Assembly Budget Subcommittee No. 7 on Accountability and Oversight

We'll start right now. Just gonna

grab some water. Do you know?

Can't go. No. I'm good. Well, good morning, everybody. I'm calling this hearing to order.

Welcome to the Assembly budget subcommittee number 7 on accountability and oversight. I'd like to welcome the members of the public here today, and I wanna thank our panelists, many of whom traveled long distances to join us today and participate in the hearing. And I wanna thank my Assembly colleague for lending her time and expertise to today's hearing. Assemblymember Addis is an expert on health policy, and her contribution is gonna be wonderful. A few housekeeping notes before we begin.

This hearing is organized in two parts. The first part will cover indigent health, and the second will cover the state leadership accountability act and audit reporting. The agenda and supplemental materials are available online on the committee's website, and physical copies are available here in the hearing room somewhere. We'll hear from a number of panelists today. And after each panel presents, then we'll have questions from members.

And then we'll take comments public comment at the end of the hearing. If you're unable to attend in person, you may submit written comments by email to assemblybudget, [email protected]. So let's begin with our first issue. Before inviting our panelists to the diocese, I'd like to offer a few remarks to frame today's discussion. The combination of HR 1 and recent federal policy changes is expected to significantly disrupt California's health care system.

Current projections indicate that more than 1,300,000 Californians could lose their medical coverage. Another half million Californians are expected to lose or forego coverage through covered California. Those losses won't affect only the individuals involved. They'll also affect hospitals, community clinics, counties, and California's broader health care safety net. Recognizing these challenges, the legislature included significant resources in the 2026 budget act to help cushion the immediate impact, including a $196,000,000 for counties, $250,000,000 for public hospitals, and $1,000,000,000 for Community Health Clinics.

Even with those investments, one important question remains, what happens to Californians who fall through the cracks? For many, county indigent care programs may once again become their primary source of care. These programs have received relatively little attention over the past decade because the Affordable Care Act dramatically reduced the number of uninsured Californians. One of our great success stories is the number of Californians that we had insured at our peak nearing ninety five percent of all residents.

Now as federal actions reverse some of that progress, counties may once again be asked to serve a substantially larger uninsured population.

That's why we're holding this oversight hearing today. Our purpose is to not simply measure the size of the challenge. It's determine whether California's existing systems are prepared to respond and where legislative oversight can help improve that readiness. Specifically, we hope to accomplish four things today. First, to better understand the current and projected landscape for indigent health care in California.

Second, to examine projected coverage losses in Medi Cal in Covered California over both the short and long term. And third, to hear directly from county leaders about the operational and fiscal challenges that they anticipate. And finally, we need to identify policy and budget options that could strengthen California's indigent care system, including actions that could be considered before the 2027 and 2028 budget process. I wanna thank each of our panelists for joining us today and for sharing your expertise.

With that, I'd like to invite, any community members who have any additional comments.

Do you have anything? Mister Chair Addis?

Thank you so much, to our Chair, Assemblymember Greg Hart. It's no small thing that you have two Central Coast legislators up here doing this particular, sub hearing because of the impacts to places like the Central Coast rural community. It's less urban communities, so it's vital for the Central Coast, but for all of California that we better understand what's happening with indigent care in California.

So I wanna say thank you to you, Assemblymember Hart, to representatives of the administration, to all the advocates who sat through numerous health sub hearings and are back today to discuss this very important topic and, of course, to staff who were working round the clock literally during the budget negotiations and are now back again to do this final hearing. And also just say welcome back to everyone.

Welcome to August. We know it's gonna go fast and furious, and so I'm glad that we're starting this week with this particular hearing. And Assemblymember Hart, you went over many of the budget moves that we went through over negotiations and ultimately that the governor signed to try to soften the blow of the HR 1.

But I think Everyone in this room and those watching know that HR 1 is the largest rollback of health care that we've really seen in recent memory and possibly in the entire history of our nation. To have health care rolled back in this way is no small thing for California in particular, and it's been vital, the effort that all of us have put in to try to save our safety net.

I would say in addition to the topics that, the Chair just covered that are the goals of this hearing, personally, I'd be very interested as panelists are providing their comment and just hearing what the day to day reality for patients is gonna be like. What does it mean when you lose to covered California or Medi Cal or other forms of coverage?

