BILL ANALYSIS ------------------------------------------------------------ |SENATE RULES COMMITTEE | AB 1657| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 445-6614 Fax: (916) | | |327-4478 | | ------------------------------------------------------------ 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 AB 1657 Page 2 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. AB 1657 Page 3 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 AB 1657 Page 4 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) AB 1657 Page 5 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, AB 1657 Page 6 Wyman, Zettel, Hertzberg CP:sl 7/11/01 Senate Floor Analyses SUPPORT/OPPOSITION: SEE ABOVE **** END ****