Assembly Budget Subcommittee No. 1 on Health and Human Services

Good afternoon. This is the Assembly Budget Subcommittee Number One on Health and Human Services. Today's hearing is focused on healthcare access, affordability and workforce. One note about workforce about our hearing is that on April 17 we will cover behavioral health issues, including behavioral health workforce, and therefore this is not the focus of today's hearing. We will be discussing the first 13 issues in today's agenda, while the remaining four are non-discussion items.

As usual with non-discussion items, we welcome public comment on them at the end of the hearing, should there be any. I want to remind everyone that all public comment on all issues on the agenda will be taken at the end of the hearing. After the last issue has been presented, we will first take public comment from individuals who are here in the hearing room, followed by public comment from individuals on the phone.

The public comment call in number is on the Subcommittee's website and it also will be on the live stream screen once public comment has started, and I will also share it right now. The phone number is 877-692-8957 and the public access code is 1315127 with that, let us begin with our first panel. Issue one is on the proposal to transfer 333.4 million from the Healthcare Affordability Reserve Fund to the General Fund. This proposal will be presented by the Department of Finance. Please begin.

Thank you, Mr. Chairman and Members. Matt Aguilera, Department of Finance. The Budget Act of 2022 provided a state contingency appropriation of 304 million from the Healthcare Affordability Reserve Fund in case more generous federal subsidies were not extended beyond 2022 or if the state implemented healthcare affordability measures. Fortunately, the Federal Government extended the subsidies for three years, and the current service level for California remains without any reduction in services.

The Legislature also passed SB 944, which would have required Covered California to reduce cost-sharing if federal premium subsidies were extended. While citing the merits of the Bill and his pleasure of working with the Legislature to enact coverage expansions through Medi-Cal, the Governor vetoed the Bill due to concerns over a downturn in revenues, sustainability for a new state-only program, and the need to hold these funds in Reserve until after the federal subsidies end.

Since that time, state revenues have declined further and as such, the Governor's Budget now proposes to use these reserves temporarily to help the state's budget situation. Trailer bill language would implement the proposal and it is posted on the finance web page. Specifically, it would revert the $304 million contingency appropriation and direct the controller to transfer the Reserve balance of 333.4 million to the General Fund.

The funds would be repaid to the Reserve Fund after the subsidies end. And with that, I'm happy to answer any questions you might have or move on to the questions in the agenda, whatever you would prefer.

Please address the questions in the agenda and then we will continue with the panel.

Okay. The first question is, is the Administration aware of the fact that it was clear legislative intent to use the individual mandate penalty revenue to reduce the cost of health care through Covered California? The answer is yes. The second question, for what reasons is the Administration proposing to do this through trailer bill as compared to provisional language? I think in this case, either trailer bill language or budget bill language would suffice, and we just chose trailer bill for this particular proposal.

The third question is, is this intended to be a loan? If yes, for what reasons does the proposal not call it a loan and include the standard language usually included for loans to the General Fund? This proposal is not a loan. We're proposing to sweep the Fund balance and repay the funds after the subsidies end. The question four is, how much individual mandate penalty revenue is collected annually? The answer is roughly $330 to $350 million annually.

Question five is, has revenue in the Fund in prior years not been expended, and if so, what happened to those funds? These revenues from the penalty accrue to the General Fund, which is current law. So the funds have been used just for overall state budget priorities. Question six, how much revenue has been collected from individual mandate penalties that has not been used to reduce the cost of health care for Californians covered through Covered California?

The federal subsidies maintain the current service level, so these funds have been used for overall state budget priorities. What's the justification for not reducing the cost of health care at the start of a recession when there is new discretionary spending in the Governor's Budget and very large reserves? The answer is, given the economic uncertainties, continued declines in revenues, and competing priorities for available funds, that's what warrants the substantial Reserve reflected in the Governor's Budget. And that covers all the questions in the agenda.

Thank you, Department of Finance. Next, we will have Beth Cappell with Health Access, who is replacing Diana Douglas, who could not be here. Ms. Cappel.

Thank you, Mr. Chair and Members. On day one of his Administration, Governor Newsom proposed an individual mandate and committed that the revenues from that individual mandate would be used to improve affordability. That money has not been used. Our estimate is that between 1.2 and $1.3 billion has been collected. It is apparently swept into the General Fund on an ongoing basis. That was not the intent. We had serious questions about the individual mandate.

Many of the Californians who do not obtain coverage do not obtain coverage because they regard it as unaffordable. I want to tell you that last week Covered California discussed increasing the deductible for the standard silver plan to $5,400 a year and the maximum out-of-pocket to over $9,000 a year. Remember that most people in Covered California make $25 to $50,000 a year. We're asking them to spend months of income on the deductible.

And yet we are taking this money that the Governor promised on day one in his day one proclamation to help with affordability and putting it into the General Fund. We are opposed to this proposal for that reason. I'd also add that as of last week, Covered California released new survey data indicating about half of their enrollees skip or delay doctor visits and skip or delay filling prescriptions.

And yet here we have a proposal that will continue these deductibles of thousands of dollars and doctor visits of $50 for a primary care visit and $90 for a specialist. Is it any wonder that people don't go to the doctor when they're asked to pay $90? So for those reasons, we are opposed to this proposal and appreciate the Committee hearing it.

Next, we will hear from Luke Koushmaro with the Legislative Analyst Office.

Thank you, Luke Koushmaro with the Legislative Analyst Office. Given the state's budget condition, we find that the proposal merits consideration. However, it may not be consistent with legislative priorities. To provide a little more background. Previously, the state established a three year premium program from 2020 to 2022 that would use General Fund to provide premium subsidies. In 2021, Congress approved enhanced federal premium subsidies that supplanted the state subsidies, replacing them and freeing up the General Fund that would have been used for those.

The state set aside the 333.4 million that's now in the Healthcare Affordability Reserve Fund, using this freed-up funding. Since that time, there has been an extension of the federal premium subsidies through 2025. However, prior to that extension, when the Legislature was considering the budget package for last year, it was unclear whether those extensions would happen, which is what led to the creation of the California Premium Subsidy Program, which would provide an ongoing subsidy program for Covered California.

The state program would only partially replace the federal subsidies when they expire. However, in anticipation that the federal funding might be extended for these premium subsidies, the budget package also included a language stating that the funds could be used to provide additional financial assistance beyond premium subsidies on an annual basis to support Covered California consumers. And I would use the Healthcare Affordability Reserve Fund in the first year and then once that funding was depleted, would revert to using General Fund in the following years.

The Governor's Proposal, in addition to this temporary transfer from the Healthcare Affordability Reserve Fund to the General Fund, would also not appropriate the planned General Fund for premium subsidies beginning in 23-24 through 25-26. We find that while the proposal is not consistent with the past priorities of the Legislature, it could merit consideration given the budget situation because it would not reduce the level of financial assistance that Covered California consumers currently receive, although it could have uses to provide additional affordability assistance.

However, we note that if the Legislature chooses to maintain the funding to provide additional financial assistance, it would exasperate the budget problem and additional funding would be needed to be freed up somewhere else in the budget to address this shortfall. Thank you.

Thank you. I will now bring it up to the dais for questions from Members. Dr. Wood?

Thank you. Thank you, Mr. Chair. Ms. Cappell, you said that... so we've been collecting this, and now it's over $300 million a year for several years. The clear intent of the Legislature was that this money was meant to go to affordability, and for three years, those years, it's been swept into the General Fund. And was that applied then to affordability programs as far as we can tell?

There was one year, as the LAO, I believe, said, when Covered California did do premium subsidies, state premium subsidies, when the Federal Government acted, they backed out that money partly because of the lag time. When we all go to file our taxes on April 15, or I guess it's now October 15, we will be filing for the prior year. There was a need for General Fund funding initially.

So I remain unclear as to whether any of the actual mandate penalty revenue has gone to the affordability help or whether in year one we were using General Fund because of the lag in collecting those revenues. And so I wish I had a better answer to your question, but in any case, we heard Finance today, they seem to be sweeping what they're collecting now.

Yeah, I guess the word sweep is the disturbing piece of this. I remember this thing called Prop 56, where a previous Governor swept money, and of course, that was all gone. And while it says, while you have said from Finance, there is an intent to repay this but won't call it a loan means you don't. I'm sorry. When you intend to repay something, it implies a loan but they're unwilling to call it a loan and create terms for that.

$5,400 premium for the silver plan is not affordable. 9000. Over 9000 out of pocket for somebody is not affordable. It's no wonder people aren't going to the doctor. I think there was a recent PPIC poll in the last several years that said 85 plus percent of people in California consider the cost of health care to be very important. And we're doing everything we can to try to improve affordability.

But except the mandate, which was designed to improve affordability, is being swept for other purposes in times, honestly, when the budget was robust. So I'm sorry, I find this unacceptable from my perspectives, and I would hope that the Legislature would reject this.

Thank you. I'll keep it with the Chair for a second, if I can. I'd like us to dig in a little bit about this intention to be a loan or not. You said a few times that it was temporarily and that it would be reverted back. So why are we unwilling or unable to use language similar to loans that we do and other parts of our budget?

Yeah, I think the way that we have it structured, it would provide the state with the maximum flexibility. As you know, we do track out-year issues that impact the budget and in our long-term forecast. But the state budget is one year at a time, and we go through our deliberative state public process to craft our budget every year based on the state of the economy and the funds available.

So this particular item we are tracking in our long-term expenses with the intention of repaying the funds when the subsidies end. And doing so the way we have it structured would give the state the maximum flexibility. But I think as far as our proposal is not to structure it as a loan.

Your comment there said it was negotiations, that it was back and forth between the Administration and Legislature. And thus last year we had entered into a negotiation and wrote the law to appropriate the funds that I'm struggling to understand why those funds were not spent as legislative intent was clear with that funding. And so I'd like to understand how we're comfortable now to take those funds and to sweep them into the General Fund.

When through negotiations, we had negotiated and appropriated those funds with clear intent, how are we now comfortable to sweep those funds to the General Fund?

I think the purpose of those funds in question was a contingency because we didn't know what the Federal Government was going to do. And since the Federal Government acted and bought out the state money, that explains why the contingency is not needed in the governor's view.

We heard from the LAO that the subsidies which the Federal Government had were higher than the state was suggesting. Were there other opportunities for us to provide additional financial assistance outside of what was being provided within those subsidies, and why did we choose not to follow through with those actions?

The Legislature passed SB 944, which would have created a state program, and the Governor vetoed that Bill due to concerns over the decline in revenues that were occurring at that time and since that time have continued at greater levels. So that was some of the concerns that were identified in the message.

The Governor did sign, and it is Dr. Wood's Bill AB 2530. I believe that extended Covered California benefits to union workers who were striking, and that was not funded in the governor's January budget and would have seemed ideal for us to use this Reserve Fund to help to support. And I'm wondering now if we're going to sweep this to the General Fund. Do we intend to fund Dr. Wood's Bill, which was again signed into law by the Governor?

Yeah, that Bill in question is subject to an appropriation which was not provided through the Bill nor the budget process specifically for that purpose.

Do we not see this crossover, though, where the Legislature put 300 million to help with financial assistance, signed a Bill by Dr. Wood, but now you're saying we didn't appropriate funds to help with financial assistance? It would seem that we're talking past each other here, and I think what I'm trying to have the Administration here is real legislative intents to address the affordability issues that so many Californians are struggling with.

So I'd like to get a sense of how we're okay both signing the Bill and then saying there's no funding while sweeping funds into the General Fund. How does that make sense?

Yeah, I think it's just the nature of the process over time. These decisions are being decided based on the latest economic information, and we understand that these are tough choices for the Legislature and the Governor in making these budget decisions. And we understand that there's a lot of needs in the public for services. So we understand the difficulties of making these decisions.

I'd like to bring Ms. Cappell in if I can. You spoke about how half of all enrollees are struggling. Can we put into context the decisions that the Administration is making and what effect this would have on average Californians who are trying to make health care affordable?

As we understood the Legislature's intent last year, it was that if the Federal Government extended the assistance with premium subsidies, that there would be help with cost sharing. Dr. Wood's Bill, which has a fairly small budget ask associated with it on the order of one or $2 million, was assumed to be part of this larger puzzle, as you've correctly identified.

I would add that Secretary Ghaly, in briefing advocates on this budget proposal, when queried about whether what would happen after the federal subsidies expired, said that they would think about what should happen then. So without the kind of language you've been querying about, about loans, without the clarity about how much money has been collected, which I didn't hear Finance actually answer that question. We have our arithmetic to add up on a per-year basis how much it is.

Without that kind of clarity that you've identified, this will simply disappear into the General Fund and never be used, as the Governor said on the first day of his Administration, and as this Legislature has repeatedly intended.

So I'm going to ask finance again if we can. Under question six, we had asked how much revenue had been collected. You simply had stated that it had been swept into the General Fund. Can you quantify how much revenue has been collected since the individual mandate has begun?

I would say I have not used the term swept, but just the nature of the penalty is that it accrues to the General Fund on the natural. So that's not something that the Administration is doing. It's just the way that the law is set up on that revenue stream.

Do we have a dollar amount? How much revenue was?

Yeah, the amount that's collected is the 330 million to 350 million annually.

In your comments, you said, I heard, you heard sweep, swept, sweeping., swepting. I don't know. I mean, I heard you use the word sweep. We intend to sweep this money is what I heard you say.

My notes say the same.

I apologize for the statement.

Sorry, Mr. Chair.

How do we ensure that these dollars ultimately get spent as they were initially intended by legislative intent? How do I stay focused on making sure that we can address health care affordability?

I think the Administration's concerns remain on. We have concerns with starting up a new state-only program and concerned with sustainability for new programs given the current economic situation.

Do you want to make any comments about reducing during a recession? Is this the right time for Californians as they're starting to experience many of the cost pressures? How do we ensure that we're addressing affordability effectively?

I think through the budget process, priorities are determined. The Governor's Budget continues the Medi-Cal expansion, which was clearly a priority, and his budget maintains that for those on the lowest economic side of the scale. And we understand that there's additional wants and needs for other populations. And unfortunately, due to the fiscal situation, the concern remains on sustainability and making sure that we don't have startup things that we're not able to continue. So that's part of the difficulty.

Earlier, you were pretty clear to say that you understood legislative intent regarding the individual mandate penalty. And so I'd like to come back. Do we feel confident that we're spending effectively to help to reduce down cost for all Californians? Again, I'll bring up the data point that half of all Californians are delaying care or delaying prescriptions. Do we feel that our programs are effectively addressing affordability?

I would consider that to be something that is work in progress, and everybody's concerned about affordability. So I think there's agreement on that. It's just due to the economic situation, this may not be a great time to start up new programs.

I'm struggling, and I'm happy to put a pin in it for today, but I'll come back to the hard-fought negotiations that we had last year to place this as a priority for us as a Legislature to fund. That I'm trying to make sure those dollars effectively stay within this area to address affordability, and I'm not hearing from the Administration that same commitment.

And so I'd like to figure out how we can effectively get onto the same page as we write the budget this year to make sure that our priorities are reflected in what actually gets implemented. And I'm struggling to hear the answers that there's a willingness to commit to a loan, that instead we're going to take these funds and sweep them or bring them into the General Fund.

That I'd like to understand how we can have the confidence that if we prioritize this again as the Legislature to address affordability, that it will actually be implemented. So if we're able to come to some agreement as a Legislature, where is the Administration in helping us to make sure we can implement affordability measures?

Yeah, and I'd be happy to take back the concerns of the Committee and I can raise the possibility of a loan and see if that would be acceptable and also mention the concerns about affordability.

Dr. Wood?

Yeah, look, I'm in my 9th year in the Legislature, and I have spent my entire career focusing on affordability of health care, access to health care, high-quality health care. The individual mandate was not intended to create funds for other government programs outside of healthcare from my perspective. I don't think I would have supported it if that was the way I thought it was going to end up.

When I look at some of the other challenges we have in healthcare workforce, this would all be easier to swallow if the money was being used for workforce, if the money was being used for other programs that are being cut, like independent living services or disability, other needs of the disability community.

How about durable medical equipment that hasn't seen any additional resources in Lord knows how many years, but to just take it and sweep it into other programs of state interest, it just feels like a violation of what we thought we were doing and certainly what we intended to do. It's pretty clear what we intended to do. Obviously, the Governor has the ability to do this, but it's a bitter pill to swallow, quite frankly. It really is. And meanwhile, health care continues to be unaffordable.

54% of people have delayed some sort of treatment in the last year because of the cost and money that we had designed for affordability. Just gets swept into another program and we don't even know where it's going to go.

Seeing no further questions on this issue, I will thank very much this panel. We will now move on to issue two. Our second issue is the overview of the Department of Health Care Access and Information Budget, which will be presented by Director Elizabeth Landsberg. Director Landsberg, please begin when you are ready.

Thank you very much, Mr. Chair and Members. Elizabeth Landsberg, the Director of the Department of Health Care Access and Information, here to give you an overview of our Department and our budget. Our current year budget is 1.5 billion, with 338 million proposed for fiscal year 23-24. The decrease of more than a billion is due to one-time funding and funding available from prior years. We are requesting nine positions in this budget, which would bring us to 702 positions.

Our staffing increase from 629 to 702 includes 64 positions approved and funded in the 2223 budget and nine positions requested in the proposed budget. HCAI's mission is to expand equitable access to quality, affordable healthcare for all Californians through resilient facilities, actionable information, and the healthcare workforce each community needs. And I'll just go through very quickly our five program areas. On the data side, HCAI collects, analyzes, and disseminates information about hospitals, skilled nursing facilities, clinics, and home health aides, home health clinics.

