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By Tim Hunt

Bright state revenue forecast obscures major financial issues

Uploaded: May 29, 2014

California revenues are booming, but so are expenses.
Governor Jerry Brown announced earlier this month that the May revision of his January budget proposal would contain $2.4 billion in additional revenues. That was followed by the statement that Medi-Cal expenses—the program for indigent people—have soared. Thank ObamaCare.
The situation in the Legislature will get even more interesting because the non-partisan Legislative Analyst's Office released its report last week that said its review said that revenues would be almost $5 billion more over the next fiscal year. For Democrats interested in restoring programs that were cut, that pot of money is very inviting.
The governor, beyond the season of life that higher office is a consideration, took a pretty conservative posture, proposing to pay some of the $200 billion debt, save money in a fund for when income taxes on capital gains turn down again (they will) and take a careful path forward. The state still faces a huge unfunded liability in the teachers' pension fund—the governor's proposal would increase employee's contributions by 3 percent and increase school district's by nearly 2 ½ times and it would still take 30 years to close the gap with a generously estimated 7.5 percent annual return. For those familiar with investments, the alarm is obvious.
The Medi-Cal situation is even more troubling. The state's aggressive outreach to sign up people for ObamaCare resulted in a nearly 50 percent increase in enrollment—11.5 million compared to 7.5 million in July. The governor noted that about 30 percent of the population will be covered by Medicaid (up from 20 percent)—ever read articles about California as the state with an extremely wealthy few and a very poor mass. You are looking at it.
As Alleysia Finley reported in the Wall Street Journal, California is one of the states that accepted the federal bribe to pay 100 percent of the ObamaCare costs for three years if states raised eligibility to 138 percent of the federal poverty line. Enrollment was a raging success—attracting both 1.4 million new enrollees that qualified under ObamaCare plus 800,000 who qualified under previous standards. The bill to the state—which must pick up 50 percent of the cost for those eligible under the prior standards-- $1.2 billion.
The ugly financial numbers do not address the more important issue—providing health care. At the same time that enrollment has soared, the governor is proposing yet another 10 percent reduction in reimbursement for physicians treating Medi-Cal patients. The rate already is the lowest in the country—under the more generous ObamaCare numbers doctors receive $42 per Medi-Cal patient—that plummets to $21.60 next year according to a report in the Contra Costa Times.
Those trivial state payments are why many physicians will not accept new Medi-Cal patients and it obviously is going to get worse.