What is that percentage of people we've talked about 95-96% of Californians were covered with health care, some sort of health care coverage before HR 1. And with HR 1, we're expecting the population that is uncovered to double at least to have about 15% of Californians that don't have some sort of health care coverage and understanding what that looks like on a very human level. A patient doesn't have health care coverage that they used to have.

They show up somewhere to try to get care. What does that look like in real life? I think would help us in addition to all of the other goals of the hearing today to understand what we need to do and the next steps that we need to take. So I just wanna say thank you again to Assemblymember Hart, to Chair Hart for chairing sub seven. It covers vital issues in this particular subcommittee, and, very glad that Indigent care is on the agenda today.

So thank you.

Thank you. Assemblymember Attister, this wonderful remarks. Now I'm gonna invite the representatives from the alleged analyst office to come up as a part of our first panel. And if you just introduce yourselves and then begin whenever you're ready. Thank you.

Hi. Good morning, Chair members. My name is Will Owens with Legislative Analyst's Office.

And Mark Newton with ALEO.

So today, I'll be presenting, an overview of county agent health care, its history, its funding, as well as maybe some key decision points before the legislature is before you, as you hear this committee and moving forward. So today, I'll be speaking from a handout that is also available on our website. I'll first give a brief summary of the current state of indigent care. I think the chair's opening remarks laid out a good high level overview of the the place the state finds itself in.

I'll also go into more detail on county's responsibility for indigent care, overview of the funding as I mentioned, the current state of indigent care, and how recent state and federal changes may impact these programs, and as I said lastly, go over some key decision points and questions for the legislature.

So over time, particularly with the introduction of the Affordable Care Act, the ACA, the number of uninsured Californians has dropped significantly. This also, in turn, reduced the need for indigent health care programs. So indigent health care programs run by counties saw a decline in Enrollment. In response, the state redirected a portion of the funding for these indigent health care programs to offset state general fund costs elsewhere in the budget.

However, recent policy changes at the federal and state level are likely to increase the number of uninsured individuals, therefore increasing the demand for engine care services again.

So as the legislature considers this, more information is needed on the current state of county indigent care programs now and moving forward in order to better make these kind of decisions on how to respond to the increasing number of uninsured Californians. So first, the county responsibility for indigent health care dates back to the 1930's with WIC code 17,000. So counties are required to provide basic health care services to individuals with no other means of receiving care. A few key points on this requirement.

First is that this is considered a program of last resort, so individuals can be eligible for any other form of coverage.

Second, case law over the years has narrowly defined what care is covered. This basic health care, therefore, is typically much less comprehensive than other forms of public health care like Medi Cal. Lastly, counties have fairly wide discretion in terming both eligibility and what benefits are covered. For example, counties are not required to serve individuals with unsatisfactory immigration status, but nothing precludes them from it. So counties have primarily been responsible for the cost of indigent care programs.

Though following the creation of the Medi Cal program, the state had taken a larger role on covering individuals, particularly low income Californians. Later changes in Medi Cal increased the number of uninsured individuals in the state, then began providing general fund support to counties for these individuals. The state county relationship again shifted in 1991 when under what is referred to as 1991 realignment, A number of health and human services programs, both fiscal and programmatic responsibility, shifted to counties.

So for indigent care programs specifically, while the scope of county responsibility for indigent care didn't change, the state eliminated its general fund support that it had been providing for indigent care instead provided dedicated funding from a specific revenue source for this care. So from this funding, counties use the same funding allocation as it were for both indigent care and public health responsibilities.

This again changed in 2013 when the state redirected a portion of this dedicated revenue to offset general fund cost within CalWORKs. This was in advance of the Affordable Care Act, which was expected to significantly reduce the number of uninsured individuals, and therefore the demand of county indigent health care programs. So in the figure, in your handout on page five, you can see in the current year the amount of funding remaining for county health programs, which includes indigent care and public health.

It's about 1,200,000,000, with about 1,600,000,000 being redirected for CalWORKs. So we understand that a later panel will kind of get into the the nitty gritty details as it were of the current state of county indigent care, but just a couple of high level points.

So prior to the passage of the ACA, there was an estimated about 850,000 individuals, who were enrolled in county health care programs. Today, counties estimated around 10,000 individuals. So a fairly large decline in Enrollment. So as Enrollment declined, many counties have expanded both the eligibility requirements and or the scope of benefits offered to individuals on these programs. Again, a lot of county discretion, so it varies by county.

