Senate Budget & Fiscal Review Committee Holds Hearing on Medi-Cal Coverage and Prescription Drug Affordability

On Thursday, the Senate Budget & Fiscal Review Committee convened an informational hearing on Medi-Cal coverage expansions and prescription drug affordability:

Medi-Cal Expansion

The hearing featured a presentation from Laurel Lucia from the UC Berkeley Labor Center, detailing California’s current landscape of health care coverage and gaps as identified in their recently released report, “Toward Universal Coverage: California Policy Options for Improving Individual Market Affordability and Enrollment.” The report projects that four million Californians will remain uninsured in 2020 growing to 4.4 million in 2023, with the largest group of uninsured being roughly 1.5 million undocumented Californians. Should an expansion occur, an estimated 1.15 million undocumented adults would be eligible for full scope, including roughly 942,000 undocumented individuals (82%) who are already enrolled in restricted-scope benefits. Another 210,000 individuals (18%) would be eligible for Medi-Cal; however, Ms. Lucia indicates only 50 percent are estimated to enroll. She also provided a breakdown of potential enrollment by aid category, while the majority 96 percent would be working age adults, approximately two percent would be disabled and two percent would be seniors. She also noted that 104,000 undocumented young adults ages 19 to 25 are estimated to enroll. Ms. Lucia’s presentation also included some discussion around the possible chilling effect of enrollment due to the proposed public charge rule and assumed that enrollment could drop up to 30 percent as a result.

Representatives from the Department of Health Care Services (DHCS), the Department of Social Services (CDSS), and the Department of Finance (DOF) discussed Governor Gavin Newsom’s proposal to expand Medi-Cal coverage to undocumented young adults ages 19-25. Mari Cantwell, Chief Deputy Director at the Department of Health Care Services, shared the Administration’s estimate that 138,000 individuals would enroll in year 1, including 86,000 already enrolled in restricted-scope Medi-Cal. She also indicated that while the proposal would be implemented no sooner than July 1, 2019, we should look to the SB 75 Medi-Cal expansion to undocumented children for a more realistic timeframe. Representatives from the Legislative Analyst’s Office (LAO) discussed their analysis of the proposal and elements of the proposal for the legislature to further consider. The LAO continues to assess the proposal to redirect additional county realignment and will be releasing a future report. However, the LAO indicated that some increased redirection may be appropriate given the decrease in indigent individuals and the previous expansion for undocumented children. They indicated some concerns around the magnitude of the redirection and the impact to counties, particularly to public health.

Senators did question whether a piecemeal approach to expanding coverage to segments of the undocumented population versus the full population was an efficient use of resources given the workload associated with implementation as each new group is made eligible. Questions were also raised about the policy rationale behind expanding coverage to undocumented individuals under age 26 as opposed to the senior population or all undocumented adults.

The hearing also included a stakeholder panel, featuring the California Immigrant Policy Center, Health Access and CHEAC. Michelle Gibbons represented CHEAC and highlighted the use of 1991 Realignment funds for public health services and remaining indigent care populations. She stressed key public health challenges local health departments are facing and urged the Legislature’s consideration how the loss of these funds would further cripple the ability of local health departments to respond.  Senator Richard Pan highlighted the importance of local health departments in protecting communities throughout the state and indicated the Senate Health Committee, which he chairs, will be further exploring public health issues this spring. Senator John Moorlach, a former Orange County Supervisor, also discussed the potential pressures placed on local governments as the result of the redirection of 1991 Realignment funds for the governor’s proposed Medi-Cal expansion.

Prescription Drug Affordability

The Senate Budget and Fiscal Review Committee also reviewed Governor Newsom’s proposals related to prescription drug affordability. Matt Bender from the Department of General Services (DGS) discussed the work they currently do with respect to prescription drugs through first highlighting the Statewide Pharmaceutical Purchasing Program, where DGS purchases pharmaceuticals for state agencies that do not have their own pharmaceutical purchasing programs. He also noted their other role as a facilitator for the California Pharmaceutical Collaborative, an interagency working group of major state drug purchasing programs, regulatory agencies and other policy makers with a goal to control spending. DGS indicated that they have collected data from all state members of the CPC around their top 50 drugs and is the process of collecting data from locals in an effort to inform the report to the Governor due in March. The LAO indicated they are continuing to analyze the impact of the Executive Order and noted the potential to scale existing practices could have an impact in curving spending dependent on whether the DGS purchasing power is extended to additional entities, including private purchasers.

DHCS Director Jennifer Kent discussed the transition of Medi-Cal pharmacy benefits from managed care to fee-for-service benefits. She highlighted two major reasons for the transition, noting combining all the Medi-Cal lives – 2 million in fee-for-service and 11 million in managed care – would increase the negotiating leverage to drive costs down. She also cited improving access as another driver and indicated that access for the fee-for-service pharmacy benefits is currently better than that of managed care. The LAO again, indicated they are still analyzing this proposal. They did acknowledge the potential to increase state savings but was not able to score the savings at this time. The LAO also acknowledged the potential impact to safety net providers as a result of impacts to 340B and noted a potential savings to managed care plans, but heeded caution. Other areas the LAO will be exploring is the impacts to care coordination and impacts on timely utilization reports.

The hearing also featured a stakeholder panel including labor, health plans, hospitals and PhRMA, which raised various questions and concerns about the impact of these proposals.

Items discussed during the full Senate Budget and Fiscal Review Committee will continue to be assessed in further detail over the coming weeks by subcommittees. The agenda and background materials for Thursday’s hearing are available here.