such as adult podiatry care, eyeglasses, speech therapy and hearing exams — benefits that lawmakers recently restored after they were cut during the last recession.

“These don’t feel optional to people if they have had a stroke or need teeth to eat their food,” said Tricia Berke Vinson, an attorney with the Legal Aid Society of San Mateo County.

“I understand we are in a budget crisis,” she added. “I just don’t think it can be balanced on the old and the sick.”

Physicians, dentists and other healthcare providers who treat Medi-Cal patients also stand to lose $1.2 billion in supplemental Medi-Cal payments that flow from Proposition 56, a tobacco tax that voters approved in 2016.

The Democratic governor’s proposal includes an automatic “trigger” to restore the cuts if the state gets more federal COVID relief dollars, shifting the responsibility to Congress to negotiate another stimulus package.

Whether lawmakers will make the sweeping Medi-Cal cuts the governor has proposed is uncertain. For example, the state Senate plan preserves Medi-Cal funding and assumes Congress will pass another stimulus bill.

Both houses of the legislature must come to an agreement and present their version of the budget to the governor for consideration by June 15.

“Save these programs, and you save lives and money,” said Assembly member Jim Wood (D-Santa Rosa), chair of the Assembly Health Committee. “Cut these programs, and costs will increase and lives will be lost.”

Healthcare experts and some lawmakers also fear Newsom’s approach could jeopardize billions of dollars in emergency federal health funding already allotted to California.

States that drop Medicaid enrollees or reduce benefits risk losing out on additional federal health payments authorized by Congress this spring, said Edwin Park, an expert on Medicaid and a professor at Georgetown University McCourt School of Public Policy.

“The federal government has said you can’t cut eligibility or dis-enroll or cut benefits,” Park said. He noted that New York lawmakers have delayed their state Medicaid cuts until after the federal emergency ends to ensure they still receive the added federal help now.

The Centers for Medicare & Medicaid Services did not respond to requests for comment. Guidance posted on the agency’s website suggests that states must keep Medicaid programs intact.

California is expected to receive $5.1 billion in additional federal funding for Medi-Cal through June 30, 2021, according to the proposed budget Newsom released in mid-May.

The Newsom administration is not convinced that its Medi-Cal budget cuts will cost the state the additional federal money already approved by Congress.

“There’s never a guarantee until we have that conversation with the federal government. So until then, it’s hard for us to tell what the Fed’s going to do,” said Yang Lee, an analyst at the state Department of Finance.

Newsom’s administration predicts that about 2 million Californians will sign up for Medi-Cal by July as a result of the pandemic, bringing the program’s enrollment to 14.5 million, more than one-third of all Californians.

The administration anticipates $3.1 billion in added costs to cover the new enrollees. The Legislative Analyst’s Office believes that figure is too high by $750 million, in part because new sign-ups will primarily be young and healthy individuals who do not need as much care as low-income seniors and people with disabilities.

For many current enrollees, Newsom’s proposals would cut into multiple benefits.

Cynde Soto, 63, said it felt like “someone had punched me in the gut” when she heard about the governor’s plan to cut the In-Home Supportive Services budget. As a quadriplegic, the Long Beach resident worries that state cutbacks could force her into a nursing home. On top of that, she fears she might lose her Medi-Cal dental and vision care if Newsom’s other cuts are approved.

“I’ve had nightmares about it. I don’t know what I’m going to do,” Soto said. “Why do we always get hit first?”

This story was produced by Kaiser Health News, which publishes California Healthline, an editorially independent service of the California Health Care Foundation. KHN is not affiliated with Kaiser Permanente.