BILL ANALYSIS Ó Senate Appropriations Committee Fiscal Summary Senator Christine Kehoe, Chair SB 1081 (Fuller) - Medi-Cal: demonstration projects Amended: April 10, 2012 Policy Vote: Health 8-0 Urgency: Yes Mandate: No Hearing Date: April 30, 2012 Consultant: Brendan McCarthy This bill does not meet the criteria for referral to the Suspense File. Bill Summary: SB 1031 would authorize a nondesignated public hospital to operate a Low Income Health Program if it is located in a county that does not have a county hospital and the county does not intend to operate a such a program. Fiscal Impact: Unknown, but likely minor, state costs. All state costs to be fully reimbursed by participating nondesignated public hospitals. Additional local government reimbursements up to $2.7 million (federal funds). Background: Under current law and the existing federal Medi-Cal hospital waiver, locally operated Low Income Health Programs are authorized to extend health care coverage to individuals between 19 and 64 years of age, with incomes up to 200 percent of the federal poverty level, who are not otherwise eligible for Medi-Cal. (The operator of the program can set more restrictive enrollment criteria.) The costs of Low Income Health Programs are split between local funds and federal funds at a 50 percent federal participation rate. Under current law, cities, counties, cities and counties, a consortium of counties, or a health authority may establish a Low Income Health Program. Nondesignated public hospitals (public hospitals that are not one of 22 specified University of California or county public hospitals) are not permitted to operate Low Income Health Programs. By January 1, 2014, participants in Low Income Health Programs will be transitioned either to an expanded Medi-Cal program or will be required to purchased health insurance through the SB 1081 (Fuller) Page 1 California Health Benefit Exchange. Low Income Health Programs are operated and financed by local government entities and the federal government. Current law prohibits the use of General Fund monies for their operation. The Department of Health Care Services may play a role in the drawdown of federal funds and the distribution of those funds to local government agencies. Current law requires any administrative costs incurred by the Department to be reimbursed by program operators. As of February 2012, about 340,000 participants were enrolled in Low Income Health Programs. Three counties (San Luis Obispo, Tulare, and Santa Barbara) have put their development of a Low Income Health Program on hold and Fresno County has decided not to proceed with one. There is no nondesignated public hospital in Fresno County, so this bill would not apply there. Proposed Law: SB 1081 would authorize a nondesignated public hospital to operate a Low Income Health Program provided that it is located in a county that does not have a county hospital and does not intend to operate a Low Income Health Program. Staff Comments: At this point, staff is only aware of plans in Tulare County for a nondesignated public hospital to set up a Low Income Health Program under this bill. The sponsors of this bill estimate that between 7,000 and 8,000 residents of Tulare County could be enrolled in a Low Income Health Program. The sponsors estimate that up to $2.7 million in federal funds could be drawn down, based on current expenditures in Tulare County for care of the medically indigent. This bill is an urgency measure. Because federal funds for Low Income Health Programs are continuously appropriated in statute and this bill expands the entities that may participate in that program, this bill makes an appropriation.