We also have important data regarding patient outcomes. This work also encompasses building California's Allpayer Claims Database, the Healthcare Payments Data Program, which I'll talk about in the next agenda item. HCAI is the building Department for hospitals and skilled nursing facilities, monitoring the construction, renovation, and seismic safety of these facilities. Our primary goal is patient safety to ensure that each facility remains functional in the event of a natural disaster, including major earthquakes.

And just a note of pride is that one of our structural engineers is today leading a delegation to Turkey to assist in the recovery after the series of catastrophic earthquakes there, and to conduct research in an area with similar seismicity to California. We also have the California Health Facility Construction Loan Insurance Program, or the Cal Mortgage Program, which offers loan insurance to nonprofit and public health facilities to develop and expand their facilities.

And we are administering a new small and rural hospital relief program to provide grants to small, rural, and critical access hospitals for seismic safety compliance. We have a range of health workforce programs that seek to build a workforce in California that reflects California's racial and linguistic diversity, serves medically underserved areas, and also serves Medi-Cal members, and I know we have items later that will delve into our workforce programs.

We have been in the last year providing support to programs to ensure Californians have access to reproductive health care services, including abortion services. And all of those initiatives are underway to make sure we have sufficient providers in California to provide reproductive health care services, to provide capital infrastructure, both the clinics and providers, both digital infrastructure as well as physical safety infrastructure. And then we're also overseeing uncompensated care and abortion practical support funds to support access to those services.

HCAI added in the last year a fifth program area advancing healthcare affordability in the state, and I'll talk in the next agenda item about that work, which includes the Office of Healthcare Affordability, the Healthcare Payments Data Program, CalRX, and the Hospital Fair Billing Program. I was asked to give a brief update on our recast from the Office of Statewide Health Planning and Development, or OSHPD, to HCAI so that recast was done in the 21-22 budget and we formally became HCAI in 2021.

This transition was in light of our growing responsibilities and expanding portfolio, which made it time to recast and modernize. Some of the recast changes included a new California Health Workforce, Education, and Training Council to provide guidance on statewide health workforce education and training needs related to primary care, behavioral health, and oral health. The council has been meeting for more than a year now and very pleased with the progress that that council is making. It's fulfilling one of the recommendations of the Future Workforce Commission Report.

We also created a new California Health workforce research data center to be the state's central hub of health workforce data, with new statutory authority to collect additional workforce data. So we had terrific collaboration with the Department of Consumer Affairs to collect that new data. We have published our first research data center report and was very pleased that the agenda includes actually several pages of findings from that report, the demographic information, geographic information, and the like.

Also, as part of the recast, we decommissioned the Health Professions Education Foundation while continuing those programs. And we integrated the State Office of Rural Health and the J One waiver program from the Department of Healthcare Services over to HCAI and we are administering that program. We made some changes to our data programs, including greater flexibility with the outcomes reporting on surgical cardiac procedures and improved access to birth and death data. So that's my overview unless there are any questions.

Department of Finance?

Joseph Donaldson, Department of Finance. No additional comments. Thank you.

LAO?

Good afternoon, Committee. Jason Constantouros, LAO. Nothing to add on this item.

Bring it up to the dais to see if any Members have questions. Seeing none. We will thank very much this panel and move on to issue three.

Wonderful. So I'm pleased to present about HCAI's affordability program, starting with the Office of Health Care Affordability, which was created by last year's budget. So we're calling the Office of Health Care Affordability. OHCA and this program will analyze California's healthcare market for cost trends and drivers of spending. It will enforce healthcare spending targets and conduct cost and market impact reviews of proposed healthcare consolidations.

And I want to recognize Assembly Member Wood as being the legislative champion and working with us so closely to get this language over the finish line. To drive toward a high-value system, in addition to the spending growth targets, OCHA will measure and publicly report on quality and equity measures, adoption of alternative payment models, will set benchmarks for investment in primary care spend and behavioral healthcare spend, and will set measures around workforce stability.

Given the role that market consolidation plays in driving up healthcare costs, OCHA will have new authority to review proposed mergers and acquisitions of healthcare entities in the state. So I'm pleased to give a high-level update on where we are with implementation of OCHA. We've hired our Deputy Director, who in turn has hired his three assistant deputy directors in his leadership team.

And so thus far, we have filled 25 of our 59 positions authorized for the current year and are aggressively recruiting to fill our remaining positions. Staff and hired contractors are working diligently to prepare for the Healthcare Affordability Board Meetings and the Advisory Committee, particularly around setting that spending growth target and preparing for the cost and market impact reviews, which start in 2024. We're pleased that OCHA will hold the first meeting of the Healthcare Affordability Board next week on March 21.

The Board's responsibilities include setting the spending target, approving key benchmarks such as statewide goals for the adoption of alternative payment models, and spending for primary care and behavioral health. The board will also appoint an Advisory Committee. We have made a call for interest from individuals who wish to serve on the Advisory Committee, which does have to include representatives from consumer groups, payers, hospitals, organized labor, Healthcare workers, medical groups, physicians, and purchasers.

So much of 2023 will be a series of design decisions for measuring total healthcare expenditures. How does the state want to define the parameters around measuring total healthcare costs and expenditures in the state? So we'll do so with input from the Advisory Committee, technical workgroups, which we have started to put together, and we've had wonderful collaboration with our sibling departments, including Department of Healthcare Services and Department of Managed Healthcare, as well as other stakeholders, to support a rulemaking package for data collection.

Once those parameters are laid out, payers will first report total healthcare expenditure data for a baseline report with data from 2022 and 2023. We are expected to complete data have that data collection completed by September of 2024 for our first report in the summer of 2025. In late 23, OCHA will then engage the Board on the methodology for setting the spending targets. The first spending target has to be proposed by March 1st of 2024 for the 2025 spending year.

That first 2025 target is not an enforceable target, it's a baseline target. The first enforceable target will be for calendar year 2026. We are also focused on the cost and market impact review piece of the office because the office has new authority to analyze healthcare entity mergers and acquisitions likely to impact competition, price, access, quality, and equity. So we are already beginning work to determine the requirements for notices because those notices do need to start in January of 2024.

So we'll prepare a rulemaking package in this fall of 2023 with specific timelines and factors to decide which proposed mergers and acquisitions have to go through this new process. We're also starting work to set the goals for primary care and the alternative payment model work which is very important. If there are no other questions on OCHA, I'm happy to move to HPD.

Let's next hear from Beth Cappell with Health Access. Oh, excuse me. Nope.

Should I go through the rest of the items? Okay, so I was also asked to give an update on the Healthcare Payments Data Program, referred to it in other states as all payers claim database. So the information for HPD is intended to support greater health cost transparency and to inform policy decisions. And I'm really happy to give a report here that we're making wonderful progress in meeting the requirement of substantial completion by this summer of 2023.

So we have been collecting literally billions of medical claims and encounter data elements, and we are on track and making progress to implement the HPD. So we've collected historical files. We're getting the data from commercial payers and insurers directly from them. We're getting the data on Medi-Cal fee for service from the Department of Healthcare Services and the Medicare data we are getting from the Centers for Medicare and Medicaid Services.

We've developed initial analytic data set outputs to be used for public reporting and are excited to start issuing those first set of reports this summer. We have also developed data release regulations for access to nonpublic data such as research data, and we've been conducting ongoing Advisory Committee meetings and recently formed a new data release Committee that started meeting in December.

We also submitted a report with long-term funding options for the HPD Program to the Legislature just in the last two weeks. On CalRX, another important affordability program. Last year's budget included 100 $1.0 million investment for the CalRX Biosimilar Insulin initiative. So that included $50 million for drug development and $50 million for a second phase around a manufacturing facility.

So we have selected a partner to develop, manufacture, and distribute lower-cost, transparently priced versions of insulin, three different types, glargine, aspart, and lispro, and we hope to name the partner very shortly in the next couple of weeks. We will be involved in the governance of the contracting partner to ensure that we have appropriate monitoring and oversight of our investment.

So there will be a new joint steering committee with equal representation from HCAI and the contracting partner to oversee the development, manufacture, and commercialization of the insulin products. The first insulin product, glargine, should be in the process for FDA approval sometime in 2024, with public availability thereafter, and the other two products, aspart and lispro following. The last program I was asked to give an update on was the Hospital Fair Billing Program, which was established by AB 1020 by Assembly Member Friedman.

It expands current reporting requirements and requires qualifying hospitals to submit to HCAI the hospital debt collection policy. So HCAI is taking over enforcement of the Hospital Fair Pricing Act, which previously was enforced by the Department of Public Health. And we will have our first consumer-facing program with consumers who feel they were improperly billed by a hospital able to file a complaint with HCAI. So those are my overview of the four programs.

Thank you. Next we will hear from Beth Cappell with Health Access, and I may ask us to create some space for Matt Lege with SEIU who's next.

Of course. Beth Cappell with Health Access California. Happy to create space, but thank you Mr. Chair and Members for oversight on the Office of Healthcare Affordability. And for the other programs that HCAI is tasked with implementing. It is very appropriate that you begin this task. This is, as you heard from the Director, the beginning of a process to try and bend the cost curve in California.

And because I think you are at the beginning of a decade of oversight, and some of you may quail, or some of you who are new to this may think, there's my career ahead of me, but I think it's a decade of oversight. I want to step back on behalf of consumers and say why we were the most steadfast supporters of this proposal. Over the last 20 years, health insurance premiums in California have doubled. Wages are flat. These are related facts.

The fact is, compensation includes both wages and health benefits. And if you have someone who's living on 20 or 30 or 40, $50,000 a year, asking that the employer fund $25,000 in family health coverage is a lot of money. It's not so much if you have a family living on a couple $100,000 a year as a percentage. That reality has worsened income inequality. It worsens all of the income-related social determinants of health, housing instability, food insecurity, inability to afford utilities.

Even for middle-class families, it means it's harder to afford the kids' college education, retirement, all of the things that matter to California families. We're going to argue a lot over what are the economic and population indicators. Should it be CPIW or CPIU? And no, I can't tell you the difference between the two at the moment, but I'm sure I'll know in six months. The difference between health care costs growing at 3%, as many states have proposed, and four or five or seven or 8%.

Our trend has been seven or 8% is the difference between worsening income inequality and worsening income-related social determinants of health. I would also say it goes directly to the jurisdiction of this Committee. Mr. Chair, I know, you know, I think other Members of this Committee may know. The United States has the most expensive healthcare system in the world, and we don't get more for it. We don't get more doctor visits. We don't get more hospital days. We don't get better outcomes. We're not healthier.

We pay more and get less. At the same time, other countries spend far more than we do on human services and on housing supports. That money, that goes. The trend in commercial coverage, that has been at seven or 8% of costs, has driven up healthcare costs across the budget as well as for commercial insurance, you have already heard a lot from hospitals about how tough it is to deal with Medi-Cal.

We have hospitals in California that are getting paid 300 or 400 or 450% of Medicare, and the hospitals that get paid the most do the least Medi-Cal. So this work that is before the Office of Healthcare Affordability is among the most important work in terms of transforming healthcare. The reason that the Office of Care Affordability, and we were instrumental, along with SEIU and others, includes all those other provisions, is really the cheapest thing in healthcare is not to give anybody care. But that's not the intention.

The intention is the triple aim of doing smarter care better, of making sure that we improve outcomes, we reduce disparities, and we control healthcare costs. And in case any of you wonder how that can be done, I'm going to quote something that Dr. Arambula's father used to say to me. Kids ending up in the emergency room with asthma is stupid. They should have their inhalers, they should have their asthma managed. He should not be seeing them in the emergency room.

And that's just one example of how doing care better can improve having adequate access to primary care. And this Committee will hear a litany of examples with regard to behavioral health. And you have done a lot on Medi-Cal, on CalAIM, and you'll hear more about that. But that isn't the fundamental rebalancing that I spoke to between health and human services and health and housing. And that's the path that we hope that the Office of Healthcare Affordability will put us on.

We also need the ability to look at those hospitals that are charging 400 or 450% of Medi-Care. In Massachusetts, Massachusetts General exceeded their cost target by $293 million. The only thing they could do was impose a $500,000 fine for failing to fill out a performance improvement plan. I'd say that's the equivalent of parking ticket, except the last time I saw a parking ticket felt a lot more painful than that.

So in the law that you passed now allows penalties as great as the amount that the target was exceeded, commensurate, and escalating. We hope we never use them. They certainly won't use them anytime soon. But it's there, and it's there for a reason. It's there to send the message that the State of California is serious about healthcare costs. And that's why the work of the Healthcare Payments Database is so important. So we'll know that they have actually met or exceeded the targets.

And a final mention on two things that are favorites at Health Access. CalRX. We think it's terrific that the State of California has gotten in this business and are pleased to hear about the progress that's being made. And then the Hospital Fair Pricing Act, which when California had seven or 8 million uninsured, price gouging of the poor by hospitals was unconscionable and routine. And so it is very important that California acted.

It's even more important that we have followed the path to expand coverage so most people have insurance. Thank you.

Next, we'll hear from Matt Lege with SEIU.

Good afternoon Chair and Members of the Committee. Thank you for the opportunity to speak today on this important issue. I want to just briefly talk about both the Healthcare Payments Database and then also our excitement that we share with Health Access around the Office of Healthcare Affordability. First, just want to thank the Department for their tireless effort around convening stakeholders and producing the recent report on the Healthcare Payments Database.

From our view, as mentioned by Health Access, we see this as a critical piece of the foundation of the Office of Healthcare Affordability, leading to a better understanding of the drivers of healthcare costs and utilization. The HPD will inform both the Administration, Legislature, and researchers on spending, utilization, and performance across a range of providers such as hospitals, physicians, and other sites of care. This data will make California enable California to make better investments in high-value care, which is critical.

As the January budget shows, General Fund revenues in California are unpredictable and we encourage the Legislature to move forward with a sustainable funding stream that supports robust implementation of the HPD. As discussed in the department's recent report on funding options for the HPD, a reasonable and steady funding stream would be an assessment on health plans for mandatory submitters to the HPD.

An assessment on mandatory submitters would provide ongoing funding stream for the HPD, which is not overly dependent on revenue generated by requests to access the data collected by the database. Any revenue from data access requests from researchers is likely to be variable and unpredictable, and keeping data access fees reasonable will encourage the use of the HPD by researchers who would be deterred by high usage fees. On the Office of Healthcare Affordability.

This is part of a 10-year campaign that SEIU, Health Access, and others have worked on to try to address the key drivers of health care, one of the key issues at the bargaining table. Over the last 20 years, health care costs have risen much faster than inflation, equaling almost an additional $20,000 that should be in workers' pockets that is not.

That is roughly about $10 an hour that families could use to address pressing needs such as housing costs and food security. The rising cost of health care is acutely felt, particularly by low-wage workers. Rates of job-based coverage are significantly lower for low-income Black, Latino, immigrant, and young adult workers than they are for Californians overall. This means that low-wage workers are on the hook for more of the increase in healthcare costs compared to their high-wage counterparts.

Through the Office of Healthcare Affordability, we have opportunity to address this rising cost of care, and we should measure our success for the Office of Health Care Affordability on the impact on low-wage workers, such as the percent of worker pay that goes into healthcare and the workers' total take-home pay, so that workers are seeing improvements in their standard of living and health care savings are shared with these workers. The office has some critical implementation steps in the coming year.

These include defining total healthcare expenditure, issuing regulations around data to be collected from regulated entities, and setting up safeguards to ensure that ongoing stability of the healthcare workforce. Collecting the data from payers, providers and integrated delivery systems that will be needed to carry out the mission of the office will be a substantial undertaking, and we encourage the Legislature to ensure that data collected is made public in such a way as to allow purchasers and other stakeholders to fully participate in the public process.

Healthcare workforce stability, from our view, is a critical issue, especially right now when we are already in the middle of a healthcare workforce crisis where workers, particularly low-wage healthcare workers, are leaving the industry. As we have seen from the recent spike in spending on contract and travel staff, healthcare workforce shortages are already impacting the ability of the system to provide timely access of care and control costs.

As the office undertakes its mission, we encourage the Legislature to lay out to stay actively involved in the process in order to guarantee that cost growth targets are constructed so as to ensure that the healthcare facility are adequately staffed and cost containment efforts are not borne on the backs of low-wage healthcare workers. We look forward to working with the Administration and Legislature on these key issues. Thank you.

Department of Finance?

No additional comment. Thank you.

LAO?

Also no comment, but available for questions.

We'll bring it up to the dais for any Members' questions. I'll keep it here if I can. Ms. Capell and Mr. Lege both stated that this was the beginning of a process and that it would require a decade of oversight. And yet, what I'd like to understand are any implementation challenges or remaining gaps that we have to address as we're going through this process.

Since the board of the office is only meeting for the first time next week and they're just staffing up, I would commend the HCAI for having put out a preliminary timeline of what needs to happen when. And we know also in our conversations with them that they're very focused, as you heard today, on what needs to happen when to meet the timelines that were laid out in the legislation.

A lot of thought was given to that and... to the point where I suspect we may have a cleanup bill or two. But a lot of thought was given to what, when and how to make that work. And the other thing I would say is that between the legislative appointees and the governor's appointees, it's a very distinguished board that we are starting with, all of whom are known to us in our work.

I think of Dr. Carlisle, who heads Charles Drew Medical School, who was a previous head of OSHPD, and very distinguished on the issue of health equity, someone we've worked with in the past, Rick Kronick, who staffed the Health Care for All Commission and before that was worked at a very senior level in the Obama Administration on implementing the ACA on things like risk adjustment.

Elizabeth Mitchell with the Pacific Business Group on Health, a large purchaser perspective, where we found ourselves often aligned with their concerns for the reasons that Matt Lege and I talked about today. So you have Ian Lewis, the speaker's appointment, who has long experience with healthcare, both as a purchaser and representing healthcare worker unions. A unique combination. So really, it's an impressive group of leaders that they will be able to rely on for these decisions. We do expect them to listen to us.

