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Gov. Newsom unveils deep cuts in 2020-21 state budget revisions

May 14, 2020 20556

Gov. Gavin Newsom today laid out a new 2020-21 California budget proposal that slashes billions of dollars in spending in an effort to tackle a massive $54 billion deficit. During the COVID-19 pandemic, California’s revenues plummeted, wiping out the state’s $6 billion surplus. The cuts are deep and affect every aspect of state government, from Medi-Cal and oral health to education and civil service. 

Medi-Cal adult dental program and other optional benefits

The revised budget proposes to reduce Medi-Cal adult dental benefits to the partial restoration levels of 2014. Additionally, the budget proposes to eliminate other recently restored benefits such as audiology, speech therapy, optician/optical lab, podiatry, acupuncture, optometry, nurse anesthetists services, occupational and physical therapy, pharmacist services, screening, and diabetes prevention program services for a total general fund savings of $54.7 million. The administration stated today that the reductions will be “triggered off” (reversed) if the federal government provides sufficient funding to restore them. 

CDA President Richard Nagy, DDS, issues statement on Proposition 56 adjustments

Beginning in 2020-21, the May revised budget proposes to redirect $1.2 billion in Proposition 56 funding from providing supplemental payments into directly funding growth in the Medi-Cal program. Supplemental Proposition 56 payments to physicians, dentists, family health services, developmental screenings, nonemergency medical transportation, value-based payments, and student loan repayments for physicians and dentists were all cut in this proposal.  

The first cohort of physicians and dentists who were awarded CalHealthCares student loan repayments in 2019 and are already in contract with the state to serve Medi-Cal patients will continue, but years 2-5 will not be awarded under the proposal. 

“Given the fiscal situation of California, CDA stands ready to work with the administration and Legislature to look at sustainable ways to continue supporting critical oral health access programs such as Medi-Cal Dental and the CalHealthCares Student Loan Repayment program,” said CDA President Richard Nagy, DDS. “The most significant lesson of the COVID-19 pandemic is to not overlook and underfund public health programs, as the cost of doing so is tremendous.”

The May Revision assumes that due to dramatic increases in the unemployment rate associated with the COVID-19 recession, the Medi-Cal caseload will increase significantly. Specifically, the May Revision assumes that caseload will peak at 14.5 million in July 2020, or about 2.0 million above what the caseload would have been absent the COVID-19 pandemic. Unemployment claims have surged — with increased claims of 4.4 million from mid-March to May 9 and a projected 2020 unemployment rate of 18%.

Earlier proposed program expansions withdrawn

Proclaiming “The state is not in a fiscal position to increase rates or expand programs given the drastic budget impacts of the COVID-19 Recession,” the administration has withdrawn several Medi-Cal program expansions that had been proposed in the January 2020 budget. Notably, California Advancing and Innovating Medi-Cal (CalAIM), which included several new dental benefits and pay-for-performance initiatives, has been delayed.

The expansion of Medi-Cal benefits to undocumented older adults (ages 65 and over) has also been withdrawn. Other cuts to previously proposed or expanded programs include withdrawal of programs for postpartum mental health, hearing aids, Medi-Cal enrollment navigators and many others. 

Dental practices throughout the state are on the brink of closure due to months of shuttered practices and new costs from increased infection control. Dr. Nagy added, “While CDA clearly understands the state’s significant budget dilemma, the administration’s proposal to redirect Proposition 56 funding to supplant Medi-Cal costs undermines the will of the voters. Cutting provider rates and eliminating most adult dental benefits will decimate the dental provider network that was expanding in recent years. A Medi-Cal Dental program without providers is an empty promise for the millions of Californians who rely on the program to keep them healthy.”    

With these concerns in mind, CDA will continue to advocate for substantial federal relief as well as a continuation of Proposition 56 provider reimbursement rates to ensure the bedrock of our health care systems in California is not destroyed. Having meaningful access to health care in California will be critical to the overall health of many millions of Californians. 

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