So due to a number of recent changes to the Medi Cal program, there is expected to be a large increase in the number of uninsured individuals, and many of individuals may find it difficult to receive, health care elsewhere. Meaning that they're more likely to enroll in county engine care programs as the program of last resort. We estimate that anywhere between 20% to 50% of newly uninsured individuals, may enroll in county engine care programs.

So as I mentioned, that 1,200,000,000 that's available, counties primarily rely on that, to fund both indigent care and public health responsibilities. And so while counties are likely to see an increased demand for indigent care, the current funding structure of realignment is such that it doesn't necessarily adjust based on increases in cost in engine care programs.

This puts fiscal pressures on the counties to either redirect existing realignment funds, supporting public health or to use local resources to support this increased demand, absent additional, support from the state or other resources. Finally, we highlighted a number of key questions before the legislature as it considers, its response to an increasing number of uninsured Californians. First, we note that just more information is needed on county interested in care programs moving forward.

This includes both a baseline and, estimates to the changing impact, that state and federal policy has on these programs in the coming months and years. This would include county by county information, for example, on just the number of indigent care, the caseloads, program benefits and eligibility requirements of each of the program infrastructure.

So as I mentioned, with these programs declining in enrollment, a number of programs have limited the networks that provide this care, as a result of the decline click caseloads, so a better understanding of what is available and how these, programs could operate with increased demand as needed. And lastly, the funding levels and sources. As I mentioned, the allocation for indigent care is is available for both indigent care and public health.

A better understanding of how counties are spending these funds could help the legislature understand the impact. So with this in mind, we did highlight a few questions in our handout, on the last page, page eight before the legislature.

So these are, some higher level questions. Again, not just necessarily, on the workings of indigent care, but some broader questions. So with understanding the landscape of the current programs and the newly insured population, what is the range of fiscal implications to the indigent health care services, as I mentioned, with declining enrollment, the funding structure that is currently in place, understanding what are gonna be the impacts of the increasing demand.

So what options are there to provide additional state resources, given the underlying budget constraints as the legislature is aware? The state's facing, structural budget deficits, which makes additional funding, general fund support for certain programs difficult and would likely need to be offset by budget solutions elsewhere in the budget.

Next, does the legislature wish to continue funding indigent health care programs through realignment? Under realignment, counties maintain a lot of discretion on the scope and the parameters of these local programs, which has, its trade offs. And so the legislature will need to determine whether that is the best mechanism to provide coverage for these uninsured individuals. Lastly, does the legislature wish to consider program or structures outside of realignment?

Like I said, the structure currently of realignment is such that it does not necessarily shift as a result of increasing demand to indigent care.

The state could consider broader changes, to either realignment or the state county partnership in this area as well. But these are all kinda key questions to keep in mind as you hear testimony today and, again, weighing options moving forward. With that, available for questions.

Thank you, Mister Owens. Appreciate that. Are there questions for the ledge analyst office? Yes, Assemblymember Addis?

Thank you so much for that. I wonder, could you, just elaborate a little bit around the discretion for scope and parameters? Could you give us some examples of county by county differences?

Sure. So I think, as I mentioned later on, you'll probably hear in a panel from counties. They probably can give you, some some good details. But, for example, the, requirements under WIC 17,000 is, has kind of been defined over time in case law. So the very, very bare minimum coverage that counties are required to offer is basically treating instances where there is a danger to a serious life harm or infection.

So anything above the very basic kinda needs of responding to that is kind of at county discretion. This could include things like specialty care, include follow-up, typically, primary it could also include things like primary care. So counties have a lot of discretion in terms of scope of benefits. As far as eligibility, typically, it is for individuals who are low income and maybe ineligible for Medi Cal. Counties have, in the past, expanded the range of income eligible individuals.

And this typically, in response to their ability to pay, may include, like, a sliding scale of share of costs for for patients as well. Again, the very basic requirements under statute is fairly limited, more so than what is currently offered under Medi Cal.

Thank you.

I just wanna take a moment to welcome Assemblymember Harabedian and Arambula and Soria.

Thank you for all being here. This is the Legianist office talking about setting the stage for our conversation about the history and background of, indigent care at the county level. One question I had was your point at the beginning that we need more data and information to understand the problem going forward. The list that you described briefly, the case load totals, program benefits and eligibility requirements, program infrastructure, funding sources, and level. Is that a full list of what you would need?

