BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | AB 85|
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THIRD READING
Bill No: AB 85
Author: Assembly Budget Committee
Amended: 6/13/13 in Senate
Vote: 21
ASSEMBLY FLOOR : Not relevant
SUBJECT : Budget Trailer Bill: Health and human services
SOURCE : Author
DIGEST : This bill establishes county financing mechanisms to
determine county indigent health care savings as a result of the
federal Patient Protection and Affordable Care Act (ACA) and
makes changes to funding mechanisms governing the 1991
Realignment of health and human services programs, as well as
the funding of California Work Opportunity and Responsibility to
Kids (CalWORKs) grants.
ANALYSIS : The Local Revenue Fund under 1991 Realignment
provides a dedicated funding source to: (1) help pay county
contributions toward various social service and health programs
(Foster care, Adoptions Assistance, Child Welfare Services,
In-Home Supportive Services (IHSS), CalWORKs, and California
Children's Services), and (2) support county indigent health,
public health, and mental health programs. The Local Revenue
Fund receives both sales tax and vehicle license fee revenue.
Existing law establishes a process by which annual growth in
these revenues is allocated amongst the various programs
supported by 1991 Realignment.
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The ACA increases access to both private and public health care
coverage. Under the ACA, county costs and responsibilities for
indigent health care are expected to decrease as more
individuals gain access to insurance. Pursuant to Welfare and
Institutions Code Section 17000, counties are responsible for
indigent care. Under the 1991 Realignment, the state provides
about $1.5 billion to counties to assist counties in meeting
their obligations. To receive these funds, counties must meet a
maintenance-of-effort (MOE) requirement of $343 million from
their own resources.
This bill:
1. Establishes a 5% increase to CalWORKs grants, effective March
1, 2014, and establishes a mechanism for determining whether
sufficient funds are available to provide future grant
increases. The estimated cost for the 5% increase is
approximately $50 million in 2013-14, with an annualized cost
of approximately $150 million, depending on caseload changes.
More specifically, this bill:
A. Specifies that grant increases will be funded through
a new Child Poverty and Family Supplemental Support
Subaccount, which consists of redirected 1991
Realignment general growth funds.
B. Requires the Director of the Department of Finance
(DOF) to annually, as part of the January 10 and May 14
budget process, determine both the cost of continuing to
provide the previously implemented grant increases
pursuant to this mechanism and the amount of revenue
projected to be in the Child Poverty and Family
Supplemental Support Subaccount for the current and
budget year.
C. Prescribes that if the Child Poverty and Family
Supplemental Support Subaccount is projected to have
more funds than are needed to cover the previously
implemented grant increase costs, adjusted for caseload,
a calculation will be done to determine the additional
grant increase percentage that can be afforded for the
following fiscal year.
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D. Specifies that, beginning with October 1, 2014, to
the extent it is determined that a new grant increase
can be afforded, that grant increase would be effective
the upcoming October 1. The final projections depend on
the revenue projections adopted in the Budget Act. Upon
enactment of the Budget, the Director of DOF will
provide legislative notification regarding any resulting
grant increase.
E. Specifies that previously implemented grant increases
will not be adjusted downward if it is projected that
revenues in the Child Poverty and Family Supplemental
Support Subaccount are not sufficient to cover the
entire cost of the grant increases. In these
situations, current provisional authority will be used
to ensure that grants are funded. Additional grant
increases pursuant to the new mechanism will not be
provided until and unless the ongoing cumulative costs
of all prior grant increases provided by this process
are fully supported by the Child Poverty and Family
Supplemental Support Subaccount.
2. As part of the changes to 1991 Realignment, sunsets current
accounts within the Local Revenue Fund and establishes new
accounts within the Local Revenue Fund, effective July 1,
2013.
3. Establishes the Family Support Subaccount and the Child
Poverty and Family Supplemental Support Subaccount at the
state level and establishes the family support account at the
local level.
4. For 2013-14, moves $1 billion in sales tax from the Social
Services Subaccount to the Health Subaccount.
5. Establishes the ongoing structure, which adds the Child
Poverty and Family Supplemental Support Subaccount as an
account that receives base funding from the dedicated sales
tax.
6. Consistent with existing law impacting the CalWORKs MOE
Subaccount, prohibits local governments from reallocating
money between the new family support account and other local
accounts in the local health and welfare trust fund.
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7. Establishes choices for counties to decide how their
contribution to the Family Support Subaccount will be met.
This contribution represents the estimated savings counties
would realize as a result of the decrease in indigent health
care costs as more individuals gain access to insurance under
the ACA.
