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HomeMy WebLinkAboutMINUTES - 07221997 - C85 TO: BOARD OF SUPERVISORS Contra FROM: William Walker, M.D., Health Services Director Costa County DATE: July 16, 1997 `e osrq......... SUBJECT: LETTER OF OPPOSITION OF ASSEMBLY BILL 1430(FIGUEROA) SPECIFIC REQUEST(S)OR RECOMMENDATION(S)&BACKGROUND AND JUSTIFICATION RECOMMENDATION: AUTHORIZE the Health Services Director (or Designee) to send a letter to Assemblywoman Figueroa opposing AB 1430 BACKGROUND: AB 1430, while intended to expand health coverage by redirecting most of the available Proposition 99 and other public health care funds to an outpatient indigent care program could destroy California's already fragile health care safety net by completely restructuring the indigent care delivery system. FISCAL IMPACT: Proposed restructuring of indigent care delivery could greatly impact the County by increasing the share of health costs. CONTINUED ON ATTACHMENT: YES SIGNATURE: '� , Li RECOMMENDATION OF COUNTY ADMINISTRATOR RECOMMENDATION OF BOARD COMMITTEE APPROVE _OTHER SIGNATURE(S): ACTION OF BOARD ON July 22, 1997 APPROVED AS RECOMMENDED X OTHER X AUTHORIZED the Health Services Director, or designee, to send a letter to Assemblywoman Figueroa, the County's Legislative Delegation, Governor Wilson, California State Association of Counties (CSAC), and the California Medical Association (CMA) opposing AB1430. VOTE OF SUPERVISORS X I HEREBY CERTIFY THAT THIS IS A TRUE UNANIMOUS (ABSENT ) AND CORRECT COPY OF AN ACTION TAKEN AYES: NOES: AND ENTERED ON THE MINUTES OF THE BOARD ABSENT: ABSTAIN: OF SUPERVISORS ON THE DATE SHOWN. Contact Person: l 22, 1997 CC: Health Services Administration ATTESTED July William Walker, MD HSD Director PHIL BATCHELOR,CLERK OF THE BOARD OF SUPERVISORS AND COUNTY ADMINISTRATOR BY J "��� DEPUTY . t Contra Costa County The Board of Supervisors HEALTH SERVICES DEPARTMENT OFFICE OF THE DIRECTOR Jim Ropes,tet oistrictE 6.....-_ •.o„ Gayle B.Uilkema,2nd District -- Director&Health Officer Donna Gerber,3rd District —_- Mark DeSaulnier,4th District fi 20 Allen Street Joseph Canciamllla,5th District g; „;, s Martinez, Califomia 94553-3191 County Administrator (510)370-5003 FAX(510)370-5099 Phil Batchelor SEi---UR County Administrator July 12, 1997 Honorable Liz Figueroa Assembly Health Committee Health and Human Services Policy Committee State Capitol, Room 448 Sacramento, CA 95814 SUBJECT: ASSEMBLY BILL 1430 (FIGUEROA) Dear Assemblywoman Figueroa: As the Director of Health Services in Contra Costa County, I am writing to express concerns regarding AB 1430. As a "spot bill", it is my understanding that the sponsor (California Medical Association) is proposing to redirect realignment funds, Proposition 99, and other categorical public health care funds to develop an outpatient indigent care program. While I support efforts to expand coverage to California's uninsured population, changes in these funds risks destablizing California's already vulnerable public health safety net. Under Section 17000 of the Welfare and Institutions Code, counties are mandated to serve as the state's safety net for medically indigent individuals. Pulling realignment dollars away from public health to restructure indigent care, not only threatens efforts to develop comprehensive systems of care for the indigent but for all low income individuals. The Health Services Department depends on these funds to provide necessary public health services to our residents. A decrease of any amount could seriously affect our ability to provide safety net services. In addition, the proposal is not clear about the impact on regional safety net services such as trauma, emergency and other tertiary health care services that are essential to the health of the larger community. wwfm>ow MamorW HoWW a H"fth Canton • PHeam, • u«,w HMM • sutxte m Ahm • EnWwmw"H@WM Coma cow►loam+Plan • Eby MeftW Swvtoaa • 1Ist HasM AOK=Y • 00ft is A-345 (2M7) JUL-16-199? 16:23 FROM TO 550% P.01 07/16/1997 Page 1 .CSAC Bill Report CA AB 1430 AUTHOR: Figueroa TITLR: Health Insurance Act of 1998 COMMITTEE: Senate Insurance Committee HEARING: 07/16/1997 1:30 pm SUMMARY: Enacts the Health Insurance Act of 1998 . States the intent of the Legislature to offer low-income persons the option of receiving medical care through a basic insurance package or from the various health care programs. STATUS: 02/28/1997 INTRODUCED. 03/20/1997 To ASSEMBLY Committee on HEALTH. 05/01/1997 From ASSEMBLY Committee on HEALTH with author s amendments. Read second time and amended. Re-referred to Committee. 05/06/1997 From ASSEMBLY Committee on HEALTH: Do pass. 05/08/1997 In ASSEMBLY. Read second time. To third reading. 05/20/1997 in ASSEMBLY. Read third time. Passed ASSEMBLY. *****To SENATE. 06/10/1997 To SENATE Committee on INSURANCE. 