Because I think that understanding that we have that reporting and that relationship with the counties and that they are prepared and ready to provide that information to us immediately is the first step in this whole process is to understand where we are. And do you feel confident that we're we have that in place?

So that's all data that does exist. Right? At the county level, at this point, it's kind of dispersed. It's not centrally located or collected by the state to our knowledge. So that would be a first step in terms of, again, just setting up a baseline for where counties are, kind of what is their response to increasing demand to help the legislature make decisions on some of those key questions.

So, for example, looking at the benefits offered across counties, distilling that into an easily understood, comparison would be, helpful before the legislature to understand is that basic level of service provided by the counties, per, the requirements of WIC code 17,000, is that the level of basic service that the legislature wants to prioritize, right, for these things? There could, again, be a number of other data points. I think we could work with the points.

I think we could work with the counties, work with the committee, work with the administration to kind of, determine what are the key pieces, depending on the legislature's, priorities moving forward. But I think those are just, like a baseline necessity to understand what is, again, not just the current state of, county indigent health care programs, but what is going to be the impact as disenrollments increase?

I think that's a key question. I think we'll have all the panelists, you know, weigh in on this. Just where are we as we're building the plane that we're flying at the same time? You know, what are the counties prepared to share in data and what is the state, gonna have as a baseline minimum requiring requirement for counties to share with us so that we are all on the same page?

I know when we first began our homeless services expansion funding, that was an issue after the fact, and we wanna make sure that we're not making that same mistake with this program.

Are there any other questions for the ledge analyst office? Well, thank you. And did you okay. Assembly member of Arambula, please.

Sorry. I wanted to make sure to give our colleagues a chance to jump in, but didn't want to leave Mark or Will without an opportunity to respond. I heard you earlier about the need for counties to step up. With their fiscal realities, what are the opportunities for them to meet this upcoming challenge as they'll be facing many of the same struggles from HR 1 that we as the state are?

Secondarily, if I can, realignment is a topic that I love to engage with as, ultimately, I think there are, many ways that our counties can be stepping up to meet the health and human services challenges.

Unfortunately, realignment tends to be after a census. So in reality, are we talking about waiting until 2031 before we're going to have any major changes to realignment? Or, what are your expectations in us being able to meet that in the near term?

Thank you. So on your first question on the kind of fiscal challenges for counties, in number of reports our office released on the changing landscape of kind of health coverage, MediCal, and in general, in response to HR 1 and other changes at the state level, I think we note that counties do face significant fiscal challenges too, in addition to the state. I would highlight again the structure and kinda leaning into your next question on realignment.

The current funding for indigent care is a bucket of money within realignment that counties also use to provide public health services. So, to the degree that counties are unable to access other resources, they would likely need to use funds for this, which may impact their ability to provide public health services.

Right? And so to the degree that counties face that trade off absent other local resources or other state resources, I think is one that the legislature would want to keep in mind. As far as realignment adjusting, so how, you know, realignment is a complex series of formulas and how it changes over time. So, counties, there is somewhat of an adjustment, for maybe indigent increases in demand for indigent care. But these typically happen at least a few years down the line, if at all.

It's Kinda dependent on the counties and how that those formulas are structured. So I think we'd say that, in general, realignment is not set up to adjust for increases in demand in indigent care, to kinda shift funding to counties for that purpose.

So with that, again, the legislature, you know, in making decisions around specifically realignment, were there to be changes in how that recurrent redirection is done, that would then put state gen, that would then put fiscal pressure on the state's general fund as it relates to its CalWORKs responsibilities. So there are a number of tradeoffs the legislature has to consider.

And Doctor Arambula, Mark Newton, LAO. I can perhaps add a few comments, in addition to, my colleague's comments on the issue. One recommendation our office has had is that, yes, the state is facing fiscal pressures, counties are facing fiscal pressures, But as we started our testimony and as the Chair and committee members have recognized, there's a need for greater information to really understand the impacts of HR 1 and other policy changes.

And our recommendation would be before making major restructuring to state programs in the state county, relationship. It's really important to have that information, the baseline information, to understand the fiscal impacts of these various policy pressures.

That said, there there are opportunities for the legislature to consider some, you know, very targeted, assistance in the, in the short run, which it has done, like, for instance, with the funding assistance that the legislature has provided for distressed hospitals. That's an example of targeted assistance that will prove quite beneficial to address a really critical sort of need or so. But opening up realignment is a very challenging issue. There are all alternatives as well.