We don't expect to always agree with them, just as we don't always agree with anyone. But it's a notable group, which is good, because there's a lot of heavy lifting in these early years. And I think I would point this Committee to Dr. Wood has pending legislation this year to close some of the gaps in merger oversight that still remain. And there's more work to do in that area. HCAI will do studies, but they can't say yes or no. They can only study the impacts.

And so it'll be important that pending legislation is very important from our perspective. But that's your job, not their job to do. We have done our best to really stay in the framework of the triple aim. Like everyone, I'm tempted to say, oh, this is just about cutting costs and all that, but really it should be about improving care at the same time that we're trying to make the rate of growth more reasonable than what I showed you.

Any comments that you can provide on the timeline, either from Beth Capell or Matt Lege?

Director Landsberg, you can comment. It seemed that it was March 1, 2024 for the first baseline target and then summer of '25 for the report. Can we comment on what that timeline would mean if that's an appropriate timeline?

Absolutely, Mr. Chair. So we did think very carefully about the time frames, and they are aggressive, but we think very much doable. We really do need to focus the next few months on understanding what total health care expenditure is, but then we believe we have enough time to have conversations about the various economic indicators we could use for the spending targets. We are the 9th state to have a program like this. Massachusetts has been doing it for more than a decade.

Our neighbor to the north has been doing it, and so we'll look to some of our other states that have done this, but we think it's doable. Also, starting the merger acquisition notice requirement in January of 2024 is aggressive, but we think we can do it. But I do just want to highlight that this is not just about cost, it really is about driving to a high-value system.

So we think the focus on investing in primary care and behavioral health, investing early, having early intervention, will really help us achieve both cost savings as well as increasing health care.

With that, I will thank very much this panel, and we will move on to issue four. Issue four is on the Education and Training Council budget change proposal, to be presented by Caryn Rizell, Deputy Director of Health Workforce Development, at HCAI. Ms. Rizell.

Good afternoon. So I will provide an overview of the budget change proposal for the Health Workforce Education and Training Council. So this budget change proposal requests two positions in fiscal year 23-24 to support the work of the council. As Director Landsberg mentioned, the council began meeting in 2022 and has been discussing innovative approaches and strategies to meet the state's needs for nursing, behavioral health and graduate medical education training so far. The council meets four to six times a year, usually over two days.

And so to support the council, these positions are needed to support the logistical, the administrative, the data analysis, but also the policy analysis needs to support the work of the council. If you'd like, I can move to answer the specific questions.

Okay, please do so.

Please explain the reason that the BCP states that HCAI needs four permanent positions to support the work of the council. Yet this request is only for two positions. HCAI received two positions for the council through last year's the fiscal year 22-23 health workforce and central services BCP. The FY 23-24 proposal requests two more positions to bring the total support for the work of the council to four positions.

The full cost of these positions we anticipate that the total cost of the two positions requested in this proposal will be approximately $340,000 per year. The Fund source for these will be existing state operations resources. These include funds from children and youth behavioral health initiative and other funds such as the data fund. And the last question, is HCAI planning to use children and youth behavioral health initiative funding? If so, please justify this, given that the council's work covers both children and adults.

To the extent that the council supports CYBHI workforce work, costs associated with that support will be allocated to CYBHI funds. The council has been busy delving into behavioral health workforce positions and strategies to diversify our workforce, and HCAI has used this information to inform program development and implementation. So in General, HCAI will allocate the cost of these positions to programs and related funding the council supports. Thank you. Happy to answer any questions.

Department of Finance?

Joseph Dalton Department of Finance no additional comments at this time. Thank you.

Jason Constantouros, LAO. We've been working with the Department on getting more clarity on this proposal, and with that additional information we understand the rationale a little better at this time, aren't raising concerns, but are available for questions.

LAO?

Excellent. I'll bring it up to the dais for any member's questions. Assemblymember Rubio.

Thank you. What are the outcomes? I guess I don't understand it completely, just got to reading about it. But what outcomes are you hoping to achieve with two additional folks and you got two last year, two this year. Are we looking at two more next year and the following year? And the funds that you're using are children behavioral health funds is what you just said. Part of it is coming from that. So let me phrase my questions, I guess.

So the first one, what outcomes are you hoping to achieve with this two additional people? Then the second part will be is the funds are coming from children behavioral health funds. How do those two positions support the children's behavioral health programs, et cetera?

So the council through the last year, as mentioned, has really been digging into understanding what innovative strategies and programs can really expand and diversify the workforce. They have been developing recommendations, for example, at the last meeting, but came forward with a set of recommendations to do that for behavioral health, for example.

And so the work to support developing these recommendations, doing the policy work, the analysis work, is the reason for the additional two positions, because there's more work that we're doing to support the council and help the council be successful in developing recommendations and providing guidance to HCAI on our programs. So we expect that these four positions are sufficient for now to be able to support the work of the council.

Yes, but what outcomes, you said you had two positions last year. What were the outcomes of those additional folks? Recommendations? Have any of those been implemented? How is that going to help the programs? Because recommendations are one thing, outcomes are different.

And again, the council just started meeting last year, and so the positions were helping to get the council up and running and be able to support the work of the council. And then the work of the council has grown considerably in the last year. And so, for example, the recommendations. So with these recommendations, then we will go back and use those recommendations to support the work that we're doing, for example, to be able to support training in community health settings.

So we're looking at what are the programs that we can implement that will increase training in community health settings, for example. So some of those outcomes are actual recommendations for ways we can improve our programs.

Again, I can appreciate all that. My question, though, is what tangible, if you will, outcomes have you gotten from the two people that you hired last year? What example can you give me of things, any program that's been implemented based on the recommendations, et cetera, et cetera. Because I was a teacher for a very long time, and we had a lot of recommendations that never got implemented.

And so my frustration has always been is that we keep having conversations and recommendations, but there is no actual tangible outcomes from this. So it can give me examples of the outcomes or anything tangible that came out of the last two positions. Therefore, you need two more positions because this outcome, whatever it may be, was so successful that we can do more of that.

I would say that, again, some of the positions are needed just to support the work of the council, the logistical, the administrative, to be able to develop those recommendations for the council, to be able to run a council meeting. So those are just the underlying work of the council that we need to support with positions.

Okay, again, I'm just learning a little bit more about this. So how many council members do you have?

18.

18, so it's going to require four people to support the council, is what I'm understanding.

Yes, it requires four people. There are significant policy development proposals, for example, that the staff does to support the work of the council to prepare to do research, the research data center, as was mentioned earlier, that work supports the work of the council, developing, gathering data, and sharing that back with the council to help inform them as they consider questions and make recommendations.

So what I'm hearing, this is strictly administrative positions, nothing to do with actually developing programs. This is more of administrative support for the council.

Correct.

Okay. And then the second part of the question is, how does this help the children? If the money is coming from there, then what tangibles do we expect to provide for the children's mental health?

Well, as I mentioned earlier, so the funding is partially from that because many of the programs that have been recommended and implemented also may serve families and adults, but also serve children and youth. For example, as I mentioned, being able to look at our Earn and Learn programs, how we building a workforce with apprenticeship programs is one of the things that we're looking at implementing, is expanding the kind of work we do with our training programs to focus on Earn and Learn.

And apprenticeship programs is one example that supports this children youth behavioral initiative, as well as many of our other programs.

Thank you. So when we come back next year and we ask the same question, then what can we expect as an answer?

What we're hoping to see is, and again, the council, again, their first set of recommendations were behavioral health. They're working on a set of recommendations for the nursing workforce, and they'll be also looking at some recommendations for primary care and graduate medical education. So what we'll see, we'll continue to see through the work of the council is a set of recommendations that drive and inform for the work that we're doing across all of our programs.

Thank you. And the reason that, again, I'm asking all of these questions is because as a teacher, we got a whole bunch of recommendations that were never implemented. And my concern is that we have such a crisis in mental health.

A crisis in a lot of issues, but mental health is one of the issues that we do have a crisis in. And so if we're going to invest these funds in additional support, then I want to see outcomes that are actually supporting people instead of hoping and praying that these recommendations someday get implemented. And if they don't, well, too bad, we supported the council, and so that's why I'm asking these questions.

I'm a little bit, I don't really know what the word I'm looking for, but again, we sit here and we talk about hoping and praying that things change by investing, and then really, we don't really see any tangible outcomes from the investments that we're making in a year where our budget is going to be hopefully not as bad as folks are saying.

Investing more money and having zero outcomes takes away from actually programs that are implemented to support mental health services, either for children and for adults. So that's why I'm pressing on that so again, I appreciate that the council is going to be supported. However, are we taking away money from actual programs? Because these positions may or may not help in informing what you're going to do later without any actual tangibles at the end.

I'll bring it back to the Chair for a second, if I can. Originally, this was created in AB 133, which allowed us to have a statewide approach to developing health workforce policy recommendations. Out of that came the 1.5 billion that we invested last year. In the next issue, we'll hear about delays. Because of those delays, does that change the council's work and their workload?

Should we continue to fund it at four positions or since there's a significant decrease in the next two budget years, does it change the council's overall mission?

We have a full agenda for the next, actually several meetings of the council in terms of work to discuss, because one of the things that it's doing is the council is helping to. As we plan, as we plan to build the nursing workforce, as we plan to build the behavioral health workforce, the graduate mental education workforce, there is a lot of work that they're continuing to do throughout the year.

I will hold this issue open as we move to issue five, but let's remember the work of the council and the dedication and recommendations that came forward as we're about to hear about delays within healthcare workforce. We will now move on to issue five, which is on the proposed healthcare workforce delays trailer bill, which will be presented by the Department of Finance. Can you please begin?

Yeah. Thank you honorable Chair, Committee Members, Joseph Dalton, Department of Finance. So, due to declining state revenues, the budget proposes delaying 68 million in current year and 329.4 million in budget year, for a total of 397.4 million for various healthcare workforce programs included in the 2022 Budget Act under HCAI's Administration.

I'm gonna ask you to get a little closer to the mic. We're having a hard time capturing you.

Is that better? All right. Sorry about that. The mechanism to implement this proposal is TBL, which is currently posted on the Department of Finance's website for review. Now, while the budget proposes these delays, the Administration is still very much committed to increasing the capacity of the state's healthcare workforce. These programs will remain fully funded, but the funds would go out later than originally planned. Now, these repayments for these delays would go out in 24-25 and 25-26 in the amount of 198.7 million in each of those specified years.

Now, we acknowledge that these are difficult decisions to consider and act upon. However, the Administration believes that these are necessary actions to address the current revenue shortfall while also maintaining our commitment to our state's healthcare workforce. I can either pause here for questions or I can go through the questions that were in the agenda.

I would go through the questions in the agenda.

Okay, no problem. So first question was please describe a more detailed administration's reasoning behind choosing the specific workforce programs that were chosen for delayed funding versus those that were not. So for current year delays, we worked with our counterparts at HCAI to identify programs whose funds had not already gone out or substantially in flight, with the ultimate goal of trying to minimize program disruption to the greatest extent possible.

For budget years, the Administration identified areas with relatively large investments, since this is where the most substantial savings could be obtained. And just to reiterate, we understand that these are very difficult decisions to consider. The Administration had to aim balancing both addressing revenue shortfalls while also maintaining our commitment to investing in our state's workforce, and we believe that this was the best compromise of trying to balance those difficult priorities.

The next question was what will happen to this funding and these programs should it turn out that California is in a protracted multi-year recession? At this time, Administration is hopeful that the economy will bounce back and that these proposed budget solutions are sufficient to address the current shortfall. If the financial landscape or economic conditions change, we'll reassess our plan as part of the annual budget process and consider all options at the time.

But just to reiterate, currently, right now, the proposed budget solution only delays funding for current year and budget year investments from the 2022 Budget Act, and I'll pause there and answer any questions you may have.

LAO?

Jason Constantouros, LAO. Before I delve into our assessment, I just wanted to point to pages in case that was helpful for the members. Page 18 of your agenda summarizes the specific delays in the Governor's Budget, so you can see the list there. And then on page 19 you will see another table that provides a fuller summary of the initiatives that were adopted last year and the revised expenditure plan for them, both ones that are proposed for delay and ones that are not proposed for delay.

Our office released a post on the proposed health workforce budget solutions, both in HCAI and in the Department of Public Health, which I understand the Committee heard in a previous hearing. You can see our recommendations of the Committee on Page 20, but rather than go in point by point, I thought it would be helpful to go right to the staff questions for our office on page 21.

The first question is, do we think that the state can afford the proposed delays in the out years given that the funds are delayed in the budget year, but would result in higher levels of spending in 24-25 and 25-26. Our office has released a multi-year assessment of the Governor's Budget, and that assessment had two conclusions. First, that the budget problem is likely bigger than what's assumed in the Governor's Budget within the budget window. So that's in 22-23 and 23-24.

And then second, that that deficit would persist into the out years in 24-25 and 25-26. This suggests that the Legislature were to adopt the Governor's Budget in its entirety, likely would face pressure in future years to take further actions, such as potentially postponing the resumption of funds that are delayed, including those in the health workforce area. The second question to our office is really around our recommendation. We recommend the Legislature weigh this approach against other potential options.

And the staff question to us is, can we be a little more specific on what we're saying there? So in our report, we offered three different ways to sort of think about this. The first way we sort of recommend here is to take a fairly different approach than what the Governor is proposing and to notably scale back the proposed workforce package that was adopted last year, focusing on areas that are sort of the highest legislative priority and initiatives that address that priority.

Our thinking there is doing that now would sort of avoid these sort of bigger delays and sort of address the issue now, rather than sort of facing this issue in the out years. Another way that we propose thinking about it is to look at initiatives and see which initiatives are, as the Administration notes, materially in flight or are currently under implementation, and look at other initiatives that have not yet been fully implemented yet.

And we note that there are a couple of initiatives that the Governor's Budget does not propose delaying or rescinding, and the initiatives have not yet been implemented. If you turn back to page 19 of your agenda, you'll see three initiatives focused on psychiatric workforce, and these are initiatives that, as we understand it, the grant programs will resume this summer and so effectively haven't started yet and could be delayed or reduced without major programmatic delay. Now, this will ultimately depend on the Legislature's priority.

If psychiatric workforce is among the Legislature's top priorities, this approach might not make as much sense. The third factor we recommend the Legislature consider is areas where delays could have some impact on sort of broader statewide health reform efforts. The Governor's Budget doesn't impact ongoing funding for a lot of the major sort of health policy changes that were enacted in previous years, but some of these workforce initiatives could have some indirect impact to that.

One initiative our office heard a bit from stakeholders on was the Community Health Workers Initiative, given its connection to the community health worker benefit in Medi Cal that's currently being implemented. So we think that's another factor the Legislature could consider when deciding which initiatives to delay or reduce. With that, I'm happy to answer any questions.

I'll bring it up to the dais for any numbers questions. Dr. Wood and then Dr. Jackson. Go for it.

Didn't mean to outdraw you there Dr. Jackson. You know, I guess I'm just, and I recognize we're in tight budget times here. The nursing initiative is troubling to me. What I hear from hospitals in particular is the shortage of nurses, the fact having to use registry nurses from out of state paying exorbitant amounts of money, and after COVID, just the burnout among nurses and attrition in the profession. So the idea that we would somehow want to reduce an initiative to create more nurses is really counterintuitive.

I don't understand that at all. And then when you go to rural communities or underserved communities in urban areas, it's even worse. It's even worse. We struggle on a good day when there's plenty of money to get people to these communities, and I think it's wrong. Behavioral health workforce at a time when mental health issues leading to homelessness are a big challenge, and as we try to get our arms around homelessness, why would we want to reduce programs in behavioral health?

Once again, it just feels completely counterintuitive. I got a list of agencies and things I would love to take money from and put it back in here, and they don't fit in this Committee, unfortunately. But I got a list. But it is frustrating. It is frustrating that we know we have a shortage of nursing now and we're going to delay this. We know that we have challenges in our behavioral workforce. They go back to, I sat on a workforce commission in 2017 with the California Healthcare Foundation.

We have professionals from all over the state identified $3 billion in necessary workforce investments, and we've begun to make some progress there. But is it important or not? We don't know. The next COVID is around the corner. We don't know. But we know we have a depleted workforce in behavioral health and nursing, and we're going to kick this down the highway a little. There's, there have to be other ways of doing this. There really do. So it wasn't a question.

It was another one of my editorial comments.

Dr. Jackson?

Well, the editorial continues. I mean, obviously we've spent hours talking about just how dire the public health of California is. And all of these are designed to help to deal with that over the long term. And similar to housing, I don't think we can afford to put the brakes on many of these programs. And so I would just encourage us to look at other avenues on if there needs to be cuts in the overall budget, where else can we find those? I'm not one to just pass the buck. I'm looking at a tax expenditure right now.

We're not taxing subscriptions of periodicals. Right. We have a lot of things in our budget that we're choosing not to tax because of given reasons. A lot of them have been on auto for decades, way before any of us got here, that we can find. We're subsidizing all kinds of things in California. Once again, it's not about whether it's a good or bad. We don't have that luxury. It's about priorities.

And so I would look at things that we're currently subsidizing in our budget, things we're choosing not to tax in our budget, and plain old flashy things in our budget that really doesn't have to do with the health and welfare of California that's currently still in our budget. So I still wouldn't believe that this is a bad budget year. I think this is a priority budget year.

And I would just say that when it comes, I would hate to be here 5, 10 years from now and say, why do we still not have the workforce? How much workloads are in our hospitals? And I hate to come back here to remember this time and say, well, we agreed because we weren't willing to make tougher decisions. Right. This is simply anything that has to do with our workforce, especially where we're in dire straits, whether it's nurses, doctors, social workers.

I mean, we can go on and on. This is not definitely something that certainly I'm not willing to support. Thank you, Mr. Chair.

Assemblymember Rubio.

