Arnold aims to terminate budget gap

Friday, February 29, 2008

SACRAMENTO, Calif. - Gov. Arnold Schwarzenegger proposed on Jan. 11 a 10% across-the-board cut to Medi-Cal provider rates as part of his sweeping plan to bridge a whopping $14.5 billion budget gap.
The proposed cut, which could go into effect as early as June 1, may force some providers to drop low-margin products like incontinence supplies and high-maintenance products like home oxygen therapy. Others may abandon Medi-Cal entirely.
"What does this mean for me?" said Mark Ehlers, owner of Ehlers Health Supply in Stockton, Calif. "I'm going to take a real long hard look about the middle of this year at phasing out of Medi-Cal."
Schwarzenegger's plan also proposes delaying Medi-Cal payments to improve the state's cash flow.
"You get paid, but not on time," said Bob Achermann, executive director of the California Association of Medical Product Suppliers. "These are disruptive changes for providers."
In January, the state legislature was reviewing Schwarzenegger's plan in a special session. In addition to a $4.7 billion cut to health and human services spending, the plan proposes cutting education spending by $300 per student per year.
"I can sympathize with Arnold," Ehlers said. "He's damned if he does and damned if he doesn't. We're in a world of hurt."