But as a starting point, really getting that baseline information to make sure that if there are any changes to the state county relationship then and to program structures in general that that it's done it's done well and without unintended tradeoffs.

It's been a minute since I've seen you and maybe I've forgotten how great your hair is, but I just wanted to comment. It looks very Kennedy Esque today.

Oh, well, thanks, though. I guess that's...

I do wanna start, if I can, by remembering that not all counties are created equal and that, the counties in the Central Valley where we house many of our immigrant communities, farmworker communities, several 100,000. We don't have one board of supervisors that's Democratic. All of them have majority Republicans. And the willingness for them to be able to undertake indigent care is harder than it is for us as a state.

And that makes it difficult for us to anticipate the prioritization of taking care of indigent care at the level that we've been at.

And with that comes harm. And I just feel like reminding us here on the dais, people don't get seen. They, get sicker and they die sooner. And those implications are severe and aren't meant for you to take on personally, but our counties don't always see that the same way. And so I just want us cognizant there will be particular harm to some communities more than others.

And those of us who represent those areas, would love for us to discuss realignment sooner rather than later. Let us help to dial in what, responsibilities there are for each party, And how do we ensure that the counties take on this responsibility if we as the state are unable to? How do we make sure that we're taking care of Californians who move our economy forward and who are our neighbors?

And so I've been fighting this battle for a while, and I'm happy that I get to pass that baton on to the future. But believe if we're waiting five years for us to have a realistic realignment discussion, that there will be harm in between.

And I understand that, you know, the initial decline in population may not be the totality of it, but the longer this goes, the more harm there will be. And so, our ability to have focused programs that are helping those who make our state the greatest state in the nation, we're still leading this charge about indigent care and look forward to the data that comes that empowers us to make decisions that are taking care of all Californians.

But we just urge us as a body that we can't wait. There was a reason we charged ahead to make these changes. There was a rationale for us to stand up for all Californians.

And unfortunately, we're in this position that we are. And I'm reminded of a Paula Abdul, many of you may not get this, but it's two steps forward and one step back. And at the moment, we're regressing. We're not leading.

We're not showing our values fully. And I, for one, don't have expectations. The counties and all of our state will be able to meet that challenge and to share our values. And I'm wondering how do we hold them accountable, and that sure seems like it's realignment. So, thank you, Mister Chair, for allowing me to ask my questions.

Well, thank you very much, Doctor and Assembly member Arambula. Those are absolutely poignant points. Your expertise and experience are really valuable to this conversation and your district as well. Any other questions? Assembly member Addis?

What what is your estimate of how long to get the baseline data? How long would that take?

Hard to say. Like I said, much of this data is at at least available at the county level. It's more so kind of at this very baseline level, kind of consolidating it and putting it in a structure and format in a way that is, maybe easily comparable and understood, for example, because counties have such, discretion in setting eligibility and benefits and things, collecting that information in a way that is comparable across counties might take some time.

Not sure we have a specific estimate, but we're more than happy to work with the members in the committee on maybe different options for that.

I may just quickly add to that, Assemblymember Addis, the counties have been very responsive to the legislature, in providing sort of requested data in terms of the implications of HR 1. And one possibility is to direct that a state department, Probably Department Health Care Services, sort of work in consultation with the counties, which would be CSAC as well as the Welfare Directors Association, and coordinate the data and have a certain structure to report to the legislature.

But as my colleague mentioned, the data are there, but just dispersed and but with the direction and request from the legislature, I think the counties can be quite responsive.

Thank you.

Are there any other questions for the Leg. Analyst Office? Okay. Well, thank you very much. Really appreciate both of your testimony and, insight. And if you would just stay close, we'll have you back at another time too.

Our next panel is, the administration, and, just please come on up and provide your insights about both the Medi-Cal coverage losses and the potential for folks being, losing their coverage under Covered California. And if you just introduce yourselves when you're ready and begin, that'd be great.

Good morning, Andrew Hewitt, Department of Finance. So the current disenrollment projections from HR 1 are estimated to be 44,000 individuals in 2026-27, and this will increase to approximately 1.3 million, by 2029-30. This is primarily driven by, the HR 1 work requirements as well as redeterminations.

Go ahead.