Thank you. Just wanted to continue the commentary to Dr. Wood's point. I wanted to offer that I did do some work in terms of trying to get more nurses in 2019 before the pandemic. And the conversation that was had at that time was that I shouldn't worry about it because I'm from LA County and they have plenty of nurses there, which. Cool, it's great that LA County does, but Dr. Wood and a lot of other members here have rural communities that don't have that workforce.

And what I see happening is a lot of times we look at an average of nurses in the state as opposed to region by region. And like I said, for me, we're good, we're gravy if LA County has plenty of nurses. But my colleagues know my priority is absolutely my district. But California has to be a priority for all of us.

We can't afford not to have the workforce for those rural communities because at the end of the day, they're going to end up either in LA County or wherever they end up. We want to make sure that everybody's supported. And so to the point of Dr. Wood and Dr. Arambula, I think you have some rural communities as well. We need to look at the regions, not just some line item that says, hey, we're going to cut this because it's a budget item.

How about looking taking a regional approach to some of these programs? That may be what you are doing. However, we don't see it. I don't see how we're really targeting those areas that have a bigger need than the ones that don't. So wanted to add on and offer support to my rural community colleagues that they don't have the benefits that those of us in LA County if we actually do.

Again, they're all just numbers on a number line on a budget, as opposed to actually looking at those regions to see if those communities are being supported.

I'll bring it up to the Chair in the next item. We'll hear about many of those geographic disparities and racial disparities in workforce that. I'd like to get a sense if any of these investments that we're talking about delaying, if they could be modified to allow us to address some of those disparities? Is the administration's position that we have to delay these, as you say, and will remain fully funded?

And if so, how can we guarantee that the funding will be available in those out years, as the LAO has indicated? That may be unlikely due to the forecasted budgets.

Yeah, thank you for the question. So we are to your first question about ensuring the repayments. We're tracking the two payments in 24-25 and 25-26 of that, 198.7 million in our long-term forecast as something we're committed to repaying. That's something that we are tracking through our budget process.

I would also note that while these delays are definitely a hard pill to swallow based on the circumstances, we would note that while funding is being delayed in current year, budget year, there's also still substantial investments going out in current year currently.

So just still want to reiterate, we really tried to take that balance of while there are delays within this proposal, we still wanted to make sure we could get out dollars that we could, because we do understand there's this immediate need to address the workforce. So I would defer to my HCAI colleagues for more detail. But for the current year, HCAI slated to implement $182,000,000 of this investment from 2022 Budget Act. So just really want to reiterate, we'd really try to find that balance.

We understand that this is a hard decision. That's why these are delays and not cuts. And we ensure that funding that was in the current year, that was already in flight. We did not want to interrupt that process simply because of this immediate need.

I'll elevate if I can, as we will delay the conversation on behavioral health workforce until April 17, the nursing initiative and the struggle that many of our local hospitals have in having nursing staff available and not having to pay traveling nurses, which then creates cost pressures on institutions.

We've seen one hospital close in my region due to those pressures and thus want to make sure we're providing immediate attention and resources to training the workforce so we don't continue to exacerbate the institutions that are in regions that feel underresourced. And hence why you see the real unanimous position of all of us legislators is feeling that cry from those who are on the front lines today to make sure that we're working on reinforcements for tomorrow.

Thus, while I appreciate the delays and the promises that we will fully Fund this, many of us are looking for the guarantee ease of getting these dollars out so we can start training the providers immediately. And we'll look to continue to have conversations with the Administration as we go forward with that. We will hold issue five open and now move on to issue six. Thank.

Our 6th issue is an oversight issue on healthcare workforce. Our first speaker is Caryn Rizell with HCAI. Please begin when you are ready.

Great. Good afternoon. So I've been asked to provide an overview of HCAI's health workforce programs. So HCAI's health workforce programs have three main goals. We are seeking to develop a health workforce that serves medically underserved areas, that represents the California it serves through racial and language diversity, and serves MediCal Members. And so to achieve that goals, we're working across the continuum to develop programs that support pipeline.

We recognize the need to build the workforce of tomorrow to increase the number of professionals trained and the number of students to support students training to be health professionals, as well as providers who are serving in underserved areas. So, for example, in our pipeline programs, we offer several programs under our health professions career opportunity program suite of programs.

Our Health Careers Exploration Program provides students opportunities to health careers exploration health career conferences our Health Professions Pathways Program that we just launched this last year announced more than 40 million in grants to support organizations supporting and encouraging students from underrepresented regions and backgrounds to pursue healthcare careers. We also, as I mentioned, training.

We look at what are we doing to expand the capacity of our training institutions to train our Song-Brown program, a long standing program that we have trains primary care providers, nurses, physicians assistants and family nurse practitioners. And this year we added licensed certified midwives. We just announced almost 50 million to support 54 primary care residency programs, including 17 new and expanding programs.

And we made announced 17 million to support 32 nursing programs, an increase from the previous year, and then 3.4 million to support 21 family nurse practitioner and physician assistant programs. As I mentioned, supporting midwifery programs in California. We also have several programs that support behavioral health, expanding the capacity to train psychiatrists, psychiatric mental health nurse practitioners, social workers, peer personnel.

As mentioned, we also have our support for individuals and we have 11 loan repayment and scholarship programs that we operate which all require a service obligation to serve in an underserved area or facility. These programs include our loan repayment programs such as Stephen Thompson State Loan repayment, our scholarship programs, and we have several programs, for example, that support the nursing profession.

We are getting ready to relaunch our stipend program to support social workers and, as I mentioned earlier, looking at ways to support students with earn and learn and apprenticeship programs with our substance use disorder program. Next, I will provide a brief overview of the research data center. So, as was mentioned, statute established the health workforce research data center as the state's central source of healthcare, workforce and education data.

So with that, we're responsible for collecting, analyzing and distributing information onto educational, employment trends, healthcare occupations and distribution. Through our collection and reporting of data, we focus on analyzing supply and demand and describing program outcomes. We developed a partnership with Department of Consumer Affairs to collect the data from all 18 healing arts boards necessary to provide this information. As you saw in our first report to the Legislature, we were able to take that and share some of the data that we've been collecting.

While new data collection efforts are in progress, our goal this last year was to develop the infrastructure and the baseline for collect the data and then be able to summarize the data we've collected. And as we build more data, we'll be able to share more data on the work that we're doing. So what type of data will HCAI have with regards to health workforce in the future? So, we will have a variety of data and information available to assist in estimating supply, demand and demographic makeup.

This includes breakdowns by profession, again from the licensed and certified from the healing art boards, different geographies, demographic characteristics, race and ethnicity, age, sexual orientation, gender identity and shortages. Where are the shortages in California, through the partnership, as I mentioned before, we have been collecting this data with Department of Consumer Affairs through licensing surveys and is featured in our report. We're expanding the number of partnerships with different state entities to add different data sets to the research data center.

We are also partnering with each of the higher education systems to share data and measure things like educational throughput, put by discipline, for example. So if you'd like, I can go into the second question, this last question, which is what are California's most urgent healthcare workforce shortages and needs? So our programs, as I mentioned, focus on creating access in underserved areas and underserved populations and increasing the diversity and cultural concordance.

Later in 2023, the research data center expects to have data to begin developing demand estimates that will help us to start to make estimates on number of providers needed. But today, I will focus today on the shortages we see geographically and demographically. As far as access to healthcare. We see the maldistribution of the workforce, which creates shortages in areas throughout the state. We continue to see the Inland Empire and San Joaquin Valley with not enough physicians or dentists, which also applies for behavioral health providers.

They are maldistributed with shortages in the empire in San Joaquin Valley as well as well as the Northern Sierra Regions of the state also disproportionately experience the smallest shares of the physician, the dental and the allied health workforce. Our programs have attempted to mitigate some of these maldistribution by funding training programs that build or expand in these areas. For example, we funded a new psychiatric residency program in Butte County and expanded a program in Kern.

We recently made words to span social work training in Humboldt and San Bernardino for our song ground program. All of the recent awards to support expanding programs were to programs in high need counties, including San Bernardino, Shasta, Butte, San Joaquin, and Kern. Our funding also supported programs starting new primary care residencies in Kings, Tulare, Butte, Shasta and San Bernardino Counties. Since California is such a diverse state, our program's intent to build a workforce that represents the California it serves.

And we know that a shortage of the workforce that is diverse affects health outcomes. Some of the things we are seeing, including that although there's been an increase in the number of Hispanic and Latino physicians, there is still much progress to be made with parity with the population.

We do see the number of black physicians growing and coming closer to parity with the population with some recent data, some of the nursing workforce is diverse, such as licensed vocational nurses, and although we are seeing a movement in the right direction, there remains a severe shortage of Hispanic Latino registered nursing nurses in California. In behavioral health, we're seeing trends in the positive direction, but we also see shortages of both Asian and Latino professionals across professions supporting behavioral health.

With the licensing data that we are receiving, we're also able to look at language. Recent census data, for example, shows that Spanish is the language spoken in 28% of California homes, but none of the professions have providers that match the percentage. For example, less than 15% of registered nurses speak Spanish. We are now seeing also that there are fewer behavioral health professionals speaking Spanish in Asian Pacific Islander languages than there are in the general population, and Spanish is underrepresented in most professions.

Our programs do prioritize organizations and individuals that can provide care in medical threshold languages. For example, in our recent round of loan repayment and scholarship cycles, we awarded over 600 individuals that speak a medical threshold language, or almost 35% of our awards were to students or providers who speak these additional medical threshold languages. Thank you.

Can we create a little space with Department of Finance? And LAO? We have a number of panelists. Next we will have Garrett Chan, President and CEO of health impact with the California Hospital Association, followed by Matt Ledge with SEIU.

Thank you, Chair of Arambula and Members, my name is Garrett Chan and I am the CEO of Health Impact, which is the California Nursing Workforce and Policy Center. I'm also a nurse currently in practice. While California has approximately 409,500,000 licensees, we know that only about 375000 or 75% are in some type of practice as there are nurses who have retired, TeleHealth nurses from outside of California, traveler or agency nurses as according to the UCSF Health Workforce center and Dr. Joanne Spets's study.

The study that Dr. Spets did also found that California is already short 40,567 registered nurses and it's likely to be that deficit between now and 2026. Of note, in that survey, 24% of the respondents said that they were, quote, reasonably likely that they would leave their position within the next two years, and almost 15% said that they were definitely leaving healthcare and hospital systems are the largest employer of nurses.

In a survey of six hospitals and counties in Southern California, Assembly Member Rubio, your county is represented in this number. They had a deficit of or they had 6394 RN vacancies posted and it also took an average of 67 days to actually fill those positions. There are over 400 hospitals in California and numerous other community and public health entities other than hospitals that hire RNs for which we do not have aggregated data. So we know that the workforce shortage is massive.

In November, as the Committee knows, Kaweah Health in Visalia reported that they experienced a $29 million loss in operating revenue. Kaweah Health has 240 vacant RN positions that are filled by traveler nurses. Kaweah is paying anywhere between $180 to $200 an hour, and since the start of the pandemic, Kaweah has paid $81 million for contract nurses. That doesn't include shift bonuses and overtime for Kaweah employed nurses.

Hospitals across the state have seen nearly 20% rise in labor cost since the pandemic, contributing to the overall financial instability in the hospital field. While we can understand the numbers of the impact that the workforce shortage has on the financial viability of healthcare organizations, we also need to understand how the workforce shortage has an impact on access to care. We're balancing the workforce shortage with important policy initiatives in California.

For example, the Governor has promised to advance universal health care access through medical and in October of last year, he announced that roughly 200 and 8600 thousand older adult Californians were receiving full scope MediCal. As a result of this expansion, we are seeing wait times for needed surgeries and clinical appointments rise. Emergency departments are overwhelmed with patients awaiting inpatient beds. The workforce crisis is not limited to hospitals, however.

Home care agencies, community health clinics, public health departments, school nurses who provide much needed care and support to people in the community are all in need of more workforce support as the healthcare needs of Californians is growing. Personally, I also see that there are so many patients who need care in the clinic where I work. Even if I work as fast, efficiently and provide high quality and safe patient care, I still feel like I cannot do enough.

It takes a toll on me as a nurse who has taken an oath to provide the best care to the most number of people and it can be demoralizing. My experience is not unique. We are seeing through research and anecdotal reports that burnout and moral injury is on the rise for all health professionals. The burnout and moral injury are driving nurses out of direct care practices in numbers we have never seen before. It also has an effect on the willingness of being a preceptor.

Having a student can be very rewarding and it's very time consuming to do well. Yet most nurses are not educated in the practice of teaching. Also, precepting is an unfunded or noncompensated activity. My patient load does not change when I have a student, I am still expected to deliver care at the same rate. So how do I create a meaningful learning experience when we're short staffed and already and now we're trying to teach on the fly?

Additionally, the time horizon for educating nurses is on average four years and the greatest number of professionals who leave the profession will do so within the first two years of practice. So we need to help increase the number of transition of practice or postgraduate apprenticeship programs to keep these highly educated new professionals in the profession. The healthcare workforce shortage crisis is caused by many factors.

While addressing single factors such as addressing faculty salaries and clinical placement shortages will help, they will have a limited impact on the overall workforce shortage crisis. Delaying funding for healthcare workforce programs will prolong the workforce shortage crisis that we find ourselves in today. On behalf of health impact, I would urge the Legislature and the Governor to not delay or include trigger cuts in these critical workforce investments.

Investing in the healthcare workforce in areas such as facilitating more K through 12 allied health providers such as doulas and paramedics and other pre-nursing individuals, especially people of color, to pursue a career in nursing strengthens the nursing pipeline, strengthens the nursing education, and expands meaningful and evidence based interventions to support and retain nurses in direct roles where well being and mental health initiatives and postgraduate transition programs are necessary. We want to thank KCAI for their significant work with us.

We are thankful for all the work that they're doing and we just hope that we can continue to do more.

Next we will hear from Matt Leje with the SEIU.

Good afternoon. Thank you for having me up again on this important issue. Healthcare workforce is something I've spent a number of years working on, and we are really at a crisis point. There's been a lot of talk of nurses, and absolutely we have a shortage of nurses. But I would say that the workforce shortage go across the spectrum, across allied healthcare professionals, up and down resident physicians and so forth. So we really need a holistic solution to try to address our healthcare workforce needs.

Although I echo the comments around nursing, where we have an acute shortage right now as well, it's been spoken about, but the trauma that healthcare workers have faced over the last three years is critical.

And it's spoken about a lot, but can't be spoken about enough because healthcare workers really are leaving the profession at an incredibly high rate, according to one survey, at a rate of almost 30%, which, if we're not retaining our healthcare workforce, it takes so long to try to retrain, to train new workers. We have to do both.

And we appreciate the investments last year by the Legislature and Governor on retention, and those funds are going to get out, but just really need to make sure that we're doing everything we can to try to retain our existing workforce and train new workers. With that being said, in a recent survey of healthcare workers, just to stress the 0.0% of healthcare workers reported that their departments are understaffed. And that's a survey of SEIU Members.

And really, we are not able to deliver on our goals of providing timely access to care if we do not have the workers to do that. And that goes from the person greeting you at the front desk to the medical assistant who's getting you ready for the appointment, to the physician or nurse practitioner or whatever provider to broaden care during your visit. Programs like registered nurses, respiratory therapists, and radiologic technologists who take x-rays, those are typically at a minimum, two years in length.

So it does take some time. And so we are concerned, and even though we are about any delays in funding, even though we appreciate that we're in a very difficult budget time, I would just echo the comments that the Committee made today around this can't wait. This is something that's absolutely necessary, particularly if we're thinking about how the Governor can meet goals of assuring 500,000 apprentices. I would argue that Healthcare is the right field to invest in, the right field to make that happen.

So for that, we would just encourage the Legislature to both think about the delays, but also look at this as a potential opportunity to look at the types of fundings that we could provide. Focus on programs that are joint programs between labor and management, so we can braid and cobble together resources so that our dollars, our limited dollars in the state budget can go further. And so with that, just also want to focus on career ladders.

How do we help existing healthcare workers advance in their career? Take the next step, because we know that if you have survived through the pandemic and you are continuing to work in healthcare, you're going to want to stay in healthcare, which would promote retention. So once again, appreciate the budget and the situation that we're currently in, but just echo all the comments that the Committee made today of really needing to make investments now and not delay. So thank you.

Next we will hear from Natalie Diaz, who's the Director of Health Center Operations with the California Primary Care Association.

Thank you, Chairman and Committee Members, for the opportunity to weigh in. I'm Nataly Diaz, Director of Health Center Operations at the California Primary Care Association. We represent approximately 1300 not for profit community health centers who provide comprehensive, quality health care, particularly for leow income, uninsured and underserved Californians who might not otherwise have access to health care. Collectively, health centers provide care to more than 7.7 million patients and a significant portion of the medical population.

Healthcare employers, including health centers, are currently operating in the most challenging labor market in decades. Inflation remains high and unemployment is near historic lows. The size of the labor market has shrunk and has not recovered since pre-pandemic levels. Across industries, employers are raising salaries while also experiencing rising turnover. The average 12 month turnover reported by health centers in 2022 was 31.4%. This turnover rate is more than three times higher than in 2020 and nearly twice as high than in 2021.

The positions with the highest turnover include medical assistants, physicians, dental assistants, dentists, nurse practitioners and physician assistants, respectively. The majority of health centers implemented salary increases in 2022 in response to high inflation in the competitive labor market. However, it's challenging for health centers to keep up with the current rate of salary increases. Health centers do not have the flexibility to increase their pricing structures. Therefore, significant increases to reimbursement rates for clinics are needed to keep up with the rising labor costs.

