February 15, 2019 Edition

Newsom Delivers First State of the State Address

On Tuesday, Governor Gavin Newsom delivered his first State of the State address to a joint session of the California Legislature. In a nearly 40-minute address, Newsom covered a wide array of issues, from the strong California economy to immigration to the environment, all while reiterating his commitment to defending the California constitution and the “California dream.”

Newsom discussed the importance of immigrant populations to California and announced that he would be reassigning National Guard troops currently stationed at the U.S.-Mexico border to prepare for the upcoming fire season by joining CALFIRE in wildfire prevention and suppression activities, among other tasks. Newsom went on to discuss significant infrastructure projects throughout the state, including the high-speed rail initiative, water issues, and energy and environmental challenges.

He highlighted the need to address the homelessness crisis, declaring the epidemic an “urgent moral issue” and an increasing “public health crisis.” Newsom pointed to the recent Hepatitis A outbreak in San Diego, a syphilis outbreak in Sonoma, and typhus outbreak in Los Angeles as proof of the need to urgently address homelessness and its underlying causes. To further his administration’s efforts on this front, Newsom announced during his address that he was appointing a new Commission on Homelessness and Supportive Housing to be led by Sacramento Mayor Darrell Steinberg.

Newsom also discussed the need to focus on the major demographic challenge of aging facing California, indicating that the statewide senior population will increase by four million individuals over the next decade and will double in 25 years. He called for the need to develop a master plan on aging that will focus on person-centered care, public services, social isolation, transportation, and nursing and caretaker shortages. Along those same lines, Newsom also announced the creation of the Alzheimer’s Prevention and Preparedness Task Force to be led by former California First Lady Maria Shriver.

Related to health care, Newsom outlined his proposals included in his January budget release that would establish a state health insurance coverage individual mandate, expand insurance subsidies to certain individuals, expand coverage to undocumented young adults, increase healthcare provider reimbursement rates, and address provider shortages. Newsom also highlighted his proposals to increase access to preventive health measures, including immunizations, trauma screenings, and mental health services.

Newsom decried the rising costs of healthcare, stating “Our ability to invest in everything we care about is constrained by the pressure of rising health care costs. It impacts everything else we want to do.” Pointing to the cost of prescription drugs, Newsom discussed his recent executive order that would establish a bulk purchasing program for prescription drugs.

Rounding out his first state of the state address, Newsom underscored the need to address affordability, housing, and workforce efforts in California, and announced a new Commission on California’s Workforce and Future of Work that will be tasked with expanding economic opportunity for all Californians.

In his closing remarks, Newsom emphasized that while there are a significant number of challenges facing California, he believes in “the remarkable talent assembled” in the legislature, in the state, and that the “best is yet to come” for California.

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.

Joint Assembly and Senate Hearing Considers Options for Funding Health Insurance Affordability Assistance

On Monday, a joint Assembly Health, Assembly Budget Subcommittee #1, Senate Health, and Senate Budget Subcommittee #3 hearing, chaired respectively by Assembly Member Wood, Assembly Member Arambula, and Senator Pan, convened to explore health insurance affordability challenges in the individual market. Dr. Wood, in his opening remarks, commented on the great success California has had in implementing the Affordable Care Act while also likening recent federal changes to the ACA as sabotage.

The first panel featured Laurel Lucia, Health Care Program Director for the UC Berkeley Labor Center, who walked committee members through the findings from a report the Labor Center prepared last year and noted the following issues impact affordability in California:

  • Affordability concerns serve as a barrier to individual market enrollment and renewal of coverage
  • High out-of-pocket costs can be a barrier to care, cause financial problems, and may dissuade enrollment
  • The high cost of living in California and broader financial insecurity may aggravate health insurance affordability concerns for some
  • Some citizens and lawfully present immigrants lack access to coverage that meets ACA affordability standards

The second panel featured Covered California’s Executive Director, Peter Lee, who outlined the affordability options Covered California (described in last week’s update) developed for providing financial assistance to low- and middle-income Californians to access individual health care coverage through the Exchange including premium subsidies, cost-sharing subsidies, California specific individual mandate, and reinsurance. Representatives from the Department of Finance discussed Governor Newsom’s proposal to establish an individual mandate, along with a financial penalty, and then use the individual mandate-imposed penalties to provide state subsidies to reduce the cost of individual market coverage.

