Increased funding for Medi-Cal threatened by state's fiscal shortfall

Medicaid is meant to provider health insurance to those who cannot afford it in the US. Unfortunately, enrollment in Medicaid does not actually mean that a person will receive adequate medical care, since many healthcare providers do not accept Medicaid insurance because of its low reimbursement rates. KFF Health News reported on California's plans to increase those rates, and the subsequent attempt by the governor to divert funding away from the state's Medicaid insurance, Medi-Cal.

A couple of years ago, the governor of California expected a state budget surplus so large that "No other state in American history has ever experienced a surplus as large as this". Unfortunately, that surplus did not last, and the state faced (or is expected to face) large deficits in subsequent years. In response, the governor desires to use funding from a tax on managed-care plans to cover the state's budget shortfall. Some in the healthcare industry have worked on a possible voter initiative to try to reserve funds from this tax for Medi-Cal. Even with such a restriction, however, it is unclear whether the state legislature would simply reduce funding for Medi-Cal from the general budget in future years.

Regardless of how this particular challenge plays out, the governor's proposal illustrates some of the challenges for funding health care for those who cannot afford it. Despite meaning well, it is not surprising that when faced with a significant budget shortfall, the state de-prioritizes this constituency. However, one problem is that legislatures frequently encounter budget restrictions, so Medicaid continues to be underfunded by various states.