06/11/1997 From SENATE Committee on INSURANCE with author's amendments. Read second time and amended. Re-referred to Committee. END OF REPORT Post-Ir Fax Note 7671 TO Fns 0049pt. 0A Mum s Phone� Fax k Fax a JUL-16-1997 16:12 510 335 loge 94% P.01 California Association of !. Public Hospitals and Health Systems 2000 Center Street, Suite 306. Berkeley. CA 94704 Phone 510 1649-7650 Fax 510!649.1533 TO: All Interested Parties FROM: Denise K. Martin, President & CEO DATE: June 6th, 1997 SUBJECT: The California Medical Association's Proposal to Expand Health Insurarce to the Working Unin.uied On behalf of the members of the California Association of Public Hospitals and Health Systems (CAPH) I am enclosing for your review our preliminary analysis of the California Medical Association's (CMA) proposal to expand health insurance to the working uninsured by restructuring California's current indigent care financing and delivery system. The CMA's proposal, titled "Restructuring Indigent Health Care Programs To Expand Health Insurance Coverage To Low-Income, Uninsured, Working Californians" would essentially redirect most of the available realignment, Proposition 99 and other categorical public health care funds to an outpatient indigent care program . While CAPH supports efforts to expand coverage to the uninsured we are concerned that a restructuring of the indigent care delivery system of the magnitude proposed by the CMA - though well-intentioned - could destroy California's already fragile public healthcare safety net. We share with CMA many common concerns regarding the alarming growth in California's uninsured population. We have developed a set of alternative options that we believe would significantly Teduce the number of uninsured, involve all sectors of the health carp industry, build on existing health care delivery systems to avoid disrupting continuity of care and preserve the safety net for the medically indigent and the community at large. We stand ready to collaborate with CMA and all interested parties to develop appropriate strategies to expand access for all Californians. If you have any questions or comments regarding CAPH's analysis please feel free to call me at (510) 649-7650. Ci% California Association of Public Hospitals and Health Systems 2000 Cewei Street. Suite 308. Berkeley, CA 9704 Phone 510 16-9.7650 Fax 510 i 649-1533 THE CMA PROPOSAL TO EXPAND HEALTH INSURANCE: Flawed from the Start... Inaccurate to the End On May 1, the California Medical Association released a proposal ivhich would divert a significant majority of available indigent care funding in order to expand outpatient and primary care services for some of the uninsured. While the goal of the proposal is worthy, it is seriously flawed. The problem of the uninsured has many root causes -- health care- inflation, shifts in the state economy toward service jobs, declining employer provided insurance, and the competitive health care marketplace, to name a few. Yet, only one solution is being proposed -- diverting key indigent care funding that supports the safety net. By only focusing on indigent care funds, the proposal ignores broader- based funding sources as well as the underlying issues which have resulted in the steady and continuing rise in the uninsured. The CMA proposal asks the most vulnerable members of our society and the most vulnerable institutions that serve them to foot the entire bill to expand care to the working uninsured. No other components of the heath care industry -- HMOs, hospiiais or physicians, representing tens of billions of dollars of health care funding -- or key sectors of society, such as business, would share in the responsibility of developing and contributing to a comprehensive solution. The CMA proposal is also fraught with errors, omissions and inaccuracies. Unforutnately, although the plan would succeed in stripping away support for the safety net, very likely leading to its collapse, the proposal would not succeed in significantly expanding coverage for the uninsured. And, without the safety net, true access to health care would actually decline. CMA Proposal Critique Page 2 Part I. FINANCING: The financing scheme proposed by the CMA is based on erroneous assumptions and overestimates the current level of indigent funding. Using more realistic estimates, the CNIA's proposal,even using its own flawed methodology,would cover at most only 1.8 million persons -- not 3.4 million. .♦ ERROR: Overall, the CA14 overestimates by about 50% the current.handing sources for indigent health care. lVith regard to the proposed frnrding for the Outpatient Package (Attachment 9, page 15), the CAM overstates the available funding by at least $872 million -- oyer 854u: • Assumes utilization of the increase/savings in FMAP and welfare savings, which is unlikely. ($115 million) • Assumes utilization of SB 1255 funds, which cannot be transferred to a pooled account because they are matched to county intergovernmental transfers. ($367 million) • Assumes only l 5%i of realignment supports public health -- it's actually at least 50%. (S390 million) ♦ ERROR: The proposed frtnding that would rennin for county indigent inpatient services (.