BILL ANALYSIS
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THIRD READING
Bill No: AB 1657
Author: Hertzberg (D)
Amended: 5/14/01 in Assembly
Vote: 21
SENATE HEALTH & HUMAN SERV. COMMITTEE : 9-0, 6/20/01
AYES: Ortiz, Haynes, Battin, Chesbro, Figueroa, Kuehl,
Romero, Vasconcellos, Vincent
SENATE APPROPRIATIONS COMMITTEE : 10-0, 7/9/01
AYES: Alpert, Battin, Bowen, Burton, Johannessen,
Karnette, McPherson, Perata, Poochigian, Speier
ASSEMBLY FLOOR : 74-0, 5/30/01 (Passed on Consent) - See
last page for vote
SUBJECT : County health care
SOURCE : State Auditor
DIGEST : This bill requires the State Auditor to evaluate
the financial capacity of the Los Angeles County Department
of Health Services to provide necessary health services to
the county's residents.
ANALYSIS : Existing law:
1.Requires every county to relieve and support all
incompetent, poor, indigent persons, and those
incapacitated by age, disease, or accident, lawfully
resident therein, when such persons are not supported and
CONTINUED
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relieved by their relatives or friends, by their own
means, or by state hospitals or other state or private
institutions.
2.Establishes the Medi-Cal Program, administered by the
Department of Health Services (DHS), to provide
comprehensive health care services to qualified,
low-income, aged, blind and disabled individuals and
establishes the Healthy Families Program, administered by
the Managed Risk Medical Insurance Board (MRMIB), to
provide low-cost, subsidized health, vision and dental
insurance to uninsured children who are not eligible for
no cost Medi-Cal with family incomes up to 250% federal
poverty level (FPL).
3.Establishes the Bureau of State Audits, headed by the
State Auditor. The duties of the Bureau of State Audits
are to examine and report annually upon the financial
statements prepared by the executive branch of the state
and to perform other related assignments, including
performance audits that are mandated by statute.
4.Creates the Joint Legislative Audit Committee to, among
other things, determine the policies of the Auditor
General.
This bill:
1.Requires the State Auditor to evaluate the financial
capacity of the Los Angeles County Department of Health
Services to render necessary health care services to the
residents of Los Angeles County.
2.Requires the State Auditor, in conducting the evaluation,
to do all of the following:
A. List and describe each of the proposals that have
been put forward to reduce expenditures or increase
revenues, and the current status of each proposal.
B. Determine to what extent proposals put forward are
complete and are likely to be effective in reducing
the gap between revenues and expenditures.
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C. Review projections of budgetary shortfalls to
independently determine if the assumptions that
underlie baseline revenue and expenditure estimates
for the Los Angeles County Department of Health
Services are reasonable for the period commencing in
2001 and ending in 2005.
D. Adjust the projections of budgetary shortfall, as
necessary.
E. Devise an accounting tool that can be used to track
progress made in dealing with the budget shortfall as
changes occur in the complicated set of revenues and
expenditures and as decisions are made that affect the
operations of the Los Angeles County Department of
Health Services.
F. Evaluate the overall effectiveness and timeliness
of the county's efforts to bring the revenues and
expenditures of the Los Angeles County Department of
Health Services into balance.
1.Requires the State Auditor to report their findings and
evaluation to the Legislature by June 1, 2002.
2.Makes various findings and declarations regarding the Los
Angeles County Department of Health Services, the
county's 1115 Medicaid Waiver, and how the financial
condition of the Los Angeles County Department of Health
Services will affect the quantity and quality of health
care service available to the county's low-income
residents.
Comments
This bill is intended to allow the Legislature to closely
monitor an evolving budget problem potentially affecting
the state General Fund and disrupting the delivery of
health care in the Los Angeles area.
In 1995-96, the Los Angeles County DHS faced a $655 million
budget deficit and was able to secure five years of
financial assistance from the federal government through a
Medicaid 1115 waiver. In June of 2000, the county, state
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and federal government negotiated a five-year extension of
the waiver. However, federal funds will decrease from $246
million in 2001-01 to $86 million in 2004-05, making it
necessary for the county health department to deal with the
imbalance between long-term revenues and current operating
expenses. As part of the waiver extension agreement, the
state has committed to provide $300 million in Medi-Cal
funding to the County DHS by providing cost-based
reimbursement under Medi-Cal for outpatient services.
According to the author, the Los Angeles County DHS has
notified the County Board of Supervisors that if major
changes are not made to either reduce costs or increase
revenues, that it will begin running major deficits by
2002-03. The deficit for 2002-03 is estimated at $184.6
million. Over the five-year period of the waiver the
cumulative deficit is estimated at $884 million. The
annual budget for the county is $2.6 billion, however, the
majority of that amount is state and federal funds.
The Los Angeles County Department of Health Services is the
second largest public health system in the nation. The Los
Angeles health department cares for 10 million residents,
is responsible for 2.5 million uninsured residents and
provides 85 percent of all uncompensated care in the
county. In 1999, the department provided 2.8 million
ambulatory care visits, 110,000 hospital admissions,
405,000 emergency room visits and 490,000 public health
visits. The county operates six hospitals, six
comprehensive health centers, 20 health centers, and 100
private/public clinics.
The Joint Legislative Audit Committee considers requests
for audits conducted by the State Auditor, and legislation
is not required for an audit, although bills in the past
have contained a provision requiring an audit by the State
Auditor.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
According to Senate Appropriations Committee:
Fiscal Impact (in thousands)
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Major Provisions 2001-02 2002-03
2003-04 Fund
2nd Audit report 120
General
Staff comments :
Note. The Joint Legislative Audit Committee (JLAC)
considers requests for audits conducted by the State
Auditor, and separate legislation is not required for an
audit. However, in the past bills have been enacted that
require an audit by the State Auditor. The Budget Act
contains a block of funding earmarked for audits in the
State Auditor's budget.
In this case, a request for the first portion of the audit
contained in the bill has already been approved by JLAC,
and is already funded in the proposed budget. Thus, the
only cost associated with the passage of this measure would
be for the second portion of the audit, and JLAC has
estimated that it would be approximately $120,000 from the
General Fund.
SUPPORT : (Verified 7/11/01)
State Auditor (source)
Los Angeles County Board of Supervisors
ASSEMBLY FLOOR :
AYES: Aanestad, Alquist, Aroner, Bates, Bogh, Calderon,
Bill Campbell, Canciamilla, Cardenas, Cedillo, Chan,
Chavez, Chu, Cogdill, Cohn, Corbett, Correa, Cox,
Daucher, Diaz, Dickerson, Dutra, Firebaugh, Florez,
Frommer, Goldberg, Harman, Havice, Hollingsworth, Horton,
Jackson, Keeley, Kehoe, Kelley, Koretz, La Suer, Leach,
Leonard, Leslie, Liu, Longville, Lowenthal, Maddox,
Maldonado, Matthews, Migden, Mountjoy, Nation, Negrete
McLeod, Oropeza, Robert Pacheco, Rod Pacheco, Papan,
Pavley, Pescetti, Reyes, Richman, Runner, Salinas,
Shelley, Simitian, Steinberg, Strickland, Strom-Martin,
Thomson, Vargas, Wayne, Wesson, Wiggins, Wright, Wyland,
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Wyman, Zettel, Hertzberg
CP:sl 7/11/01 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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