Rounding out the hearing, Covered California and the Legislative Analyst’s Office discussed implementation options for the Legislature to consider based on both revenues and budgetary funding options. Both Covered California and the LAO agreed that the individual mandate would have the most dramatic impact on influencing individual market enrollment; however, the LAO stated that individual mandate financial penalties would fall on people who likely had not purchased health insurance coverage due to affordability issues. Dr. Arambula, noting some of the affordability tradeoffs, discussed potentially convening stakeholders prior to the May Revision to discuss appropriate incentives for health care consumers. Other affordability funding options discussed included the renewal of the Managed Care Organization (MCO) tax, a tax on sugar sweetened beverages, state general fund expenditures, or savings realized from health care delivery system efficiencies.

Senate Health and Education Committees Hold Hearing on Proposition 64 – Youth Education, Prevention, Early Intervention & Treatment Account

As CHEAC has outlined in a previous memo, the Youth Education, Prevention and Treatment Account is a subaccount contained within Proposition 64 (Adult Use of Marijuana Act) that provides funding for youth education programs focusing on accurate information, prevention, early intervention, school retention and timely treatment services. Funding for this purpose is directed to the Department of Health Care Services (who may also contract with CDPH and the California Department of Education) and then those Departments may contract with county behavioral health programs with local funding allocations based on demonstrated need. Please recall this particular subaccount is on the third tier of Proposition 64 funding draws meaning that tier one and then tier two funding are prioritized first. To date, no funding has been allocated for third tier Proposition 64 purposes.

On Wednesday, the Senate Education and Senate Health committees convened a joint hearing to discuss implementation and funding for the Youth Education, Prevention, Early Intervention and Treatment Account (YEPEITA). Kicking things off, the Legislative Analyst’s Office provided an overview of the aims of YEPEITA as well as considerations for the Legislature to consider as these programs are implemented. The Department of Finance also briefly presented on this pot of funding, revealing for the first time that the Administration would be funding Tier 3 programs starting in Fiscal Year 2019/20 (based on current Proposition 64 revenue projections this could mean approximately $160 million allocated for YEPEITA next year) and would be releasing their proposal during the May Revision.

A subsequent panel of stakeholders, that included representatives from the Prevention Institute, the Tulare County Office of Education and an addiction specialist, discussed their ideas for how to move forward implementing YEPEITA. Stakeholders mentioned a need for prevention funding, building on existing infrastructure, considering existing models that work, and weaving in equity as the programs are created. One panelist referred committee members to a consensus document created by a variety of Proposition 64 stakeholders (including CBHDA) who have been meeting for the past two years as a good guide for how to move forward.

CDPH, DHCS, and the Department of Education comprised the final panel with the stated intent of the joint committees asking the departments about their plans for implementing these funded programs.  CDPH Director Karen Smith discussed CDPH’s work on the Let’s Talk Cannabis information campaign including conducting local calls and providing consistent messaging materials for use across the state. Dr. Smith also mentioned CDPH’s discussions with local health departments on cannabis issues.  Jennifer Kent, DHCS Director, discussed her departments work on the Drug Medi-Cal program and how they’ve been working with counties to create a SUD infrastructure statewide. Khieem Jackson, Deputy Superintendent for the Department of Education, discussed their work on tobacco and alcohol prevention programs in schools. Both Dr. Pan, Senate Health Committee Chair, and Connie Leyva, Senate Education Committee chair, voiced concerns with the state agencies’ lack of planning over the past two years to implement YEPEITA. Director Kent noted the Administration would lay out their fleshed-out proposal for YEPEITA during the May Revision.

LAO Issues Analysis of FY 2019-20 State Medi-Cal Budget

On Wednesday, the Legislative Analyst’s Office (LAO) released its analysis of Governor Gavin Newsom’s FY 2019-20 budget proposal related to Medi-Cal. The governor’s budget estimates the Medi-Cal budget at $20.7 billion General Fund ($98.5 billion total funds) in 2018-19, which is a significant $2.3 billion General Fund downward adjustment relative to the 2018-19 Budget Act. For FY 2019-20, the governor’s budget proposes $22.9 billion General Fund ($100.7 billion total funds) for Medi-Cal, which is a $2.2 billion increase over the revised 2018-19 General Fund estimate.

The LAO report examines key proposals made by Governor Newsom and its impact on the state’s Medi-Cal budget. The LAO recommends that the legislature seriously consider renewal of the Managed Care Organization (MCO) Tax Package, which expires at the end of FY 2018-19. Renewing the MCO tax would require statutory reauthorization from the legislature and federal government approval. The Newsom Administration, however, did not propose an extension of the MCO tax in its FY 2019-20 budget proposal. According to the LAO, allowing the MCO tax to expire would forego significant General Fund benefits.

