BILL ANALYSIS
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
771 (Alquist)
Hearing Date: 1/21/2010 Amended: 12/16/2009
Consultant: Katie Johnson Policy Vote: Health 6-1
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BILL SUMMARY: SB 771 would extend the suspension of the
mid-year status eligibility reporting requirement for children
who are Medi-Cal beneficiaries beyond December 31, 2010, in the
event Congress passes and the President signs legislation that
would maintain or extend the Medicaid enhanced Federal Medical
Assistance Percentage (FMAP) provided to states in the American
Reinvestment and Recovery Act of 2009 (ARRA).
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Fiscal Impact (in thousands)
Major Provisions 2010-11 2011-12 2012-13 Fund
Continuation of 12-month $2,470 $40,000 - $92,000 $0 General*
continuous Medi-Cal eligibility $2,470 $40,000 -
$92,000$0Federal*
for children
*Assumes Medi-Cal costs are shared 50% General Fund and 50%
federal funds and that the enhanced FMAP is extended through
July 1, 2012.
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STAFF COMMENTS: SUSPENSE FILE.
Existing federal law establishes Medicaid, also known as
Medi-Cal in California, which provides comprehensive health
benefits to eligible low-income individuals including the aged,
blind, disabled, pregnant women, and children. The State
Department of Health Care Services (DHCS) administers Medi-Cal.
In California, Medi-Cal costs are generally shared 50 percent
General Fund and 50 percent federal funds. However, in February
of 2009, President Obama signed the American Reinvestment and
Recovery Act (ARRA) into law. As a result, the Federal Medical
Assistance Percentage (FMAP) increased from 50 percent to 61.59
percent for California, based on the state's unemployment
figures. Thus, retroactively from October 1, 2008, through
December 31, 2010, the federal government would pay for
approximately 62 percent and the state General Fund would pay
for 38 percent of benefit-related Medi-Cal expenditures,
provided there was no action taken by California to diminish
program eligibility.
California had recently taken an action to diminish Medi-Cal
eligibility for children by instituting mid-year status reports
commencing January 1, 2009. Prior to mid-year status reports,
children were required to submit annual eligibility
redetermination forms for Medi-Cal enrollment. Mid-year status
reporting means that children were instead required to submit
eligibility redetermination forms every 6 months.
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SB 771 (Alquist)
In order for California to be eligible to receive the
approximately $3 - 4 billion in enhanced federal funds under
ARRA, SB X3 24 (Alquist), Chapter 24, Statutes of 2009,
suspended the requirement for children to renew their Medi-Cal
eligibility every 6 months and instead required them to renew
their eligibility every 12 months. The suspension will be lifted
when ARRA expires on December 31, 2010, and children would again
be required to renew their Medi-Cal eligibility every 6 months
until July 1, 2012, when annual eligibility reviews recommence.
Mid-year status reporting commenced January 1, 2009, as a
General Fund cost-saving measure. When SB X3 24 suspended it,
the Department of Finance estimated a cost, or a loss of
savings, in the tens of millions of dollars in General Fund.
The DHCS FY 2010-2011 budget estimates that if the mid-year
status reports take effect on January 1, 2011, upon the
expiration of ARRA funding, DHCS is expected to save $4.94
million in total funds in the latter half of FY 2010-2011, or
$2.47 million federal funds and $2.47 million General Fund,
assuming a 50 percent General Fund, 50 percent federal fund
FMAP. The savings would result because DHCS estimates that
thousands of children would be disenrolled from Medi-Cal when
they are required to reconfirm eligibility biannually.
This bill would provide that mid-year status reporting may
continue to be suspended in the event Congress approves
legislation that would either maintain or extend increased
federal financial participation.
Suspending mid-year status reporting would likely be a condition
imposed on the state in order to continue to receive enhanced
federal funds of approximately $2 billion in 6 months, since it
was necessary to receive the enhanced FMAP under ARRA.
Based on the Medi-Cal estimates above, it would cost $2.47
million in federal funds and $2.47 million in General Fund for
two quarters-January 1, 2011, through June 30, 2011. Congress is
currently considering the Jobs for Main Street Act, or HR 2847,
which includes a provision that would extend ARRA funding for 2
quarters-from January 1, 2011, through June 30, 2011.
Alternatively, if mid-year status reporting were suspended for
18 months, January 1, 2011, to, July 1, 2012, costs in FY
2010-2011 would be $2.47 million in federal funds and $2.47
million in General Fund, and in FY 2011-2012 would be estimated
to be between $40 million and $92 million federal funds and
between $40 million and $92 million General Fund, depending on
the change in DHCS fiscal assumptions between FY 2009-2010 and
FY 2010-2011 in their budget estimates. The exponential increase
in costs in FY 2011-2012 are due to the monthly increased number
of children not responding to mid-year status report mailings.
The actual total cost of this bill is currently unknown and
would depend directly on the number of months for which Congress
agrees to continue enhanced FMAP prior to July 1, 2012.
Although the bill's construction seems to build on the current
mid-year status reporting suspension related to enhanced FMAP
under ARRA, since the bill does not define the level of
"increased federal financial participation," one could presume
that the
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SB 771 (Alquist)
suspension, and the associated costs, would be triggered if any
act of Congress maintains or extends an increased FMAP for
California, including the pending ARRA extension for 2 quarters
(6 months) in the Jobs for Main Street Act, or HR 2847, the FMAP
changes in the federal health reform bills, or HR 3962 and HR
3950, or an act that would increase California's base FMAP, as
proposed by the Governor in his FY 2010-2011 budget.
In order to mitigate potential FY 2011-2012 costs, staff
recommends that the bill be amended to suspend the mid-year
status reporting requirement only if Congress amended ARRA to
extend the enhanced FMAP for two additional quarters.