In addition, strategic investments into healthcare pathway programs and total rewards are crucial. Now more than ever. For these reasons, the workforce programs under HCAI have become incredibly important to developing the health center workforce. We continue to work alongside HCAI staff and partners like CMA, CAP, SEIU and others to ensure that graduate medical education programs like the Song-Brown Primary Care training program, continue to have robust funding available.

The Teaching Health center program, which shifts the model from training physicians in the hospital to the community based setting, has doubled in the last seven years, and that's really with the support for new, expanding existing and teaching health center funding available through the Song-Brown program. Now, the challenge in front of us is sustaining the teaching health center funding, given the significant expansion and increased cost of teaching health center training, which is now at $209,000 per resident per year, according to HRSA.

Last year, additional funds were invested into the Song-Brown Primary care residency funding program through the state budget process, but additional and sustainable funds are needed to ensure that we don't lose ground. In addition, California invested for the first time last year in new nurse practitioner and physician assistant postgraduate training programs. This was a one time investment, so additional work will be needed to sustain this program. Overall, this highlights how HCAI, through collaboration with the Legislature, Governor, and stakeholders, has significantly expanded health professions training programs.

Similar examples include the California Medicine Scholars program and the Health Professions Career Opportunity Program, which help us reach out to students earlier in their training and expose them to health careers in community health centers. We're delighted by this, and we would like to see HCAI workforce funding programs continue to prioritize community based training programs, sites, and preceptors. This is something that has been significantly discussed in the California Health Workforce Education and training council meetings, so welcome additional conversations on how we can make this happen.

The HCAI loan repayment and scholarship programs have filled gaps that exist with the federal HRSA programs. The National Health Service Corps funding expires this fall, which means that limited or non expanded funding will only fund providers and entities that have a certain HIPSA threshold. State programs like the state loan repayment program will have a HIPSA requirement, but they don't have a HIPSA threshold.

This means that providers working in underserved areas with relatively high HIPSA scores will continue to be able to leverage these state loan repayment programs, which is critical. While this is great, I do want to flag for you a challenge that is on the horizon. The increased federal funding in the state loan repayment program in the past two to three years removed the employer match requirement, which previously posed challenges for smaller health centers who could not provide the match.

Unless increased funding is dedicated to this program, that match requirement may be reinstated, which recreates the challenge for all eligible healthcare providers and entities to participate. Lastly, we are aware that the governor's proposed budget included deferred funds for several workforce initiatives as has been discussed. An example of that is the community health workers. And we know that in our setting, community health workers are critical to connecting our patients to social and outreach services.

So we do, like others have stated, encourage the Legislature to revisit this proposal and explore ways that the funding could be reinstated. Like many in this room, we are committed to ensuring that our underserved communities have access to high quality healthcare. And so investing in the development of a diverse and inclusive workforce is a significant answer to achieving that goal. Thank you.

Finally, we have one more speaker who so kindly accepted our very late invitation. Lupe Alonzo-Diaz was the President and CEO of Physicians for Healthy California. Ms Alonzo-Diaz thank you.

Thank you, Chair, Members, Lupe Alonso-Diaz, President and CEO for Physicians for Healthy California not related to Natalie Diaz. I wanted to first and foremost thank you for your leadership in this space. As a former recipient of MediCal and WIC and food stamps and other services available for low income, working poor families, having this conversation about the opportunities to address healthcare workforce challenges is really personal for me. It continues to be personal for me.

My mom is on MediCare and she relies on that for every single service that's available to her. And so, again, this is personal for me. And I appreciate both the leadership here in this Committee as well as the leadership by the Department in the space. I wanted to share two best practices, and I want to also just recognize time and keep my comments brief. We know, as has been noted already, we know that addressing, developing, deploying physician training programs in underserved areas works.

It's a win win. It's an economic development opportunity. It works for that community. It increases access to physicians and allied health professionals in that community. It increases access to care. It also ensures, ideally, that those physicians are staying in those communities. They become the PTA leaders. They become the individuals looking for employment. They're also looking to buy a house and make a home in that community. And that is a business development opportunity. That is a win win for that community. PHC administers the calmed force program.

We have a contract with the University of California. It is funded by Proposition 56. It's an annual appropriation of 40 million in the last five years, since 2018, we have received a request for more than 2,482 residency positions. So again, 2,482 resident positions that have been requested for support, and we've been able to award slightly more than 965. And of those, 386 are new and expanding residency slots.

Those are 386 new and expanding residency slots that wouldn't be there without the joint support of the Prop 56 funds, as well as other funds such as Song-Brown. We also know that physicians tend to practice where they train, so to having physician training programs that are exposed to migrant farm Worker Clinics, street medicine, other communities, foster children, LGBTQ plus. It helps. It's a win win. For that reason, we again want to acknowledge and appreciate your leadership in this space.

The other program that we administer, also funded by Proposition 56, is Cal Healthcare. So the Cal Healthcare Loan Repayment program. This program focuses on who physicians and dentists serve rather than where they serve. We've already heard data with respect to MediCal communities. This particular program is a one time appropriation of Prop 56 funds for 340,000,000.

We have received requests for more than 35,853,585 physicians and dentists since 2019 that would like to increase their access and their participation in MediCal the average payer mix for our awardees is 65% to 70% MediCal. So we are looking for young physicians and dentists that want to practice with medical communities. Of those awardees that we have funded, it's been a little bit more than 1,130. Their educational debt is more than 1.1 billion and what we have available to date is 350.

I'd like to repeat that again. The request in the last four years has totaled more than 1.1 billion. And I'm sure, as both of the good doctors here noted, the average educational debt for a physician is about 350,000. That is a lot of money. After 20 to 30 years of servicing that debt, it's closer to 600,000. So in addition to reimbursement rates, having those opportunities to provide both loan repayments and real time academic support, both academic and financial support by means of scholarships is critically important.

If we want to diversify the physician workforce honestly, we have to start at the womb. We have to start with maternal health. But recognizing that the purpose of this Committee is focused on addressing healthcare workforce, we have to find those opportunities to ensure that financial barriers and academic barriers don't limit how we diversify our physician workforce. Of our Cal Healthcare's awardees, almost 80% speak another language other than English, and again 65% to 70% of them with MediCal Communities.

Again, I want to recognize and thank this Committee, your leadership in this space, as well as the Department, for all of the wonderful work that you've done to date, and recognizing also all of the wonderful work that shall happen. So again, appreciate your support.

Department of Finance, followed by LAO.

Joseph Donaldson, Department of Finance. No additional comments at this time. Thank you.

LAO?

And Jason Constantouros, LAO, also available for questions.

Bring it up to the dais. We'll begin with Assembly Member Rubio, followed by Dr. Wood.

Thank you. Appreciate all of the information, and I'm looking through our packet and I see all of the deficits in the workforce. I think Director Rizell talked about all of the investments on programs to help develop the workforce. I don't see any data as to how those are working. Investing in those programs is one thing, but are they actually working because I know that prior to the pandemic we had a shortage, a health care workforce shortage. The pandemic happened, and it doesn't seem to be getting better.

So if there's any data that you can provide on all the investments that you talked about earlier, what was it, the doctors, the investments in the minority communities being providers in some of these workforce--again, I don't see that here. And so to me, again, we're investing in these programs, but are they actually making a difference in the workforce? And that is the first question.

Obviously, if you don't have it today, I would like to see that data because we can't help unless we see, hey, this program is working; let's put more money into this particular program. What I also hear is we talk about the shortage of workers. So how are you recruiting folks for these programs, for example? Because we can have great programs, but if you have empty chairs, obviously nothing is happening.

And so if we are having a hard time recruiting actual employees, how are you even recruiting folks to participate in some of these programs that we're investing in so that we can train and provide that workforce that we so desperately need? And again, the question is we had a shortage of health care workers prior to the pandemic. How are we doing now? I guess it's rhetorical, but we really need to address those issues before we continue.

Are the investments that we're making, are some programs better than others? That's, I think, the data that I would like to see so that when we're up here making these decisions, we can say to the point of our budgets, right, do we cut this funding and then put that money in here or--you understand what I'm saying? Because if we're in a tough budget situation, then we have to make those tough decisions and actually invest in programs that are working.

Well, thank you for that question. You know, I think that they are working. For example, with the increased funding, with Song-Brown, for example, the number of programs that we've been able to support, some of these--this is a longer term, but we have been able to significantly expand the number of programs that are being built to train. For example, with our Psychiatric Mental Health Nurse Practitioner Program, I think we're able to fund over 700 new psychiatric mental health nurse practitioners, for example.

And so, with our loan repayment programs, we've been able to award over 1,000 awards with these increased dollars for providers to be able to serve in those underserved areas. Significant increase. So we have demand for the programs, people who are applying. We do significant outreach to reach out and work with our stakeholders, our communities, to make sure that our programs are--we're communicating as much as we can, and we're seeing increased demand for the programs.

Well, that's exactly what I need, those numbers. You listed a whole range of programs earlier. If I can have or we can have--

Yeah. A chart I'm sure you have of how much investments and how many people have been trained, and the retention, too, because as we know, even with universities, the enrollment is very different than the graduation rate, and so if you bring in folks for training, how many of are actually a: graduating or continuing and how many are actually going into the profession? Because you may be investing, but if you don't have them in the hot seats, then those investments are basically being wasted, and what are we doing to make sure that we retain those?

Share that.

Dr. Wood?

Thank you, and thank you for the report from the entire panel here. I'm curious, so how granular is your data as I look at your report? And I'll just give you an example of a question here. On page eight in the report, it says, 'relative to the population, the existing nursing workforce is well distributed throughout the state.' So when I see your chart or your numbers, it says in the Northern California, it's 3.6 percent of the population and three-point-whatever, so the numbers line up.

But that doesn't tell the whole story from my perspective. But it says additional research is necessary to determine if the existing workforce is sufficient. And thus, so you're working off of 2020 numbers that show decline or exits from the profession. We don't really know, but yet anecdotally, what we hear is that hospitals, federally qualified health centers, are seeing shortages in nurses. That corresponds to shortages of doctors in some areas. You've noted that's maldistributed.

Allied Health professionals aren't able to work in areas where there aren't doctors. There's a lot going on here, and so how granular is your data? Because if even from 2020, we know there are exits that are exceeding the number of new licenses in the nursing and the nursing piece, yet, on the other hand, we're being told we need to push back on our nursing initiative because we don't have the resources to do it. Our health care, these things are going in the wrong direction from my perspective.

And, look, I recognize you're in a difficult position. I can say a lot more probably at times than as a Legislator, but how granular is your data? When will you have more current data? Because what we're hearing from hospitals is that shortage of nurses and Allied Health professionals is absolutely killing them.

What we were able to produce in the report, so we're beginning to collect the data from the licensing boards, and so it will be over the year, right, that we'll get that full set of data, right, that we're getting from the licensing board. And so what we were able to do is to take some of the new data as well as data that was from 2020.

And then there are next steps, as I mentioned earlier, for the team to take that data and start doing and understanding the exits and doing that granular work. What we have here was just kind of a representation of the data that we have so far. Our next steps are to take that and actually become more granular in understanding the exits and how that impacts the shortages, et cetera.

Okay. When you analyze that data, is it basically looking at addresses where people live?

Where their address--where they provide that in their licensing survey is where they live or where they practice.

But it doesn't tell you how many hours a week they might practice, doesn't tell you if they're even practicing.

There are some of that we're looking at in terms of number of hours and what kinds of work that they're doing, for example.

Okay.

One of the things--and what we'll be doing as we get this data is we'll be publishing it on our website. So we're taking this data and developing it, and we'll make it available publicly regularly.

Yeah, I guess I would just--and I thank you--I guess I would just look at just pages seven and eight. The key findings doesn't show a health care workforce that's firing on all cylinders, not even close. Physicians are maldistributed. Dental professionals are maldistributed. Behavioral health is maldistributed. Allied Workforce is maldistributed. Nurses seem to be distributed well, but the numbers are declining. We have a workforce crisis, from my perspective, but we're being told we need to cut back on the investments.

I'm going to follow up, if I can. Earlier, we heard from Matt Lajay about this crisis point that we're referencing today, and that 83 percent of frontline workers were feeling understaffed. We also heard that our decisions will prolong the workforce shortage crisis that we have, as well as us having a 31 percent turnover rate, which is three times higher than we had in 2020. How does it then make sense for us to be decreasing investments into a nursing initiative, knowing, as was stated by Mr. Chan, that we're currently short 40,000 nurses? How can we not address this crisis head on by continuing the investments that we made?

Yeah, thank you for the question, and definitely, we're very much cognizant and acknowledge those concerns. The Administration would note that specifically, investments in nursing within that initial 2022 Budget Act investment, some of those investments have still been retained. We understand that there are delays for some of those investments in the other years that would be repaid in the outyears.

But it's a tough decision to try to balance both the immediate need to address a budget problem and as well as trying to stay committed to a long-term commitment to health care workforce. So we tried to do the best balancing act possible while trying to still retain as many as investments as we could, but also understanding we have an immediate budget problem at our hands. So, like we said, it's a hard decision, but we tried our best to balance those very competing priorities.

I may contextualize it and remind us of what, again, Mr. Chan had stated regarding Kaweah, that there are 240 vacancies and that had cost them 81 million dollars in contract nurses. I want to scale that to what California is looking to invest for the state in terms of a nursing initiative, and that's one of the 400 hospitals that's looking to address it.

That I want to make sure we're addressing the scale of problem and the 40,000 nurses who we are short and the amount who are turning over and burned out and leaving the profession, that we're making investments to train those providers today. I feel like I've communicated my point, but want to make sure you're hearing the priorities from the Legislature for us to also be making those investments to train the providers of tomorrow. I'd like to turn a little bit--I'll turn just for a second and then come back to Dr. Wood if I can.

I wanted to talk about how we prioritize threshold languages within Medi-Cal, and I'm very supportive of this, as I believe it's important to build trust and to do it in a language which patients are most comfortable in, but I want to make sure that this is solid ground for us to do it on because why aren't we focusing on language more?

Why don't we use this within our workforce packages to prioritize so we can address many of these threshold languages? Is it constitutionally feasible for us to be using language to prioritize for acceptance?

Yes, Mr. Chair. We do believe it's permissible to look at language specifically because it is related to the work that's being done, and we think it's critically important to increase the linguistic capacity of the workforce.

Recently, we were at a Latino Caucus policy retreat where we discussed prioritizing language and would like to be able to work with the Administration to follow up and figure out if that's a way in which we can help to diversify our workforce. As we're seeing the physicians and providers who are short, a focus on language may allow us to make inroads into those disparities.

My final question, if I can have Ms. Alonzo-Diaz come back up. Now on the CalMedForce, the numbers I wrote down, there were 2,482 positions for support placements, people who had asked for support. You had funded 965, but the number that stuck out to me was 386, or less than half, which were new and expanding residency slots. So are we to say that the remainder between 386 and 965 were backfilling slots that hospitals were currently paying for before and how does that make sound fiscal sense for us to be making inroads, especially hearing some of the geographical disparities we heard about?

Agree.

Great question. If I may clarify that, CalMedForce funds GME physician training programs. They're not all hospital-based groups, so these are GME physician training programs. Some are in hospitals, others might be in community health centers as well as other non-hospital areas, and so we're focused on supporting those training programs that have a large payer mix with Medi-Cal. And yes, you are correct that we have funded 967 resident positions since 2018. 386 are both new and expanding.

The statute for Prop 56 specific to GME specifically focuses on sustaining, retaining, and expanding, and that retention piece is critical. I wouldn't describe it as backfilling. I would describe it as supporting existing GME physician training programs that likely were in dire financial straits and/or needed additional support in order to keep the resident positions that they have.

What we've seen in the past, as you know, is a number of either physician training programs that have closed or they've started to reduce the number of resident positions that they have because they simply can't sustain them.

This is ongoing funding, is that correct?

Yes. This is annual and an annual appropriation of 40 million.

Now, I guess why I'm trying to focus on it is whether or not it makes sense for us to invest into those specific examples you gave rather than in new or expanding residency slots. Earlier you had stated the importance of the economic development opportunity and increased access to care. That only happens when you're creating new and expanding slots, not sustaining slots. That's baseline.

So why are our dollars going towards baseline rather than expanding the economic opportunities and increasing access to care, which was the intent of the dollars? Do we need to work on the prioritization and language within our side so we can refocus and make sure we're prioritizing new and expanding slots? Is that what I'm hearing from you since that's what we've funded thus far?

It's a delicate balance of retaining and supporting the expansion of physician training programs. The program--CalMedForce currently prioritizes new and expanding physicians, and we take into account a number of different criteria that includes payer mix as well as graduate outcomes. So we're focused on prioritizing those physician training programs that are in those underserved communities and that have a high Medi-Cal payer mix.

I'll follow up offline if I can, but I will elevate that locally, we had 15 expansions within one facility. I thought it was 15 expansions, but it ended up being zero more providers who were there available to help us during the pandemic of a century, and I guess for many of us, we had expected that to translate with more dollars going to facilities to more providers during the pandemic.

And it's a bit frustrating to hear that it's going towards supplanting or towards existing slots rather than towards new and expanding slots, and so I look forward to making sure that the legislative intent is present into those dollars as we go forward. Oh, go ahead. Please.

Sorry. If I may offer additional information--and I appreciate your interest in the CalMedForce Program and happy to talk to you offline about it or to anybody else--if I may offer an additional perspective with respect to the challenges of both new and expanding programs, there is absolutely value in supporting both existing new and expanding programs.

Back to the core focus of ensuring net new, as well as supporting increased opportunities for physicians to train in those areas, new physicians, new slots in those areas, I would also just offer as an additional opportunity is ensuring that what we call GME-naive health systems--it's a terrible name, but it's health systems that don't have a GME program--their biggest challenge is the process, the journey of, as you know, becoming accredited, and typically for those GME-naive health systems, it takes one to two years and typically about two million dollars. So if I may just offer that as an additional perspective in terms of if--if we--

Not I think--I know that we all have the same goal, which is to continue to support net new. That's also a different perspective that I wanted to add in terms of looking at the ecosystem as a whole.