Further, the LAO assesses proposals related to Medi-Cal coverage expansion for income-eligible undocumented young adults and proposed uses of Proposition 56 revenues in Medi-Cal. Citing the increasingly complex elements of the Medi-Cal budget, the LAO discusses the importance of short- and long-term steps to improve Medi-Cal fiscal estimates and transparency. The LAO will be releasing additional analyses on major components of the governor’s budget proposal, including Proposition 56 expenditures, initiatives to reduce prescription drug costs, and proposed changes to 1991 Realignment, over the coming weeks. The LAO analysis on the Medi-Cal budget is available here.

GO-Biz Releases Proposition 64 Community Reinvestment Grants Program Draft Solicitation

This morning, the Governor’s Office of Business and Economic Development (GO-Biz) released their draft grant solicitation document for those interested in applying for a grant from the program.  As we’ve noted in the past, this funding from Prop 64 (Adult Use of Marijuana Act/Tier 2) is directed to local health departments and community-based organizations to provide grants to support activities such as job placement, system navigation services, and linkages to medical care, for communities disproportionately affected by past federal and state drug policies.

GO-Biz is seeking comments on the draft solicitation document from now through Friday, March 8, 2019, with plans to release the final grant solicitation on Monday, April 8, 2019.  Comments mayA technical assistance webinar will be held on Wednesday, April 17 (Time TBD) to assist applicants with questions about the application process.

Community Reinvestment Grant applications will be due on Friday, May 3, 2019, no later than 5:00 pm. From that date on, GO-Biz will evaluate applications and announce awards with all awards to be announced by Sunday, June 30, 2019.  A total of $9.6 million will be awarded during this grant cycle (FY 2018-19) with the draft solicitation setting a minimum award amount of $50,000 and a maximum award amount of $300,000 from a single organization.  For organizations applying as a collaborative, the minimum award amount is set at $100,000 and a maximum award amount of $650,000.  All grants awarded must be expended by June 30, 2021.

We were pleased to see that some of the CHEAC recommendations submitted to GO-Biz this past December were incorporated into the draft solicitation document including targeting funding to communities disproportionately impacted by the war on drugs using key indicators such as drug-related arrest rates, poverty rates, high incidence of single-parent households and low educational attainment rates.  GO-Biz also increased the award amounts and incorporated the opportunity for partnerships for applying for grant funds. CHEAC will continue to review the draft solicitation and encourage your comments to us by COB, Tuesday, February 26, 2019.

CDPH Office of Oral Health to Hold Fiscal Training Webinars

The California Department of Public Health (CDPH) Office of Oral Health (OOH) has announced that is will hold two fiscal training webinars on February 22 from 11:00 am to 12:30 pm and February 28 from 1:00 pm to 3:00 pm. The webinars will provide local oral health programs information on budget updates, budgeting tips, and invoicing processes. The same information will be presented at each webinar, and attendees will have the opportunity to ask questions and receive answers.

Registration for the webinars are available below:

Friday, February 22, 11:00 am to 12:30 pm – Registration

Thursday, February 28, 1:00 pm to 3:00 pm – Registration

CDC Vital Signs Finds Increases in Youth Tobacco Use

This month’s edition of the U.S. Centers for Disease Control and Prevention (CDC) Vital Signs publication details increasing tobacco use among youth, largely due to use of electronic cigarettes. The report determines that more than one in four high school students and about one in 14 middle school students in 2018 had used a tobacco product in the past 30 days.

The CDC found that this was a considerable increase from 2017, driven by an increase in electronic cigarette use. Among high school students, electronic cigarette use increased from 11.7 percent to 20.8 percent. Among middle school students, electronic cigarette use increased from 3.3 percent to 4.9 percent. No change was found in the use of other tobacco products, including cigarettes, during this period. There were 1.5 million more youth electronic cigarette users in 2018 than in 2017 and use of any tobacco product grew by 38.3 percent among high school students from 2017 to 2018. Other notable findings from this month’s edition of Vital Signs include:

  • Electronic cigarettes remain the most commonly used tobacco product, ahead of cigarettes, cigars, smokeless tobacco, hookah, and pipes
  • Electronic cigarettes are the most commonly used product in combination with other tobacco products
  • Electronic cigarette use is highest among boys, whites, and high school students

The Vital Signs report goes on to detail strategies and interventions for parents and educators, healthcare providers, schools, and state and local governments. The full CDC Vital Signs report is available here.