And I will defer to Department of Healthcare Services for any specific questions on the disenrollment, as a result of the...

Just all of you, take your remarks and then we'll ask questions.

Mr. Chair, if I may ask that they identify themselves prior to making...

Yeah, that would be helpful. Thank you.

Oh. Andrew Hewitt, Department of Finance.

Andrew, thank you. Who's next? I think your microphone's on.

Sorry. Thank you, Chair. My name is Tyler Sadwith. I serve as a Medicaid Director for California at the Department of Health Care Services. So, at this time, the Department does not have new or revised disenrollment projections beyond those included in the final state budget.

In general, the Department projects a continued decline in overall Medi-Cal enrollment, moving from 14.8 million in fiscal year '24–'25 to 13.8 million in the current year. In the recently enacted Budget Act, we estimate the work and community engagement provisions of HR 1, which require adults who are eligible as part of what's called the "new adult group" to demonstrate participation in work, education, or community service. We believe this will lead to the loss of 43,000 members in the current year.

And at full implementation, it will lead to the loss of slightly over 1,000,000 Medi-Cal members. This is out of a total population of 4.7 million Medi-Cal members in the new adult group who are subject to these requirements.

One caveat that I'd like to note is that this estimate does not account for the impact of the new interim final rule that was released by the Federal Centers for Medicare and Medicaid Services in June. Specifically, the interim final rule establishes criteria for one of the main exemptions from work requirements in a way that is more stringent than the federal HR 1 law and more stringent than policy direction that CMS have provided over the past year.

So, specifically, the interim final rule narrows the definition of "medical frailty," which is one of the main exemptions from work requirements. The final rule says that someone must not only have a condition that makes them medically frail, but also that that condition significantly impair their ability to work. Medical frailty, as context, was one of the most powerful exemptions in our implementation of work requirements to exclude new applicants and members from being subject to, to work requirements.

The final budget reflects over 700,000 members being exempt from work requirements due to the Medical Frailty Provision. However, that interim final rule makes this more restrictive. It will reduce the number of applicants and members we're able to exempt and it will increase coverage loss and disenrollments. In addition to, work requirements, HR 1 includes a provision related to a six-month Medi Cal eligibility redeterminations for the new adult group.

We anticipate, in current years, zero members will lose coverage as a result, but at full implementation, 278,000 members are projected to lose coverage.

The Department anticipates to closely monitor data on enrollments, on disenrollments, and reasons for disenrollments to better understand the impact of HR 1. We maintain a website with statistics and dashboards with information about enrollment and renewals, and we update that dashboard monthly. We're in the process of identifying the specific data elements to display in those dashboards to better convey to the public the changes to enrollment under HR 1.

So, in in the middle of next year, we'll have much more refined data to really illustrate the ongoing impact of HR 1, especially as it pertains to Medi-Cal members losing coverage as a result of work requirements specifically. Couple notes regarding data.

The agenda asks about if there is existing data infrastructure that can assist with determining potential demand for county...care or the uninsured rate at real time—in real time—at a statewide level. We are not aware of any such data infrastructure that exists. The agenda asks about the data exchange framework.

For example, the Data Exchange Framework provides sort of a structure for data exchange in California, related to health care, in that it includes a data sharing agreement and policies and procedures that govern the exchange of data, but it does not collect or report data. The Department of Health Care Access and Information is one source of information regarding how much health care utilization occurs in certain settings for individuals who are uninsured.

HCAI collects emergency room inpatient hospital data, primary care, and specialty care clinic utilization data broken down by expected payer source, which can include, specifically, the uninsured self-pay in in contingent care. However, this data is also not real time, and, and has, has lags in in the timeline for collection and reporting, and I would refer to the Department of Health Care Access and Information for more information about the data exchange framework or their collection of this data.

Thank you. Yes. Go ahead.

Angel Alonzo Coronel, Department of Finance. Since the 2026-'27 budget was adopted, Covered California's projected enrollment has narrowed. The current forecast projects a decline of approximately 454,000 enrollees, an improvement over the roughly 527,000 decline in the original budget estimate from six months ago. And what's driving these, these reductions comes from a result of a combination of factors. We have the expiration of the enhanced premium subsidies, the enactment of HR 1, and the federal final rules, issued in 2025.