-lttachinent 11, page 17) is overstated by at least $225 million -- 42%: • Assumes Prop 99 lawsuit reserve, which is for education not health services. ( $82 million) • Assumes county overmatch, which was eliminated. ($143 million) • Assumes no changes in DSH funding at the state or federal levels. ( ? ) ♦ OMISSION: The CMA proposal does not recognize that Realignment helps fund indigent services in all 58 counties, not just in counties with a county hospital The CMA estimates that county inpatient costs are $746 million (pages 16 and 17). Yet, that figure only includes expenditures in counties with county hospitals and ignores the costs expended by counties such as Orange, San Diego, Sacramento, Yolo and more than 30 other counties, which do not operate their own hospitals. At the same time, the CMA suggests that $757 million would remain available for all county inpatient services in order to cover the costs. Not only is the $757 million estimate inflated, as noted above, it would be grossly inadequate to cover the statewide costs associated with inpatient and emergency care. ♦ INACCURACY: The CMA proposal confuses two frnrdanrental issues:providing access to care for the medically indigent --for whom realignment and all its predecessor programs vrerc created -- and providing health insurance for California's 7 million uninsured. CMA states on page 2, ".. many of the uninsured, working poor receive 'safety net' services through counties, who by law, must provide medical care to uninsured (emphasis added)." In fact, counties arc CMA Proposal Critique Page 3 mandated by Section 17000 of the Welfare and Institutions Code to be the providers of last resort for the poor and indigent, not all uninsured, which is a larger societal responsibility. "Realignment" was enacted in 1991 for a very specific purpose -- to replace two existing programs that funded health care for the medically indigent as well as public and community health. At the time of enactment, funding levels for Realignment were far lower than anticipated and only recently has the program achieved the 1991 goals. Moreover, Realignment culminated a decade of cumulative shortfalls in programs for the medically indigent beginning in 1982 with the transfer of the medically indigent adults program from Medi-Cal to the counties with only 70% of the expected Medi-Cal cost. Compounding 15 years of reductions in financing for the medically indigent, the number of uninsured and poor people, including the medically indigent, grew dramatically during this period of time (from 4.5 million uninsured in 1987 to nearly 7 million today). Realignment funding has not kept pace with the very specific demands of the program. Diverting the program further to address the significant public policy problem created by the rise of the uninsured -- a purpose for which Realignment was never intended -- will only serve to undermine vital public health, community health and key safety net services. OMISSION: In developing the eery low capitated rate for outpatient/priman, care, the extraordinaril' high costs associated with the medically indigent population were not factored in. While the working uninsured may have costs similar to the Medi-Cal population -- generally healthy, young, and inexpensive -- the medically indigent population typically have higher costs because of higher severity of illness resulting from homelessness, mental illness, and substance abuse. • Numerous programs around the country have found that capitation for the medically indigent (including inpatient services)average several hundreds of dollars per member per month. • The CMA proposal also does not address the barriers faced by the medically indigent population in accessing the proposed program. Many will be unable to properly enroll in the insurance program and will, instead, simply continue to seek care primarily through county health clinics and ERs, at county expense. CMA Proposal Critique Page 4 Part 11. POLICY: Rather than promoting the successful restructuring of health care financing systems to expand access, the CMA proposal would set back the cause of expanding access through streamlining and cost-effective care. ♦ INACCURACY: Splitting apart the financing for outpatient/primary care from the financing for inpatient/ER coverage, would undermine incentives to discourage inappropriate ER/inpatient utilization -- a basic tenet of ani, managed care plan. When the full continuum of care are the responsibility of one entity, such as under managed care, the primary care physician and managed care plan can properly oversee the whole spectrum of services. In contrast, the incentives under the CMA proposal are contrary to managed care principles and will promote more cost shifting. Under the CMA plan, the primary care physician would not be responsible for inpatient utilization nor ER usage, and, therefore, has every incentive to shift costly care that could potentially be done on an outpatient basis to the hospital. The costs of such hospitalization and ER care would remain with the safety net hospitals/counties. Yet they would have limited ability to control those costs. ♦ INACCURACY: The 0M proposal is based on the faulty premise that the safety net is a "hospital-baser!