NACCHO to Launch National Profile of LHDs Study in March

The National Association of County and City Health Officials (NACCHO) recently announced that it will be launching its next version of the National Profile of Local Health Departments Study in March 2019. NACCHO invites local health departments throughout the United States to complete its questionnaire on LHD infrastructure, programming, and practices. Since 1989 NACCHO has conducted this survey to provide a comprehensive and accurate snapshot of LHDs in the United States. The survey was last conducted in 2016.

LHDs will have five weeks to complete the questionnaire once launched in March 2019. NACCHO will be hosting virtual “office hours” in March to answer any questions that LHDs may have about the survey. For additional information about the survey and how to prepare for the questionnaire, a 2019 Profile flyer is available here.

TFAH Releases 2019 State-by-State Emergency Preparedness Report

This week, the Trust for America’s Health (TFAH) released its report “Ready or Not: Protecting the Public’s Health from Diseases, Disasters, and Bioterrorism,” which provides an annual snapshot of states’ public health and emergency response preparedness. This report, authored by TFAH since 2003, has documented significant progress in the nation’s level of emergency readiness, public health preparedness, and opportunities for improvement.

The report assesses top priority emergency preparedness and public health indicators and capabilities on a state-by-state basis, including incident management, cross-sector community collaboration, workforce resiliency and infection control, and health security surveillance. The report determines the following key findings:

  • A majority of states (31) have made preparations to expand public health and healthcare capabilities in an emergency, often through inter-state collaboration and compacts.
  • Most states are accredited in the areas of public health and emergency managements – many in both. These accreditations are one measure of a state’s capacity to effectively respond to health threats.
  • Seasonal influenza vaccination rates, already below 50 percent, fell last year. The influenza vaccination rate for Americans ages six months or older dropped from 47 percent in the 2016-17 season to 42 percent in the 2017-18 season.

It is important to note that these indicators do not necessarily reflect the effectiveness of states’ public health departments. Improvement in these priority areas often requires action from other agencies, elected officials, or the private sector.

The report discusses climate change and the increasing likelihood of extreme weather and natural disaster events, including wildfire risks, and its intersection with public health and emergency preparedness activities. TFAH details a series of actions for federal, state, and local officials, healthcare systems, academia, and the private and nongovernmental sectors to further protect the public’s health; top priority recommendations include:

  • Providing stable, dedicated, and sufficient funding for preparedness activities and a significant funding increase for core public health activities.
  • Establishing complementary emergency response fund to accelerate crisis responses.
  • Monitoring and addressing any potential challenges caused by the transition of the Strategic National Stockpile and significantly strengthening the “last mile” of distribution and dispensing.
  • Developing a multiyear strategic vision, and fully funding surveillance infrastructure, for fast, accurate outbreak detection at all levels of government.
  • Promoting heath equity in emergency preparedness planning, response, and recovery, including through the appointment of a chief equity or resilience officer.

The full TFAH report is available here.

PPIC Issues Report on ACA Impact on Emergency Department Use

The Public Policy Institute of California (PPIC) this month released a report on emergency department (ED) use in California, analyzing demographics, trends, and the impact of the Affordable Care Act (ACA). The report assesses ED use from 2005 to 2016 with a particular focus on rates of ED use following ACA expansion that occurred in 2014. The report discusses that the large expansion of the Medi-Cal program under the ACA previously raised concerns that the dramatic declines in uninsured residents in a short timeframe may have been contributing to increases in ED use.

According to the PPIC report, no evidence exists that the ACA was responsible for increased ED use in California. Instead, the PPIC analysis suggests ED visit rates for non-elderly adults would have been higher without the coverage expansions provided under the ACA. Key findings of the report include:

  • Significant reductions in the number of uninsured Californians as a result of the 2014 ACA expansion did not increase ED use among adults under age 65 and likely reduced ED use among middle-aged adults ages 35-54.
  • Among non-elderly adults, women aged 19-34 have the highest rates of ED use, at least partly due to pregnancy-related visits.
  • Approximately 90 percent of all ED visits made by adults under age 65 are outpatient visits – patients are treated and released the same day. Only approximately 10 percent of ED visits result in admission to the hospital.
  • ED outpatient use has increased substantially across all demographic groups and for all reasons. Non-elderly adults experienced the largest increase (38 percent) during the study period of 2005 to 2016.

The report further discusses that, while the impacts of the ACA are encouraging, the rising use of EDs for complex medical needs warrants further consideration of how EDs fit into the broader healthcare system. As state lawmakers consider further health insurance coverage expansions, according to the report, it will be important to continue monitoring patterns of healthcare use and evaluating efforts aimed at reducing ED use. The full PPIC report is available here.