I'll just counter if I can. There were two facilities in my region which received dollars: one started a brand new residency program that I've now been to their graduation and seen providers who are practicing in our communities, another is sending money to a hospital that isn't training and giving us more providers.

And I think when I look at those two investments, I think there's a logical rationale for us to increase access to care and to work on economic development for those regions rather than to supplant funding that was already being spent in those places. And so I look forward to those conversations and how we can tighten language. Dr. Wood?

Thank you, and just kind of a general comment in the workforce-related areas--and I can't get my mind off the nursing piece of it because it's in front of me and I don't have one for Allied Health, I don't have it others--but when you push back these initiatives, there is a workforce associated with the initiatives.

And so there's no guarantee a year from now or two years from now, when the money is restored, that the people that support these initiatives are going to be around because they need to work somewhere else. So pushing, not having a consistent stream of funding for these kinds of programs imperils the ability to increase the workforce at a totally different level.

You could get to a point where you suddenly have the money, you don't have the workforce to train the workforce, and so beware of the unintended consequences. I know we budget from year to year, we have to focus on this year to year thing, but the reality is that these are investments and you don't always see the return on the investment for years to come.

And we don't really do a very good job in California of investing in these kinds of initiatives because they're always line items and people are not line items, and health care has big line items, unfortunately. But I just caution you to think when you're making cuts to programs like this, the workforce is supporting--these workforce programs may go away because they don't have the ability to move on, and now we've further exacerbated the challenge going forward.

So in the nursing initiative, when you go from 25 million in one down to ten in one year, 55 to zero, and then we drop in 175 the following year, you don't go from a zero to 175 and expect miraculous results from our perspective. It's really difficult, which typically will mean, at the end of that, there'll be unused for money that'll get clawed back and never used.

I have to think somewhere there's some machiavellian process that thinks about these things, and if we line it up this way, maybe some of that money won't ever get used and we'll get it back. So anyway, I think I must have low blood sugar or something today, but I just wish we could think about the big picture sometimes, and we often just thinking about the line item.

Ms. Rizell, I may bring you up if I can. Earlier we heard about the Council and how they can help us to create some innovative approaches. We've really had a stubborn disparity in the geographic disparities, and so I'm wondering how the Council can help us to address this and come up with some solutions and hoping you could provide some insights today that may allow us to address the geographic disparities.

Well, I think that it's a perfectly appropriate thing for the Council be to discussing as they're discussing disparities, and we've been hearing from people who at the Council, in terms of stakeholders and talking about the geographic disparities, and so one of the things that we're doing with the Council is helping us to understand a little bit more about where those disparities are, and then it helps us to then prioritize and organize our programs to be able to reach those areas. So we are definitely hearing from the Council as to what kinds of shortages and where these shortages are.

Mr. Chen?

Thank you. I just want to reiterate my appreciation for HCAI, and this is the intersection between nonprofit, community-based organizations like mine, who work very closely with the Council and with HCAI to actually provide the programs. And so we're doing a lot of things that are innovative and yet don't require a lot of geography, you know, people to be close in geographical areas, and so distance learning is really big, and we're using new pedagogies to teach people about this.

So I think it's the relationship between community-based organizations and governmental agencies to actually do the work, and we rely on the Council for their support and their vision and guidance.

I want to make sure--and again, we can follow up offline if needed--but hyperlocally, I know we have an impaction at our local CSU system that doesn't allow us to train the number of nurses that are needed. Is the Council focusing and looking at some of those impactions as causes of the geographical disparities that are so prevalent? I'll just give you an example. At Fresno State, I got 60 slots. We had 129 students who applied with over a 4.0.

Now, just to be fair, I didn't have a 4.0 and got into medical school and thought I did just fine, that I think we have to make sure we're providing those opportunities into communities that are suffering those disparities that I just want to make sure that we're asking those types of questions so we can start solving the problem at its root cause.

Yeah, absolutely, and I think some of the conversations we've had with the Council are we don't have enough faculty and people make more money practicing than they do as teachers. So how do we have retention programs, recruitment programs for faculty? Clinical placements are a real struggle. So how do we increase the clinical placements and make sure that they're in these rural areas and that we have good coordination? Pipeline: how are we thinking creatively about recruiting folks who have emotional intelligence?

We have this wonderful program we heard about at one of the presentations of the Council called the baristas, barbers, bartenders. There are folks who are working in retail, who are really good with people who have lived experience, who have a lot to offer as behavioral health folks. How are we reaching out to them to be peer support specialists? So we are hearing presentations from the clinical placement folks from the schools about what do they need. They're telling us they need faculty.

So we're looking at how do we next year make sure that our cycles include funding for faculty positions and the like? And we know we need to increase slots. We need to increase slots for social workers, for nurses, and all the points you all are making.

Dr. Wood?

The maldistribution challenges--and I know it's a state program and I know that I'm careful how I word this--but the lottery systems in some of our nursing programs and dental hygiene programs make it difficult for people in a community who want to go to their local community college in a nursing program to get there because they're going to be in a lottery in somewhere else in the state, and so--if they get in at all--and so that means they may have to move.

They may not be able to afford to move, but they're at home, in their own community, and have a hard time getting into programs in their own community. And then we wonder why we have a maldistribution because I think we're--and same with all the Allied Health programs as well. So I understand why the lottery exists in theory.

But maybe some of the unintended consequences is that the people who want to be in the communities that they grew up in and can afford to live there--because maybe they can live at home and go to these programs--can't get into the programs in their community. They might get--someone in Humboldt County might get into something in the Inland Empire. And how does that work? That just feels like it could further exacerbate our problems.

And then when people go away, they might decide they want to stay, but certainly people coming from a large urban area to a rural area for a program, they don't always stay. They go back to where they came from. So as we start looking at some of the maldistribution issues, can we start looking at some of these other issues as well? And I don't--

And we do have representatives of the community college system, the CSU system, and the UC system on our council, which I think is very meaningful, but I think the notion of growing your own is very important, so, you know, one of the psychiatric mental health nurse practitioner programs, we're never going to train enough psychiatrists.

We gotta have, you know--so we're excited about these psychiatric mental health nurse practitioners, but they have a mostly online system so that someone can start out in Humboldt County, can have a couple of in-person sessions, but can have their clinical placement at home so that they're being educated there, they don't have to move, and they can stay where they are and provide the valuable services where they are. So we are definitely looking at innovative solutions like that.

This feels like the natural place for me to elevate that there is a UC that doesn't have a medical school that would allow us to address many of the geographic disparities in the Central Valley. And so as we're looking towards how we address them, hopefully UC Merced is thought of and included as part of that solution. With that, I would like to thank very much all the speakers on this panel. We will now move on to Issue Seven.

I want to welcome the Department of Managed Healthcare. We will begin with an overview of your Department budget. Our first speaker is the MHC Director, Mary Watanabe. You can please begin when you are ready.

One second here to get settled. All right. Good afternoon. Mary Watanabe, Director of the Department of Managed Healthcare. With me, I have Dan Southhard, our Chief Deputy Director. The department's mission is to protect consumers' healthcare rights and ensure a stable healthcare delivery system. The DMHC license and regulates 140 health plans that provide health coverage to over 28 million Californians. We regulate more than 96 percent of state-regulated commercial and government health plan enrollment in the state.

Our total proposed fiscal year 23-24 budget is $157 million and 685 authorized physicians. The department is specially funded by annual assessments on health plans and receives no general fund money. The DMHC regulates health plans in a number of ways. We license and approve plan products for full-service behavioral health, vision, dental, and chiropractic plans. We ensure basic healthcare services and mandated benefits are provided. We review health plan networks upon initial licensure and on an annual basis, and when health plans expand or contract their service area.

We also review health plan timely access compliance report filings and prepare an annual timely access report. We review consumer and provider complaints and since 2000, the DMHC has assisted over 2.6 million consumers at our health center and recovered over 4177 million for providers. We administer the independent medical review process. We conduct routine health plan medical surveys and financial exams. We monitor the financial solvency and review health plan rate filings. And our program for rate review has saved consumers over $296 million since we started over 10 years ago.

We also prosecute noncompliant health plans via fines, penalties and/or corrective action plans. That concludes my overview. I'll move on to your questions, if that's okay. The first question is, is there any evidence that DMHC's rising costs measurably drive up overall healthcare costs in California? As I mentioned, we're funded through assessments on health plans and so the cost of increased assessments related to either new legislation or workload or other policy BCPs are likely passed on to consumers through increased premiums.

However, I'll note that the total cost of our 23-24 BCPs is approximately $24 million, which will result in an increase in assessments for full service plans of approximately 48 cents per enrollee per year, which is about, I want to say, a four cent per month premium increase. It's worth noting that the other costs that get passed on to consumers in the form of premiums is the actual requirements of new legislation in particular. And the other question was, what's the justification for the proposed workload budget requests?

Dan's going to cover a couple of those in more detail later on, but at a high level, we're requesting additional resources for our Office of Financial Review to conduct more frequent financial examinations of health plans and risk-bearing organizations, and to address the additional workload associated with the increased number of health plans licensed by the DMHC. To give you some sense, I think just three years ago we had about 25 million consumers in the plants we regulate.

We're up to about 28 and a half. We had about 125 to 127 health plans, and we're up to 140. So just with our growth, that's led to additional workload. In addition, we're requesting additional resources to comply with some of the new security and privacy requirements, to remediate audit findings and to make security and monitoring enhancements to comply with the Cal secure five-year plan. That concludes our overview.

Mr. Southard?

He's actually going to cover them in more detail in our different issue. That's it for our overview.

Department of Finance?

Joseph Donaldson, Department of Finance. No additional comments. Thank you.

Jason Constantouros, LAO. Just wanted to point out a few additional aspects of the department's budget. On page 27, you can see the department's budget and the growth of the department's budget year over year. Also wanted to provide a little more information. The department noted that the increase in the proposed budget results in about a 48-cent sort of increase in the full-service rate, in actual levels in the budget year.

Based on information the department provided us, we estimate that'd be about just a little over $3 in the total full-service rate. So while the growth is $0.48, that results in a total level of just over $3, and that's an annual charge. So if you divide that by 12 to get the monthly impact of that per month. One final point. We wanted to emphasize several of the issues that you're about to hear, we were asked if we reviewed the proposals and found them reasonable and warranted.

And we just want to emphasize we did review the proposals and aren't raising concerns with the proposals. We also want to emphasize that we share the staff interest in the department's growth over time and are available to the committee to assist on any issues

With that, I'll bring it up to the dais to see if any members have questions. I'll keep it here just for a second if I can. Using your numbers, 25 million enrollees to 28 and a half and 127 health plans to 140.

Those are about 10 percent increases, give or take. And yet we're talking about a 44 percent increase in your budget and staffing in the last two years. And so I'm just trying to figure out how those work together to have a 10 percent. It seems like it's a 10 percent workload increase, and yet we're having a 44 percent staffing increase. Hoping you can comment on that.

Yeah, no, I'll give you a little bit of perspective on that. I think some of it is just, there's a lot of interest in healthcare related legislation, and so, as we've had a lot of new legislation passed, it's added to just our workload. And so a lot of just our core functions, like our financial examinations, our medical surveys, even help centers, complaints to our help center, a lot of the functions that we do have increased.

I will also just note that we historically have been very conservative in our fiscal requests associated with legislation, and we tend to get analysts. And what we noticed, particularly last year, we had a big workload BCP request, was that while we had a lot of worker bees, we didn't have the supervisors to oversee them. And so we really needed to do kind of some reconciliation to shore up our operations to make sure we had the appropriate number of staff reporting to supervisors.

And so I think what we noticed, too, is just with our ongoing growth, we needed to request some additional resources. So you saw some of that last year, and we've got one more with our office of financial review this year. Dan, I don't know if you'd add anything else on that.

I'll bring it back then. Under your office of Plan and Licensing, you said you evaluate provider networks and network adequacy on an annual basis, as well as evaluating mental health parity is what's listed within the agenda. Can you provide some comments or tell us some of your findings so we can help and track and trend how this is progressing?

And can you help to elaborate what role DHCS has versus DMHC and determining network adequacy, as well as the mental health parity that so many of us are pushing for?

Sure, yeah, I'll start. And this is Dan's area of expertise, so he can add as well. So it's actually our office of plan monitoring that looks at both network adequacy, timely access. We've done a very large mental health parity review at the Department over several years. We've now incorporated that into our ongoing survey process. So we're looking at, when we do every three years, we go out and look at health plan operations for compliance with all aspects of the law. We're looking at parity there.

We do an annual review of network adequacy to make sure the plans have both an adequate network to provide all the services they're required to cover, as well as geographic accesses and the ratios that are in the statute. So we do that on a regular basis. And then annually the plans need to conduct a survey of their providers to assess their compliance with the timely access standards in the law. They report that to the department.

We release a report, which we did, I think, earlier this year. We'll also have a rate of compliance that we will be enforcing, starting with measurement year 2023. That will be reported in 2024. So there's a lot of steps that we are taking there just to ensure compliance with the law. I will just mention on the note about mental health parity. We also have behavioral health investigations that we're conducting.

This is five per year on the commercial health plan side, and we should have our first finding reports from those investigations in the next probably month or two. In terms of DHCS, DHCS is the purchaser. They administer the Medi-Cal program. Most of the Medi-Cal managed care plans have to have a Knox-Keene license. We don't regulate the county-organized health systems, but so we work very closely with DHCS.

There's a lot of overlap in the functions that we have and the work that we do, particularly as it pertains to timely access and network adequacy. Did I miss anything? Something?

I'll just add a couple of other touching points here. So with respect to reviewing networks, anytime a health plan contracts or expands their service area, they must file that new network with the department for approval before they can go into that expansion or contraction. In addition, anytime there's a contract termination between a hospital or a provider group, an RBO, and a health plan that impacts 2000 or more enrollees, the health plan needs to file that with us.

It includes the enrollee notice that they need to send in enrollees to inform them of that change. So we review those block transfers to ensure wherever the health plan is trying to transfer, block transfer the enrollees to, they have the capacity to take on that enrollment. And I think there are a number of work groups, too, between our networks and our surveys.

Divisions that work directly with DHCS on these topics.

I would love to understand CalAIM and its interface and what will occur. how are we going to be able to monitor as we enter into January 1, 2024. That may be more appropriate for DHCS, but wanted to ask your opinion and how you're positioning.

Yeah, no, I think it's probably more appropriate for DHCS. I will say one of the things we're constantly reminding the health plans about is often the changes they need to make to comply with the requirements in DHCS's contract impact their Knox-Keene license. And so we're working very closely to make sure they're filing any of those changes with us if it impacts their network, their contracts. Often they have delegation agreements. Those need to be filed with the department.

So I think my overarching response would be, we're working closely both with the health plans, but also with our agency, the Department of Healthcare Services.

I'm asking because of that subcontract, and since we had focused on the prime contract before for adequacy, we didn't have a real ability to view and determine if the subcontracts had been meeting, what they were able to state they were going to do, and thus why I'm wanting to guarantee you will have that ability in addition to DHCs post-CalAIMS implementation, so we can truly dig in and make sure that all plans are delivering the networks that they claim they can.

Are there any other flexibilities or improvements we could do that would better empower you to make sure you were aware of their networks?

Yeah, no, I don't know that there's anything else that we need. At the end of the day, we hold what we call the parent plan that holds the Knox-Keene license accountable. And if they sub-delegate those functions, they need to report that, file the contract with us, and make sure that they have the appropriate requirements in those contracts and the appropriate oversight. So I think that's a piece we'll be monitoring very closely is the health plan oversight, the parent plan oversight of their delegates.

We heard earlier about how the next decade will be focused on health care affordability. I also believe it will be on network adequacy and timely access to care to make sure, as we're increasing access overall, that people are then able to see providers. With that, I will thank very much, this panel, and we will move on to issue eight.

Okay. Issue eight is me again. This is gender affirming care. So SB 923 requires the California Health and Human Services Agency to convene a transgender, gender diverse, or intersex working group for the purposes of developing a quality standard for patient experience to measure cultural competency related to the TGI community and to recommend a training curriculum to provide Trans Inclusive Health Care.

The working group will be made up of at least three TGI serving organizations, at least three individual California residents who identify as TGI, and healthcare providers, and representative state agencies. The working group will conduct at least four listening sessions across the state with patients of the TGI community. The quality standard and recommendations for the training curriculum will be developed no later than March 1 of 2024.

The California Health and Human Services Agency has delegated the convening and coordination of the TGI working group requirements to the DMHC. SB 923 requires health plans and their delegate staff who are in direct contact with enrollees to complete evidence-based cultural competency training so they can provide proficiently trans-inclusive health care. SB 923 also requires the cultural competency training to be facilitated by a TGI-serving organization, and the training curriculum would be subject to DMHC's approval following engagement with TGI-serving organizations.

The bill stipulates that any health plan staff who may have been found to have failed in providing Trans Inclusive Health Care would be required to complete a refresher course on the topic. The DMHC will review individual case complaints the department receives alleging discrimination based on gender identity and refer those complaints to the Civil Rights Department. We'll review the complaints that we receive involving improper denials to determine whether any enforcement actions, including sanctions, may be appropriate.

We'll review and approve the health plan's use of cultural competency training curriculum. We'll modify our existing survey methodologies and tools to include a review of policies and procedures for 923 compliance. We'll provide a status report to the Legislature semiannually until we adopt regulations, and we'll issue guidance to ensure health plans are following these new requirements and annually review health plan documents to ensure compliance with the provisions of SB 923.

