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How Reform Can Save California (next Time)

Anthony Wright is executive director of Health Access California, the statewide health care consumer advocacy coalition. He blogs daily at the Health Access WeBlog and is a regular contributor to the Treatment.

It's a shocking number. Over two million Californians could lose or be denied health care coverage under Governor Arnold Schwarzenegger's health care budget cuts proposed in the past two weeks, according to a new report by Health Access.

Even with California's very severe budget crisis, there is the alternative of raising taxes and revenues-but that been dismissed by the Governor and particularly by Republican state legislators who hav signed "no new tax" pledges, and whose votes are needed under California's two-thirds requirement to pass any budget or revenues.

That requirement is a crucial part of why the state is in such a hole. In order for the legislature to get two-thirds votes to past pass budgets, they had to agree to tax cuts-like a $6 billion cut in vehicle license fees, which the Governor campaigned on, helping make the bed he now lies in. Even last year, while making very tough cuts and some temporary taxes, some legislators demanded--and got--various corporate tax giveaways.

But as bad as it is, this structural deficit is not the biggest part of the California's problem. The main reasons for the crisis is that we are in the worst economic time since the great Depression-all states are feeling this, even if California is harder hit than most states, whether with the rate of foreclosures, or a particularly high unemployment rate of 11 percent.

The great tragedy of this situation is that states seek to make cuts to safety-net health and human services at exactly the time that people most need them. As people lose jobs and income, Medicaid and other programs see increased enrollments during economic downturns, which makes the programs more expensive at the same time that state revenues are falling.

Those crafting federal health reform have started to think about this. In the Senate Finance Committees' list of options for reform, there's an appealing prospect with the opaque title of the "Automatic Countercyclical Stabilizer."

In essence, it would increase the federal government's share of paying for Medicaid during bad economic times. It would be similar to the enhanced matching funds now provided to states by the economic recovery package, but it would be a matter of policy, rather than something that is provided only when there's a willing Congress and President.

Right now, at least while they are taking the billions of dollars in enhanced federal match, states are appropriately not allowed to decrease eligibility and enrollment. Governor Schwarzenegger is seeking an exception for that rule for Medicaid eligibility cuts, which would require an Act of Congress that he is not likely--and shouldn't--get.

But there's no similar federal prohibition for the Governor's new proposal to fully eliminating Healthy Families, our state child health
insurance program that covers nearly a million low-income children, along with a range of other key programs. So stay tuned for what happens in California.

Under any goal of universal coverage, and especially under an individual requirement to have coverage, any such eligibility cuts as proposed by governors in California and elsewhere simply should not be allowed. It's both cruel and unworkable to have a health system that only provides coverage during good economic times, but that is allowed to yank coverage out from under people during bad times.

But then states will need help to be able to meet that commitment, when balanced budget requirements and bad economic times threaten to cut off the coverage and care that we need when we need to.

--Anthony Wright