LAO Issues Analyses on Medi-Cal Budget, CalAIM Financing
This week, the California Legislative Analyst’s Office (LAO) released an analysis on the state’s Medi-Cal budget for 2020-21 and 2021-22, as well as an analysis of California Advancing and Innovating Medi-Cal (CalAIM) financing issues. Brief summaries of these reports are provided below:
Medi-Cal Budget Analysis
The LAO’s analysis assesses major adjustments to the Medi-Cal budget in 2020-21 and 2021-22 and summarizes major discretionary proposals that contribute to increased spending in the program for 2021-22. The LAO intends to release additional publications analyzing major Medi-Cal budget investments over the coming weeks and months.
Due to lower than anticipated caseload growth in the Medi-Cal program, the Governor’s budget reflects a $1.2 billion decrease from the 2020-21 Budget Act. The LAO indicates the Governor’s budget additionally recognizes a savings in 2020-21 of around $230 million General Fund related to declines in routine health care utilization due to the COVID-19 pandemic. For the upcoming budget year, the LAO indicates the Governor’s budget anticipates an unprecedented nearly $6 billion increase due to technical adjustments and discretionary spending proposals.
The LAO further details the Newsom Administration’s Medi-Cal proposals and provides an assessment of several aspects of the Medi-Cal program’s expenditures. Of note, the LAO provides commentary on the end of the COVID-19 public health emergency and Proposition 56 provider payments and implications from the state’s flavored tobacco referendum, among other considerations.
The full LAO Medi-Cal Budget Analysis is available here.
CalAIM Financing Analysis
The LAO additionally published an analysis of financing issues related to the Newsom Administration’s ambitious CalAIM initiative. The LAO report provides background and history of the CalAIM proposal and details major policy reforms as part of the initiative. Notably, the LAO determines that many, if not most, of CalAIM reforms have significant potential to result in new costs and/or savings in Medi-Cal.
The LAO identifies anticipated major impacts of the CalAIM proposal, including improved coordination and new services for high-risk and high-need populations, transforming and streamlining managed care, and modifying behavioral health service delivery and financing. The LAO finds that using state General Fund resources for a series of CalAIM proposed investments is a reasonable approach and determines that expanded federal Medicaid funding would become available to the state through CalAIM services. The LAO identifies possible changes the Legislature may wish to explore, including improving managed care plan fiscal incentives to deliver more cost-effective care. Many programmatic details of the Administration’s CalAIM proposal remain elusive, limiting the ability of the LAO to provide a full analysis of the proposed delivery and financing changes.
The full LAO CalAIM Financing Issues Analysis is available here.