The California Health and Human Services Agency is requesting expenditure authority of $400,000 in 23-24 from the general fund to reimburse the DMHC for consultant services to plan, organize, and facilitate the TGI workgroup. The DMHC is requesting expenditure authority of four and a half positions and $1.2 million in 23-24 increasing to $2.2 million in 27-28 and annually thereafter. That concludes my overview. You had questions about the report to the Legislature.

We're anticipating painting right now that the first report would be submitted likely by July 1 of 2025, and every six months after that until we promulgate regulations. That will give us enough time so the first report can include an update on the working group and implementation of the quality standards and training requirements. So, getting close. And then, how will the Administration engage the TGI community on implementation of SB 923?

We've already had some engagement with the author's office and sponsors, and we'll also be looking to get input from the working group. We issued a solicitation a few months ago for members, and we're really pleased with the response we received. So the working group was primarily going to be made up of members of the TGI community or those that work with the TGI community.

Also, those additional four listening sessions we intend to conduct across the state will be a good opportunity for us to hear directly from the TGI community. That, I think, answers those questions.

I had Mr. Southern on my list, but if you have nothing else to add, we'll go to the Department of Finance?

Yeah. No additional comments at this time. Thank you.

LAO?

No concerns.

I'll bring it up to the dais to see if any members have questions. Seeing none, I will thank you and we will move on to issue nine.

Okay. Issue nine healthcare coverage for abortion services and cost sharing for SB 245. SB 245 requires full-service health plans to cover abortion and abortion-related services, including preabortion and abortion follow-up services, without a copayment, deductible, or any type of cost sharing. SB 245 requires the DMHC to interpret and implement provisions of SB 245 in consultation with the Department of Healthcare Services and the California Department of Insurance by means of all plan letters or similar guidance.

We'll adopt regulations by January 1 of 2026 and annually review health plan documents, including evidence of coverage and disclosure forms, utilization management data and health plan survey data to ensure compliance. We're requesting limited term expenditure authority of $499,000 in 23-24 and $483,000 in 24-25 through 27-28 to develop legal memoranda and regulations. I think you had a question here about why the costs were higher than what was provided to the Appropriations Committee last year.

Our understanding is the bill was last heard in the Assembly Appropriations Committee on July 5, I believe of 2021. The bill was amended on the floor seven months after it was heard in the second House Fiscal Committee. So the last fiscal analysis does not reflect the February 14, 22 amendments, we believe. Also, the increased fiscal was the result of potential litigation.

While the substance of the bill didn't change greatly given the federal abortion litigation, we wanted to include costs for the likelihood that DMHC will be challenged in our position. In the 2021 fiscal, we anticipated two memos and in our updated fiscal we're anticipating about 14 memos and additional coordination with the Attorney General's Office during litigation.

Department of Finance?

No additional comments at this time. Thank you.

LAO?

No concerns.

I'll Bring it up to the dais for members' questions. Seeing none, I will thank this panel and we will move on to issue 10.

This is related to SB 858. SB 858 revised the administrative and civil penalty provisions of the Knox-Keene Act and increased various specified penalty amounts assessed for violations of the law. This bill provides the DMHC with specific authority to impose corrective action plans on health plans for a violation of the Knox-Keene Act. It also increased the civil penalty amount for violations from $2500 to no more than $25,000.

Additionally, SB 858 updates various specific dollar amount penalties throughout the Knox-Keene act applicable to civil penalties, criminal penalties and various administrative penalties. SB 858 requires the DMHC to conduct annual rate change analysis to analyze, calculate and combine the average rate change information for the individual and small group markets. We'll assess the financial impact of increased penalties on health plans, conduct financial monitoring for corrective action plans for health plans and risk-bearing organizations.

We'll develop comprehensive health plan survey, corrective action plans, review health plan filings and as we always do we'll modify our existing survey methodology and tools. In order to comply, we'll be establishing a compliance team that will be housed in our Office of Enforcement to monitor and enforce health plan compliance with corrective action plans. They'll also lead the review and assessment of the severity of issues that come to DMHC's attention, whether from internal offices, external stakeholders, the media, et cetera.

We're requesting 40.5 positions and $12.6 million in 23-24 decreasing to $9.7 million in 27-28 and annually thereafter. Let's see. You had a question about the 40 and a half new positions we're requesting, which is at a 7 percent expansion to the department staff. It is significant, and some of the justification for that is really, this is a significant increase in our oversight and authority on our enforcement office.

It's not just an increase to the potential penalty amounts, but also the ability to require a corrective action plan. Historically, corrective action plans have been something we had to negotiate and often the plans didn't agree to, given the increased penalty amounts and the ability for us to require corrective action plans. We are also anticipating the more challenges from the plans which will lead to litigation, which is why you see such an increase in the number of attorneys at the department.

And I will just note that there's a significant amount of work, not only in the development of corrective action plans, but we really want to make sure that we're following up and monitoring that those corrective action plans are complied with, because our enforcement actions, while the penalties and the fines make the big headline, it's really correcting operations and plan behavior. That's the goal here. And I think that was it for that question.

Department of Finance?

No additional comment. Thank you,

LAO?

We don't have concerns with this proposal. The staff questions does note that this is a significant increase in the number of staff and just wanted to share a rationale why we didn't have concerns. One is, as the department noted, is that the bill does notably change the scope of the existing work that it's undertaking. And so the added sort of programmatic staff made sense to us as we were reviewing the proposal.

The proposal also includes some additional administrative and technology staff, which we understood to be reasonable given the sort of programmatic impact to the department. And then we also wanted to note that the fiscal impact of this proposal generally aligned with what we saw in the Appropriations Committee. So we understood that it was understood that this bill would entail a substantial increase in the department's workload. Thank you.

I will bring it up to the dais for any members' questions. Seeing none, I will thank very much this panel. We will move on to issue 11.

Good afternoon, Mr. Chair. Members of Subcommitee the DMC's Office of Financial Review works to ensure stability in California's healthcare delivery system by actively monitoring the financial status of health plans and provider groups, known as risk-bearing organizations, so that they can meet the financial obligations to consumers, providers and purchasers. The DMHC's Office of Financial Review conducts that oversight through routine and nonroutine financial examinations of each health plan and RBO.

As Mary indicated earlier, the number of DMHC licensed health plans under the DMHC's jurisdiction has steadily increased from 121 licensed health plans in 2015 to 140 licensed health plans in 2021.

In addition to addressing the workload associated with the increased number of licensed health plans, the DMHC has determined that it's in the best interest of enrollees and stakeholders to transition to a schedule where every licensed health plan is examined at least once every three years instead of the current once every five years, and moving the RBO or medical group reviews from once every eight years to once every five years.

Less frequent examination from health plans may result in an increase in the number of health plans and RBOs that are financially insolvent and are noncompliant With the Knox-Keene act. To address this workload, the DMHC is requesting expenditure authority of 14.5 positions and $2.68 million for fiscal year 23-24 and $2.55 million in fiscal year 24-25 and annually thereafter to conduct the more frequent financial examinations and address the workload associated with the increase in the number of health plans licensed by the DMHC.

I don't believe there are any specific follow-up questions. More than happy to address them now.

Department of Finance?

no additional comment at this time. Thank you.

LAO?

Also, no concerns with this proposal, but wanted to emphasize two key points. The first is that this is a discretionary proposal, so it's not being triggered by enacted legislation or any federal requirements. And that second, that fundamental goal of this proposal is to increase the frequency in which risk bearing organizations and health plans are reviewed for financial solvency.

And so that's really the issue before the Legislature. Is that a priority of the Legislature?

I'll bring it up to the dais. Dr. Jackson?

Is there any data you're seeing or anything that has triggered the need to be able to review them more frequently?

Yeah, I think with the increase in private equity to consolidations and mergers and activity around healthcare entities, we have a growing concern of whether interests, and also in addition to that, we're seeing more frequent insolvency or concerns with tangible net equity at the health plan and RBO level, which is our justification for requesting more frequent examinations of those two entities.

Okay, thank you. And just to confirm, these are through the managed care Fund and thus don't have a general fund obligation.

With that, we will thank very much this panel and move on to issue 12.

So, due to an increase in the statutory requirements on health plans, coverage of abortion and mental health services, and changes due to COVID-19 requirements, the DMHC has been a defendant in two to three legal actions per year since 2019. Given the high level of complexity and significance of these matters, such as personnel. Sorry. The DMHC utilizes the Attorney General's Office for legal guidance and to prepare these cases for hearings.

The DMHC is requesting additional expenditure authority to address the Attorney General's Office legal fees, and the DMHC has not had sufficient resources to address these associated costs. Historically, the DMHC has reallocated money from salary savings to cover excess Attorney General fees, which is not a viable long term solution. To address this, the DMHC is requesting expenditure authority of $400,000 in fiscal year 23-24 and ongoing to support legal representation by the Attorney General's Office in litigation to which the department is par is called, whereas a witness.

That concludes my overview. More than happy to address any questions.

Department of Finance?

No additional comments. Thank you.

LAO?

No concerns with this proposal.

I'll bring it up to the dais, see if there's any members' questions. Seeing none, I will thank this panel and we will move on to our last issue of the day. Issue 13, all right.

The DBC's Office of Technology and Innovation is tasked with providing project management, reengineering and automating critical business processes to mitigate security vulnerabilities.

In 2021, the California Military Department and independent security audit identified the DMHC as lacking adequate information security resources to capture data, perform critical data security practices, and document security procedures. It was determined that the DMHC needs to adopt 38 new information security policies, 12 information security and privacy plans, and, at a minimum, 87 procedures that need to be created and maintained. The DMHC currently lacks sufficient resources to implement, operationalize, and maintain the required security controls and address ongoing growing security threats identified in this security assessments.

The DMHC is requesting expenditure authority for approximately $3.5 million in fiscal year 23-24 increasing to $30.6 million in fiscal year 27-28 and annually thereafter to Fund the requested five positions. This request also includes consulting funding of $100,000 annually through 2526 to assist the DMC with the development of IT policies, plans and procedures, and consulting funding of $75,000 annually through fiscal year 24-25 for gap analysis consultants and one time funding of $90,000 for an identity life consultant, lifecycle consultant.

That concludes my overview. More than happy to answer any questions.

Department of Finance?

No additional comments, thank you.

LAO?

No concerns with this proposal.

I will bring it up to the dais for any members' questions. Seeing none, I will thank you very much, as I will thank all of our panelists who have participated in today's hearing. Now we will be moving to public comment.

As I stated at the start, we welcome public comment on all of the issues that are on today's agenda, but ask you to please keep your comments to only these issues. We will begin public comment with individuals who are here in the hearing room, and then we will go to the phone lines. Let us begin with public comment.

Good evening. Linda Nguy with Western Center on Law and Poverty. We share the chair and committee's concern regarding the proposal to sweep Covered California affordability into the general fund. When the individual mandate penalty was proposed in 2019, we had raised concerns considering the very large number of low-income individuals who are paying the penalty and more recent data bears that out. And so we recommend that, we urge the committee to reject this proposal, as this funding should be used for affordability assistance.

In addition, as co sponsors of SB 923 related to access to gender affirming care, we do support that BCP, as well as SB 858 related to health care penalties. Thank you.

Thank you.

Good afternoon. Matt Lege from SEIU, California, also on issue one, just wanted to share our concerns with health access and Western Center around the sweeping of the funds for Covered California. Deeply concerned with the potential implications for affordability and premium subsidy programs such as in AB 2530 which we were a co-sponsor of, which would guarantee workers are not punished when they strike by removing their health care coverage.

For this policy to be successful, we do need funds available to offer the enhanced subsidies for striking workers, a fund we hope we never have to use. So thank you so much. Also, just speaking of support, although not heard, but the BCP on AB 1882, also in support. Thank you.

Hi, and thank you, members of the Budget Committee. My name is Robert Boykin, representing the California Association of Health Plans, whose Members deliver healthcare coverage to approximately 1.7 million individuals and families to cover California. We are concerned and disappointed that the Administration has decided to sweep away money from the healthcare affordability reserve fund to the general fund. The fund's whole purpose, in uncertain times, is to support increased affordability measures for people purchasing coverage through the Covered California Exchange.

We believe this money, along with the federal subsidies, is important to help reduce the cost of health care and increase access for Covered California individuals and families. Thank you for your time.

Good afternoon, chair and committee members. My name is Rowena Robles, and I am the Executive Director of the California Medicine Scholars Program. This program was funded in 2021 as a pilot. Thank you, Dr. Arambula, for supporting this current ask to continue program funding. As I said, this program was funded as a pilot in the governor's budget of 2021. We have since launched and recruited and enrolled 140 students throughout the state.

We are well on our way to reach our target of 200 students by June 2023 with recruitment of the second cohort beginning immediately in July 2023. I'd like to emphasize three things about the California Medicine Scholars program, which is a premed pathway program from community college to medical school. One, physicians from backgrounds underrepresented in medicine are more likely to practice in rural and low-income areas where the physician shortage is most acute. So this program also addresses a health equity and healthcare access issue.

Number two, students from community colleges have been found to be more committed to their communities and are more likely to return to live and work and be of service to these communities. Lastly, number three, the students already enrolled in the current inaugural cohort require continued program funding to be supported in their pathway and journey to medical school. This budget ask would support 600 students from the current pilot from community college to enrolling in medical school. Thank you.

Good afternoon, chair and members of the committee. My name is Vince Richardson. I'm the associate Director of the California Medicine Scholars Program, which is a pipeline from community college to community residency. I want to acknowledge to the Committee how vital this program is to addressing the physician shortage crisis in our state.

By increasing diversifying the healthcare workforce in the medical field, this program would also have a positive impact on changing the lives of our children, youth, and families, especially in our vulnerable urban and rural communities. Thank you for your support.

Hello, chairman and committee members. My name is Kaitlin Jackson, the associate Director for California Medicine Scholars Program. I'm here to support the California Medicine Scholars program, which was not included in the governor's January budget proposal. CMSP has already launched and enrolled its first cohort of students to protect our progress. Please help ensure the pathway is completed from community college to medical school as originally intended by the legislation. Thank you.

Thank you. I will take that as the conclusion of in person public comment. As a reminder, the phone number and access code are on the first page of our agenda and should be on the Subcommittee's website. It should also be appearing on your screen if you are watching over the livestream. The phone number again is 877-692-8957 the access code is 1315127. Operator, let's begin.

Thank you for public comment. You may press one, then zero. Again, that's one and then zero for public comment. We will go to line six. Your line is open. Your line is open. Please go ahead. You just took yourself out of queue. There you go. Go ahead.

Hello, chair Members. My name is Kevin Gilbert, and I am a fourth-year medical student at the University of California, San Diego School of Medicine, and I'm one of the assistant directors of the California Medicine Scholars program at the San Diego Hub. I'm calling in support of the California Medicine Scholars program, which is not included in the governor's January budget proposal. The Scholars program is a vital pipeline program that supports students from diverse backgrounds, from community college all the way to med school.

I am a product of the California community college system myself and can testify to the need of this program. It has already launched and enrolled its first cohort of students and in the spirit of protecting our process, please help ensure that these students make it to medical school as was originally intended by the Legislature.

Thank you.

Thank you. Next caller, please.

Thank you. And next, we'll go to line 15. Your line is open. Please go ahead.

Thank you. Mr. Chair, I'm Darby Kernan representing LeadingAge California. We're requesting that the administration and Legislature preserve the healthcare workforce funding that was appropriated in the 2022-23 budget. The governor's January budget proposal included the deferral of funding to numerous workforce programs over the next three years, including the $125 million for the nursing initiative through 2026.

As this funding is vital to growing the healthcare workforce, LeadingAge is strongly advocating for the funding to be preserved. Thank you.

Thank you. Next caller, please.

Thank you. We'll go to line 17. Your line is open.

Hello, my name is Stephanie. I'm calling because I listened to your committee and I heard you talk about, I think it was SB 944, and I definitely think it was AB 2530. I think I got that one correct where it was mentioned that unions medical will be paid for when they strike. I mean, if our tax dollars pay for that. That's completely ludicrous.

First of all, our state is facing a $25 billion deficit. I'd like to move to item 10 since I didn't care about item eight, and I wasn't clear on that. I am under the opinion, which I know for the last 50 years, Medi-Cal pays for abortions. I know that for a fact. As a 15-year-old and having sex education, way back in 1969, it was told that if a female has administration, you can or will get pregnant if you have sex without protection.

I think we as a society, and especially Californians, should protect the children and it should be the parents responsibility. If not, it should go back to the basic education and not forcing people or having abortions or giving them an easy way out. Now, if it's during rape or anything of that nature, yes, I support it. Not full term or after birth. I do not. And here we are, we're talking about being short nurses and doctors. I really want to talk about this for 1 second.

Most of them left because they went with the vaccine. That is honestly clear. We all know that. So let's not fool ourselves. The other ones are so exhausted. I am fully covered, been fully covered. I am with Sutter Healthcare and I can go to any Sutter hospital now. And you have to wait to go into an emergency. I am already a senior. It is so filled with homeless people it is completely ludicrous. This needs to stop.

Why aren't we talking about building mental health hospitals if it's needed? We need to get back to the basics here. That's all I need to say because I think you guys are all off a target.

Thank you. Next caller, please.

Next, we'll go to line 18. Your line is open.

Good afternoon, Mr. Chair and Members. Nicole Wordelman, on behalf of the children's Partnership, requesting that the funding allocated to the training and certification of community health workers in last year's enacted budget not be delayed. Delaying this investment will cause disruptions to California's broader efforts to achieve significant improvements in medical, clinical and health equity outcomes that the state has committed to achieving by 2025 through the DHCS Comprehensive Quality Strategy.

Published last year, the strategy outlines DHCS's bold goals 50 by 2025 initiative with specific strategies meant to address health inequities impacting children and families enrolled in Medi-Cal that were highlighted by the California State Auditor in 2018 and 2022. Delaying this investment will counter California's broader efforts to achieving health equity in Medi-Cal. As such, we urge the Legislature and Administration to move forward with the investment without delay and instead consider alternatives recently laid out in an LAO report. Thank you.

