Federal court rejects California Medicaid cuts

Mar 4 2010

The San Francisco Chronicle: "A federal appeals court barred California on Wednesday from lowering Medi-Cal payments to doctors and hospitals by 5 percent and from cutting in-home care workers' wages by nearly 20 percent, saying the state's budget crisis doesn't justify violating federal laws that protect the poor and disabled. In four rulings, the Ninth U.S. Circuit Court of Appeals in San Francisco rejected attempts by Gov. Arnold Schwarzenegger and the Legislature to reduce the state's deficit by paying less to the health professionals who treat 6.6 million low-income Californians, and to hundreds of thousands of workers who care for some of the neediest."

The appellate court said federal law requires "states to maintain poor residents' equal access to basic health care, and forbids cuts intended solely to save money" (Egelko, 3/4).

The Associated Press/Mercury News: State officials said they would appeal the decision. "'We strongly disagree with the court's decision, which interferes with the state's ability to manage its finances and reduce its spending to match its revenue,' Schwarzenegger spokeswoman Rachel Arrezola said. 'We are confident that the U.S. Supreme Court will overrule the 9th circuit's ruling.' Wednesday's decision does not affect California's $20 billion deficit because finance officials did not count on the savings in the governor's January budget, said H.D. Palmer, Schwarzenegger's finance spokesman" (Lin, 3/3).

The Sacramento Bee: "The Ninth Circuit agreed with lower court decisions that granted preliminary injunctions against the cuts because California did not comply with the federal Medicaid Act. The cuts were contained in budget agreements over the past two years. The court decisions not only have blocked past budget cuts, but they could also preclude the state from pursuing similar ways of solving its current $19.9 billion budget deficit. … The court previously determined that under the Medicaid Act the state Department of Health Care Services must set rates 'that bear a reasonable relationship to efficient and economical hospitals' costs of providing quality services, unless the Department shows some justification for rates that substantially deviate from such costs.'" (Yamamura, 3/3)

The Bee, in an earlier story:"A state appellate court ruled Tuesday that Gov. Arnold Schwarzenegger's line-item vetoes last year reducing funding for several programs were constitutional, rejecting a challenge from various social service advocates, unions and Democratic legislative leaders. In a 3-0 decision, Justice J. Anthony Kline wrote that the challenge failed to show that Schwarzenegger had overstepped his executive authority in further reducing expenditures during last July's budget revision. The case, St. John's Well Child and Family Center v. Schwarzenegger, called into question seven line-item vetoes worth $288 million, cutting programs ranging from the Office of AIDS to Healthy Families" (Yamamura, 3/2).