Solution
Paulami answered on
Jun 22 2021
The Governor,
California
Subject: Proposal for responding to 5% Medicaid budget shortfall caused by the pandemic of COVID-19
Action Forcing Event
Every state, even California are eyeing upon cutting Medicaid for balancing the budget of theirs since healthcare is the biggest portion of spending in the state. Due to such, a 5% shortfall of Medicaid budget took place because of COVID-19 pandemic which is the cu
ent action forcing event. States like California, which are buckling under revenues getting declined and Medicaid enrolment, are getting increased because of COVID-19 [footnoteRef:2]. From such, they might have no other choice but to cut down such program for poor people unless they receive support from the federal government financially. Federal laws need states in balancing their budgets. During downturns economically, state legislatures tend cutting Medicaid being one costly program. Medicaid has consumption close to 20% among budgets by state. Spending of such program spiking at recessions occur with more people signing up after suffering job losses. Due to such economic downturn taking place from such pandemic, spending in Medicaid increased accordingly. Beneficiaries would seek for care regarding COVID-19 treatment and testing. Such would cause blows in safety net socially when needed. [2: Allen, Heidi, Ashley Swanson, Jialan Wang, and Tal Gross. "Early Medicaid expansion associated with reduced payday bo
owing in California." Health Affairs 36, no. 10 (2017): 1769-1776.
]
[footnoteRef:3] [3: "Ebudget". 2020. Ebudget.Ca.Gov. http:
www.ebudget.ca.gov
udget/2020-21/#/Home.]
Statement of the problem
The problem involving shortfall of budget in Medicaid takes place due to some factors which are discussed accordingly.
Reimbursement in healthcare refers upon payment where the other healthcare providers, diagnosis facility or hospital doctor gets for providing someone with service medically. Medicare pays much less than actual sense they have its greatest shares in the market. Also, it has become the big dog on the block, having further buying power for leveraging discounts[footnoteRef:4]. [4: Sommers, Benjamin D., and Jonathan Gruber. "Federal funding insulated state budgets from increased spending related to Medicaid expansion." Health Affairs 36, no. 5 (2017): 938-944.]
In California, Medicaid beneficiaries of 48%, the state’s program of Medicaid turned out Hispanic in comparison to 20% being white. Most of the Hispanics fall into the low-economic status [footnoteRef:5]. [5: Angel, Jacqueline L., and Ronald J. Angel. "The public cost of low earnings across the life course." Generations 42, no. 2 (2018): 41-47.]
California has opted upon expanding Medicaid through the Affordable Care Act for the single, low-income adults not having dependent children. It even involves forming an insurance marketplace based on state.
Every recession is getting accompanied by the demand for safety net expenditures getting increased. Such a crisis is not an exception, though magnitudes in need have outpaced the Great Recession already. COVID-19 has increased needs of high spending levels in housing, public health and other measures for preventing infection[footnoteRef:6]. [6: Sommers, Benjamin D., and Jonathan Gruber. "Federal funding insulated state budgets from increased spending related to Medicaid expansion." Health Affairs 36, no. 5 (2017): 938-944.]
Such pandemic lead of people losing jobs mostly, still, the state has this new program for helping partially unemployed and unemployed people. Such involves independent contractors, self-employed, business owners and others impacted from this pandemic financially.
Background
Medi-Cal, the Medicaid program in California has its administration from DHCS (department of healthcare services) providing coverage in healthcare to 13 million almost of this state’s residents having low income. Coverage involves being free of cost for most of the enrolees in Medi-Cal. Instead, costs of Medi-Cal are shared among the local, state and federal governments generally. In the year 2019-20, the budget act of and governor’s budget of general funds are $273,275 and $258,598 respectively. Presently, their expenditure on drugs is $260,464 which is -4.7% of the budget[footnoteRef:7]. The budget act and governor’s budget of federal fund are $535,188 and $472,659 and cu
ently they are spending $492,566 which is -8.0% of the budget[footnoteRef:8]. Combining state operations by fund source, the total operations are $960,056 which is 10.1% of the budget[footnoteRef:9]. As per the data, cu
ently the local assistance by fund source is $114,693,244 having 8.5% changes from the budget act. [7: "Ebudget". 2020. Ebudget.Ca.Gov. http:
www.ebudget.ca.gov
udget/2020-21/#/Home.] [8: "Medical Prescription Drug Benefit Overview". 2009. Chcf.Org. https:
www.chcf.org/wp-content/uploads/2017/12/PDF-MediCalPrescriptionDrugBenefitOverview.pdf.] [9: "Medi-Cal Fast_Facts". 2020. Dhcs.Ca.Gov. https:
www.dhcs.ca.gov/dataandstats/statistics/Pages/Fast_Facts.aspx.]
Before the year 2014, eligibility involving Medi-Cal has its main restriction towards the families of lower income, having children, pregnant women, person with disabilities and seniors. Having its allowance under the ACA (affordable care act), this state had its expansion in the eligibility of Medi-Cal involving low-income populations additionally[footnoteRef:10]. It involved the childless adults primarily who were unable to qualify for such program previously. Such eligibility is considered as the expansion of ACA being optional. [10: Abd El-Kader, Rabab Gad, and Victoria Funmilayo Hanson. "Internet usage and its addiction level among students in a selected college in Ras Al Khaimah Emirate: A cross-sectional study." International Journal of Studies in Nursing 4, no. 2 (2019): 7.
]
Based on several studies, Medicaid has its representation of 1$ out of each 6$ consumed on healthcare. Such is one major source for state financing for providing coverage in meeting the long-term care and health needs of residents having a low income. Authors mentioned about Medicaid providing guarantees in matching payments federally, not having limits being pre-set. Involving services, payments to private MCOs (managed care organizations) accounts Medicaid spending being 46%. Studies revealed almost 2/3rd of Medicaid spending involved persons with disabilities and the elderly[footnoteRef:11]. They make up as one in four as enrolees. Increased needs in behavioural and long-term health services, rising costs of drugs prescribed and recessions are factors putting pressure of Medicaid spending growth upward. In the federal budget, Medicaid turns out as the 3rd largest program is mandatory. State-wise, Medicaid is one item of spending, also being the largest source federally[footnoteRef:12]. Since Medicaid has its role in both state and federal budgets, being one primary source of coverage towards people of low income, it is one source of debate constantly. States continue in focussing efforts for constraining costs of Medicaid respectively. [11: Angel, Jacqueline L., Ronald J. Angel, and Phillip Cantu. "Medicaid Use among Older Low-Income Medicare Enrollees in California and Texas: A Tale of Two States." Journal of health politics, policy and...