Thank you. Next caller, please.

Thank you. Next, we'll go to line 21. Your line is open.

Good afternoon, chair Members. My name is Tiyesha Watts and I'm calling on behalf of the California Academy of Family Physicians, the largest primary care medical society in California, representing over 10,000 family physicians, residents and medical students. I want to provide comments on issues pertaining to the healthcare workforce and access. We want to extend our appreciation thus far for ensuring that access to health care remains a central goal in the California State budget.

Refraining from making drastic health care cuts is critical for leading Californians, especially as we recover from the COVID-19 pandemic, which has had devastating health and catastrophic economic impacts on the most vulnerable residents of our state. As this budget cycle progresses, we ask that you prioritize improving investments in primary care, such as the primary care rate increase in the budget, and continue to invest and maintain funding in the Song-Brown Primary care physician training program.

These investments will improve access to primary care and address California's primary care physician workforce shortage. Lastly, we ask that you continue to maintain the general fund expenditure to expand access to health care, such as full scope medical eligibility to all income-eligible adults ages 26 and 49, regardless of immigration status, as this will ensure that vulnerable populations receive the critical care they deserve.

Thank you for your time and consideration and CSP looks forward to working with the Administration and the Legislature to ensure California continues to build the primary care physician workforce.

Thank you. Next caller, please.

Thank you. Next we'll go to line 26. Your line is open.

26, your line is open. We will move on to line 28. Your line is open.

Hello Dr. Arambula and Members, Janice O'Malley with the American Federation of State and County Employees and just wanted to express my appreciation, or our appreciation, for the comments made by Dr. Wood and Dr. Arambula on the concerns around the delay in supporting the healthcare workforce.

The Legislature and the Governor made significant investments in the workforce and in healthcare affordability and access, so just again, wanted to as well echo comments made by Matt Lege from SCIU. He was a co-sponsor of AB 2530 by Dr. Wood that would support access to health care for striking workers and we really need to make sure that that is funded as well as providing assistance to those who cannot afford health insurance.

And we need to ensure that the funds provided by the Federal Government to support healthcare affordability does not get swept up into the General Fund. Thank you.

Thank you. Next caller please.

Thank you. Thank you. Next we'll go to line 30. Your line is open.

Thank you Mr. Chair and Members Vanessa Cajina, on behalf of Vision y Compromiso on HCAI issue six. Vision y Compromiso is a statewide organization dedicated to improving community well-being by supporting Promotres de Salud, we've been pleased with HKI's work on the rollout of certification training for community health workers, including Promotores de Salud as envisioned last year's budget.

And related to this, we've also been monitoring the rollout of the community health worker benefit through Medi Cal. It's important to remember that there is a distinction between CHWs and Promotores. Promotores are primarily women from the community who are deeply entrusted by people who have been otherwise neglected or excluded by the healthcare system. The Subcommittee should be proud of the work that we've all done on Health for All, as well as other ways to improve health equity for underserved communities.

That in mind, we believe HCAI hears our points on inclusion of Promotores in these multiple implementations and having it as under a benefit in Medi-Cal, it needs to reach the workforces who can reach the underserved communities. As such, we are working with Assemblymember Aguiar-Curry on a budget request to increase training and capacity for CBOs that have those best practices on working with Promotores.

We really appreciate the work that the Subcommittee has done, particularly the Chairman, on getting closer to a Healthy California for All, and look forward to working together. Thank you.

Thank you. Next caller, please.

Thank you. Next we'll go to line 31. Your line is open.

Andrea Rivera with the California Pan Ethnic Health Network here to comment on item 4800 and item 4140. For item 4800 Uncovered California affordability remains a significant barrier to Californians accessing the health care that they need, when they need it. And with deductibles of almost $5,000 in copays for primary care visits at about $50, many low-income and middle-income Californians are opting to delay care simply due to costs.

We do urge the Legislature to respect the redirection of the individual mandate penalty revenue to the General Fund and instead continue to use those funds to provide critical affordability assistance to communities of color. For item 4140 on workforce delays. CPET is disappointed by the Governor's proposal to delay the allocation of funds to recruit, train, and certify 25,000 new CHWs to fiscal year 2025 to 2026. We urge you to reject this proposal as well.

These funds are critical to build a robust, culturally and linguistically responsive workforce that can meet the needs of California's diverse populations, including the Medi Cal beneficiaries who are now able to access the new community health worker, or CHW, benefit in the program. And as we heard today, California is facing a severe healthcare workforce shortage, and CHWs are essential.

If any delay of funds is approved, we would urge that a percentage of the funds be set aside for fiscal year 2023 to 2024 so that we can include a public planning process that includes CHW to determine how these funds should be spent in future budget years. Thank you.

Thank you. Next caller, please.

So go to line 13. Your line is open.

Good evening, Mr. Chair and Subcommittee Members. My name is Lindsay Gervacio, and I'm calling on behalf of Blue Shield of California. Blue Shield opposes issue one that was heard today on the transfer of the Healthcare Affordability Reserve Fund balance. It is critical that funds remain within cover California for purposes of assuring affordability to our members and Californians. Transferring funds to the General Fund speaks this purpose. Thank you for your time.

Thank you. Next caller, please.

Thank you. We'll go to line 33. Your line is open.

Hello, Chair, Members. My name is Jessica Garcia, and I am a higher education practitioner here in California. I am calling in support of the California Medicine Scholars program, which was included in the Governor's January budget proposal. The California Medicine Scholars program has already launched and enrolled its first cohort of students, so in the spirit of protecting our progress, please help us to ensure that these students make it to medical school.

The program is a vital pathway that supports students from diverse backgrounds from community college, all the way to medical school residency and the California workforce. By providing a pathway for underrepresented students to pursue careers in medicine, the program not only helps to address the critical shortage of physicians in California, but also brings much-needed diversity to the medical profession. California has a growing health workforce shortage across the state and especially in the Central Valley.

The California Medicine Scholarship has begun addressing this crisis, but in order to continue tackling it, I ask that you include the California Medicine Scholars program in the 2023 budget because it has had and will continue to have a significant impact on the lives of many students. Thank you.

Thank you. Next caller, please.

Thank you. Next we'll go to line 38. Your line is open.

Good evening, Mr. Chair and Members. This is Rebecca Gonzalez with the National Association of Social Workers California Chapter here on a few issues. First of all, issue number five, about the delays in the workforce program. We're especially concerned about the 30 million that was slated to be allocated for schools of social work to increase their slots, and also concerned about other social work investments.

We have recently, along with our partners who promoted the MSW budget proposal last year, we've met with HCAI and we asked them questions, but we still have a lot more questions. We're going to continue to meet with them to get more clarity, but at this point, we're very concerned about the delays since you've heard about all the issues with the workforce. I also want to join others on issue one about being opposed to the transfer of the Healthcare Affordability Reserve Fund into the General Fund. We need to keep healthcare affordable. And lastly, we wanted to support the budget proposal on gender-affirming care. Thank you.

Thank you. Next caller, please.

Thank you. Next we'll go to line 41. Your line is open.

Dr. Arambula, Members of the Committee, I'm Toni Triguero speaking on behalf of the California Teachers Association. We again would like to address issues around HCAI's workforce investments funding, student scholarships, loan repayments, and grants to mentor and support a future workforce made available in part from $1.4 billion from the workforce for a Healthy California for All Initiatives, as well as the topics being explored by the Educational and Training Council.

These efforts do not include pupil services personnel like credentialed school nurses and school psychologists who are licensed medical personnel who are also earning their necessary credentials, issued by the Commission on Teaching credentialing to work in schools. From the North Star of the Healthy California for all, I quote, where all of our children can play and learn, and where we are confident that we have done all we can to pass to them a state that can lead into the future.

End quote. Going forward, we hope this goal encompasses all behavioral health workers, not just a selected few. Thank you very much.

Thank you. Next caller, please.

Thank you. Our next line is 42. Your line is open.

Hello, Chair and Members. My name is Michelle Patterson, and I am a community college student involved in the California Medicine Scholars program. I'm calling in support of the California Medicine Scholars program, which was not included in the Governor's January budget proposal. The California Medicine Scholars program is vital to addressing California's physician shortage as well as increasing diversity in the medical field. Thank you.

Thank you. Next caller, please.

Thank you. Our next line is going to be 46. Your line is open.

Hello, Chair and Members. My name is Alejandra Navarro, and I am a marketing communications professional who has worked in both the Central Valley and in Southern California. I am calling on item 4140 healthcare workforce and in support of the California Medicine Scholars program, which was not included in the Governor's January budget proposal.

This academic pathway program, guiding students from community college to medical school, is critical to responding to California's physician shortage crisis and is also vital to increasing diversity in the medical profession, both of which are necessary to ensure that all California communities have equitable access to quality health care. The California Medicine Scholars program has begun addressing this crisis with its first cohort of students, and I support state funding to continue this informed work. Thank you.

Thank you. Next caller, please.

So go to line 27. Your line is open.

Good evening. This is Kelly Brooks. I'm testifying tonight on behalf of two clients regarding the workforce funding delays. First, on behalf of the California Association of Public Hospitals and Health Systems. Public healthcare systems continue to face extreme workforce challenges which were exacerbated and compounded by the pandemic.

Systems are struggling to retain workers and fill positions across the delivery system, including registered nurses, certified nursing assistants and medical assistants, clinical lab scientists and technicians, respiratory therapists, behavioral health providers, and others. As both employers of healthcare workers and major providers of training to the healthcare workforce and essential safety net systems. We're very supportive of the funding included in the current year to support and rebuild California's healthcare workforce. We hope that the Administration and Legislature continue to prioritize investments in health workforce.

Any delays, reductions, or trigger cuts to workforce development will negatively impact and further delay resolution to our ongoing healthcare workforce crisis. Second, on behalf of the Urban Counties of California, workforce remains a top priority. Counties are struggling to compete with private sector employers to attract and retain workers, especially for some of the most critical services that counties provide. County hospitals and clinic systems, public health departments, behavioral health agencies, and human services agencies.

We are very concerned that the proposed delays in workforce funding will hamper the pipeline for this very essential workforce. Thank you.

Thank you. Next caller, please.

Next we'll go to line 29. Your line is open. Line 29, your line is open.

Hello, Chair and Members, my name is Maria Galvan. I attend community college, Mount San Antonio. I am calling in support of the California Medicine Scholars program, which was not included in the Governor's January budget proposal. The Medicine Scholars is a vital pipeline program that supports students from diverse backgrounds, from community college all the way to medical school, residency and the California workforce.

It is paramount that this program is included in the 2023 final budget. Thank you for your time.

Thank you. Next caller please.

Next, we'll go to line 36. Your line is open.

Good evening, Mr. Chair and Members. My name is Lucy Quacinella. I'm speaking today on behalf of Maternal and Child Health Access, a community-based organization in Los Angeles with over 50 employees serving low-income families on a variety of health and other social issues.

We oppose the transfer of Healthcare Affordability Reserve Fund balances to the General Fund. Covered California is an extremely expensive program for low-income consumers because of the out-of-pocket costs. We tend to think in California that pregnant people are covered for labor and delivery at little or no cost, but that is certainly not the case for inpatient hospital labor and delivery services under Covered California, which can run in the thousands of dollars.

Similarly, inpatient treatment for diseases like breast and cervical cancer and many other serious conditions requiring surgery are subject to this very high-cost sharing. We urge you to reject the proposal and to keep or make Covered California affordable. Thank you so much for your attention to this matter.

Thank you. Next caller, please.

Thank you. Line 45, your line is open.

Good evening. Thank you. My name is Dr. John Grenito. I'm an emergency physician by training, and I am the medical school dean at California Health Sciences University in Clovis, our state's newest medical school. I'm calling to ask funding support for the California Medicine Scholars program be continued.

I know firsthand the need to train our local students for their medical careers, and in just a few short months, we at CHSU will have an enrollment that exceeds 500 medical students, with about 100 or more being from diverse backgrounds, such as first-generation college students and persons of color. We are proud to assure that all of our students actually have required medical Spanish as part of their curriculum.

As you all know, California's physician workforce shortage is disproportionately and really due to mal distribution occurs in areas outside of the three or four major metropolitan areas and is hardest hit in areas like the Central Valley. And so I ask that the California Medicine Scholars program, which has begun addressing this by providing more clear pathways to our young, diverse young people to make a path for medical school more clear, and ask that the funding be continued. Thank you.

Thank you. Next caller, please.

Thank you. Line 25, your line is open.

Thank you, Dr. Arambula, Committee Members, and panelists for this hearing. My name is John Drebinger. I'm a senior advocate with CBHA, the California Council of Community Behavioral Health agencies. We represent mental health and substance use community-based organizations across the state, serving over 1 million Californians. Just wanted to say we really appreciate the agenda of this hearing, especially its consideration for expanding workforce resources and support.

As has been mentioned multiple times today, our state is in a behavioral workforce shortage that is impacting timely access to care, driven in part, as mentioned by numerous participants, inadequate compensation for behavioral healthcare workers. I wanted to say we also appreciate the focus on improving access to gender-affirming care while elevating Trans and LGBTQIA-plus voices in state decision-making.

Gender-affirming care is shown to improve the behavioral health of trans-identifying people who often experience higher rates of depression and suicidality as a result of cultural, social, and family stigma. Our members provide critical behavioral health services to these populations and know firsthand the positive impact access to affordable gender-affirming care has on client well-being. We stand by the Legislature and its commitment to serve the health and behavioral health needs of LGBTQIA plus California.

Thank you for your leadership on these issues and thank you for your time.

Thank you. Next caller, please.

Thank you. Next we'll go to line 50. Line is open.

Good afternoon, Dr. Aambula and Committee Members. My name is Amelia Sweeney and I'm a Nursing and Allied Health Counselor at College of the Sequoias Community College. I'm calling in support of the California Medicine Scholars program and would request that it be continued. The Medicine Scholars program is a vital pipeline program for our community college students wanting to enter the medical field.

The majority of our students here at College of Sequoias are students of color, with many of them being first generation college students. This program is crucial to provide them with the resources and mentorship they need to pursue medical school and residency. The investment in this program will positively impact the California workforce and fill the need for physicians in our area. Please consider renewing this program. Thank you for your time.

Thank you. Next caller, please.

Thank you. Our next line will come from line 57, your line is open.

Hi, is that me? Am I in the budget sub one Committee? With the California State Legislature? Well, excellent. I know you folks probably are hankering to go to dinner, which I understand.

You are with the California State Legislature. Well, excellent. I know you folks probably are hankering to go to dinner, which I understand.

It's about that hour and I wasn't planning to comment today, but I couldn't help but call in because I was hearing about this nursing shortage and consistent with the teacher shortage and all these other shortages in California, including a shortage of people because people keep leaving this state and they keep moving to places like Florida. They keep leaving for free states. And yes, I do mean that free states. Because human beings have a right to exist apart from pharmaceutical products.

They have a right not to be strong-armed and bullied by their elected officials about unregulated, untested, genocidal medical products. So at some point I think you lawmakers may be able to connect some of the dots on this.

Maybe these shortages have to do with the fact that people are leaving this pharma fascist hell complete with this shot proponent, surgeon General, who was just confirmed in the Senate today, one of Governor Newsom's cronies, who's going to continue the lies here in California while you people sit up there continuing to grease your palms with pharma blood money. The parents are sick of it. They're sick of your mandates and they're leaving. They're leaving the state. They're leaving these professions.

And at some point you people are not going to be able to ignore the elephant in the room any longer. So thanks for letting me speak. At least the first amendment still mattered in this moment. Who knows about the next hearing? If Jim Wood has anything to do with it, he won't have comment time at all. So go enjoy your dinner. But let me leave you with this. There's a little bit of poetry in my kindergarten past.

The six best doctors anywhere, and no one can deny it, are sunshine, water, rest and air, exercise, and diet. These six will gladly you attend if only you are willing. Your mind, they'll ease your will. They'll mend and charge you not one shilling. No matter what you folks do, we are never taking your COVID poison.

Thank you. Next caller, please.

Your next one will be line 40. Your line is open.

Hi there. Is that me?

Yes, ma'am.

Hi there. My name is Bianca Blanquez. I'm Policy Director for Small Business Majority. I'm calling today to speak in support of using the Healthcare Affordability Reserve Fund to continue to make healthcare more affordable for small business owners in California. As folks here are probably already aware deductibles are reaching almost $5,000 and copays for primary care visits, around $50 for small business owners in California, many, most of whom are middle-income. As you know, the Administration collects hundreds of millions of dollars already each year from uninsured Californians.

That penalty money should be used to help them afford coverage and care. Thank you so much for your time, and I appreciate you hanging in there.

Thank you. Next caller, please.

Thank you. Next, we'll go to line 58. Your line is open.

Hello, Chair and Members. My name is Jeff Oxendine. I'm with the California Health Profession Consortium, Health Career Connection, and UC Berkeley School of Public Health. I'm calling in support of the California Medicine Scholars program, which was not included in the Governor's January budget. It's really vital that we support the California Medicine Scholars program as a strategy to address the physician shortage in California and increasing diversity in the medical field, which is really critical to access and health equity for all. Thank you very much.

Thank you. Next caller, please.

Thank you, Mr. Chair. We have no further public comment in queue.

Thank you, operator. I will take that as the conclusion of public comment for today. Before we adjourn for the night, I'll take a moment and thank the Administration, the Department of Finance, the LAO, stakeholders, and all of the panelists who participated. I will appreciate my staff, the budget staff, the sergeants, and the tech for helping to distribute and to keep us safe. But most importantly, I wanted to thank the public for participating and improving our process and making this the people's house.

With that, we are adjourned for the night. Have a good night.