A. County Medical Services Program (CMSP) . For the 34
counties that were part of the CMSP in 2011-12, this bill
generally specifies that the amount of payments to the
Family Support Subaccount shall equal 60% of the program's
1991 health realignment funds, MOE, and the amount the
CMSP counties collectively contribute to the CMSP
Governing Board.
B. Designated Public Hospital (DPH) Counties and
Non-DPH/Non-CMSP Counties . For the 12 counties operating
DPHs and the 12 counties that do not operate DPHs and did
not participate in CMSP in 2011-12, this bill requires a
choice between Option (1) a formula that measures and
compares actual county health care costs and revenues or
Option (2) contributing 60% of the county's health
realignment allocation plus a portion of its MOE. This
bill contains Los Angeles County-specific definitions on
revenue and costs to be considered under Option (1).
Under Option (1), a county retains 20% of the indigent care
savings and 80% is deposited into the Family Support
Subaccount; the state's share of savings is limited to the
funding spent on indigent health (i.e, Realignment funding
for public health is protected); and a "true-up process" is
established whereby a reconciliation will occur to
determine the extent actual savings differ from initial
estimates and funding could be adjusted. Additionally,
since Option (1) is cost-based, it includes incentives for
cost containment and maximizing enrollment in coverage, and
also accounts for the remaining uninsured being served by
the county, consistent with today's level of service.
Savings, from all counties, are estimated to be $300
million in 2013-14. For counties that chose Option (1), the
state will revise the 2013-14 estimates in May and if the
savings are estimated to be lower than $300 million, the
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money will be provided to the county for health care costs.
8. Establishes safety-net protections for DPH counties. This
includes requiring plans, for the first three-years, to
default 75% of individuals who do not choose a primary care
provider to a county system until certain targets are met;
requiring plans to pay 100% of the costs to public hospital
systems; providing for a minimum of 75% of the rate range
available with respect to all enrollees who are newly
eligible for Medi-Cal; and requiring the Department of Health
Care Services (DHCS) to submit an application to the federal
Centers for Medicare and Medicaid Services for a subsequent
demonstration project that maintains a comparable level of
support for delivery system reform in the county public
hospital systems as is provided under the current 1115
Medicaid waiver.
9. Creates the County Health Care Funding Resolution Committee.
This committee is made up of: (a) one person from the
California State Association of Counties, (b) one person from
DHCS, and (c) one person from the DOF. It allows the
counties to petition to switch to a mechanism option
described in Section 7. Additionally, the committee resolves
issues related to differences in historical data being
applied to calculations and the data being provided by the
county and the department.
10.Pursuant to a schedule developed by the Director of Finance,
allocates monies from the Child Poverty and Family
Supplemental Support Subaccount (state level), to the family
support account (local level). Requires all funds that are
allocated to be used for grant increases. Any funds that are
not allocated will remain at the state level, and be
available for allocation in the following fiscal year.
11.Specifies that transfers from the family support account are
in addition to counties' share-of-cost.
12.Directs the State Controller to move money monthly to the
family support account to be used by counties to pay an
increased county contribution towards CalWORKs costs.
13.Establishes short-term and ongoing methods for transferring
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funding from the Health Subaccount to the Family Support
Subaccount.
14.Requires the State Controller to offset a transfer of sales
and use tax funds from the Social Services Subaccount to the
Health Subaccount with an equal transfer of distributions of
Vehicle License Fee funds to the Social Services Subaccount.
15.Establishes how general growth in the sales tax account will
be allocated among: (a) mental health (the same as under
existing law), (a) health (set at 18.4545%), and (c) the new
Family Supplemental Support Subaccount (the remainder).
There will be no longer be general growth funding for the
Social Services Subaccount.
16.Requires that funds deposited in the family support account
be used only to pay an increased contribution toward CalWORKs
grants.
17.Requires the Director of DOF, DHCS, the Department of Social
Services, and the State Controller's Office to work together
to ensure that this legislation is implemented as the
Legislature intended.
18.States an intent to review the funding formulas established
in Section 7 in the event that the federal government enacts
reforms to federal immigration laws that create a pathway to
citizenship for otherwise undocumented persons, and that that
pathway does not provide for enhanced federal funding.
Requires DHCS to analyze the potential impacts of such a
change on county health care expenditures, and to report this
information to the appropriate fiscal and policy committees.
FISCAL EFFECT : Appropriation: Yes Fiscal Com.: Yes
Local: Yes
JL:d 6/14/13 Senate Floor Analyses
SUPPORT/OPPOSITION: NONE RECEIVED
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