/eme►-gency room s}stem"; suggesting that public hospital and health systems do little outpatient care. In fact, the public health care safety net provides nearly 6 million outpatient visits each ycar. Public hospital and health systems operate over 100 outpatient clinics both on-site and throughout the communities they serve. Of the 6 million outpatient visits provided by the public health care safety net, about 2.5 million are to the medically indigent and uninsured and about 2.5 million are to Medi-Cal patients. Moreover, Public health and hospital systems have developed integrated systems of care from public health through acute hospitalization. The CMA proposal would disrupt the continuity of care provided by these systems by establishing two distinct service systems -- outpatient and inpatient. ♦ INACCURACY: Although the CMA proposal suggests that counties would have the option to consolidate outpatient and inpatient services into a single benefit package on a count}, by county basis, it would actually preclude counties from restnicturing their health care systems in order to meet local needs. As many as a dozen county health and hospital systems are pursuing state and federal options to streamline and restructure their health care delivery systems into primary-care, outpatient-driven systems that would be consistent with managed care principles. Such coordinated and integrated systems of care could help the public health safety net utilize scarce resources more efficiently and, thereby, maintain its broad mission. These efforts would also help preserve dollars now spent in the local community for the needs of the local community. In contrast, the CMA proposal would transfer local funds to a statewide pool, which would essentially preclude local communities from being able to redesign their systems. d CMA Proposal Critique Page 5 Part Illi. ALTERNATIVE OPTIONS: There are numerous options to expand health insurance coverage for the uninsured, especially the working uninsured and children, restructure health financing and delivery systems, and develop new revenue sources, such as mandatory contributions -- either fiscal or services -- by HMOs, hospitals, and physician practices, and subsidies related to not-for-profit tax status of health care institutions. Options should be evaluated based on a number of criteria, including whether they build on existing health care delivery systems to avoid disrupting continuity of care, involve all contributing sectors of the health care and business communities, and preserve the safety net for the medically indigent and for the community-at-large. ♦ Maximize Medi-Cal Coverage. Hundreds of thousands of children are currently eligible for Medi-Cal but not enrolled because of administrative barriers. In addition, over a million uninsured children in California could obtain Medi-Cal if the state expanded eligibility for children up to 200% of the federal poverty line. Pending legislation to maximize Medi-Cal coverage for children includes AB 1126 (Viilaraigosa), developed by Children NOW, (Villaraigosa); SB 1036(Polanco), developed by CAPH; SB 860 (Thompson), by Children NOW. ♦ Expand Employer-Provided Insurance through Tax Breaks. Employer-provided insurance -- the primary mechanism for working Californians and their families to obtain health coverage -- continues to decline. Small and medium-sized employers could be provided a variety of tax breaks and subsidies to encourage more employers to purchase health coverage for all employees and dependents. These principles are contained in legislation developed by the California Healthcare Association, AB 534 (Thomson). ♦ Promote Local Restructuring. As many as a dozen counties are exploring the development of comprehensive integrated systems of care for all low-income populations in order to restructure and align financing streams, help stabilize the safety net, and provide greater continuity of care to patients, since many low-income persons participate in both the indigent and Medi-Cal programs at different times. Integrating inpatient and outpatient services of both the Medi-Cal and indigent health care systems -- not splitting them apart -- would help maintain access and preserve the provider-patient relationship. ♦ Enact Federal Child Health Initiatives. President Clinton and Congressional leaders have proposed a number of initiatives to expand health care coverage for children. Potentially billions of dollars may be available for Medicaid expansions, tax breaks, and grants to states to provide coverage to uninsured children. ♦ Create an Investment Account for Expanding Health Coverage. In 1994, more than $105 billion was spent on health care in California, including payments to HMOs,hospitals, physicians, and pharmaceuticals. An investment account funded by a set aside of one-half of one-percent of all health spending would raise $525 million, which could be used to expand Medicaid, provide tax incentives, and support local restructuring efforts. In contrast, the CMA would redirect only indigent care funding, which totals less than 2% of all health care spending statewide.