And the narrow, the narrow projected decline comes from—reflects two developments. First is the 2027 State Subsidy Program, which provides subsidized premiums for enrollees up into 200% of the federal poverty level. The second is the reversal of the federal final rule that would have shortened the 2027 open enrollment period from 90 days to 60. That concludes my remarks, and the administration is here to answer any questions you may have.

Thank you very much. Are you—you're here for any questions? Okay. Great. Colleagues, questions for our panel?

Assemblymember Addis.

Thank you so much, and thank you for all the presentations. Back to the data, which Assemblymember—which Chair Hart—originally was asking about, and to my question around how long would it take to, for us to get baseline data. I heard—I think I heard you say DHCS does not have database infrastructure with the count that you could collect and share this information, although you do have agreements to be able to share data, but you don't have a platform to share it on publicly.

Is that what you're saying?

Thank you, Assemblymember. So, that is accurate. There is no database that exists right now or data reporting platform or program between counties and the state, with respect to uninsured populations or indigent care. I mentioned the data exchange framework, which is, in effect, serves as sort of rules of the road for data exchange, primarily between health care providers and managed care plans and some county entities, like public health or behavioral health or social services.

So, what would it take to get this data from the counties that we've been talking about and be able to share it with the legislature in a digestible format for us to be able to make decisions?

I think there would probably be a number of factors that might go into how long it would take to set that up and and what the cost might be. I think it would depend on sort of the main entity collecting the data, be it the Department of Healthcare Services or the Department of Healthcare Access and Information, which, today, has a little bit more data than we do on this population. It would depend on the data elements that are required, things that LAO remarked in the prior panel.

There are probably 58 different ways now of collecting, reporting, describing what constitutes indigent care, so, if there were to be sort of one single statewide definition with technical specifications to define it, even setting that up takes time, let alone setting up the data collection and reporting process.

My experience, my experience in working in publicly funded Medicaid programs in California and federally is that when it comes to collecting and reporting data, everything takes way longer than one would think.

Just last, last question. Are we talking weeks, months, years, decades?

We're talking to the point of being able to receive and digest useful sort of apples to apples equivalent information, I would say years.

Oh, sorry. Sorry. Sorry, Chair Hart.

No. Go ahead. Go ahead.

I'll, I'll just make this one last comment, that—and I just, we, I don't think we can drive this enough, is that we're in this situation because of HR 1. I don't think we're in this situation because our departments necessarily are, are at cause here. It's really HR 1 and the horrible effects of the lack of renewal of the Covered California subsidies that we're in this situation of needing to look at how we might revamp our entire health care system.

And it's—I can't, I can't emphasize enough how detrimental this has been to California.

Assemblymember Soria and then Assemblymember Schiavo.

Yeah. Good morning, and, and thank you for the presentation that you guys did. The, the former presenters as well. Obviously, very sobering. I think for communities like the ones that I represent, which are traditionally more rural, much more impoverished, and the lack of access to real—even just basic care—is much more challenging than in other urban areas. I, you know, the fact that we can't even get the data—or the data's gonna take so long to get—is troublesome.

I know that it's not our fault, to the point that Assemblywoman Addis mentioned, that this is really a consequence of HR 1 and what this current federal administration is doing, essentially dismantling a health care system that this state has very proudly been trying to do to ensure that we expand as much, as much as—as much coverage as possible to, especially, the folks that need it the most. And so, it's, it's concerning that it will take us this long.

I, I'm just wondering too, in terms of the gathering of the data, will—would that include also communicating with hospitals and seeing the utilization of an emergency room? Like, can we compare the data from, you know, pre-HR 1 cuts to, you know, post HR 1, and if we're seeing a drastic increase in the utilization, the, the, the type of utilization of those emergency room visits, which is where these folks are gonna end up having to go if they don't have the coverage that they need to be able to access primary care and so forth in, you know, in other, in other forms.

So, I'm curious to understand that, if that's something that you guys are looking to as well.

Thank you, Assemblymember, and your question actually sort of allows me to maybe refine a little bit more about my response to the prior question about this taking years to set up. It would it would take years, you know, several years to set up sort of the Cadillac version of, data collection and reporting on the uninsured in California on county indigent care programs and what those look like, and for it to be standardized at a statewide level with timely data. That would take several years.

To your point, Assemblymember, data does exist today.

There are probably, you know, surveys that, that ask people about whether they have insurance or not. So, that's a data point that exists. Yeah. You mentioned emergency room-based data. So, that data does exist today.

I mentioned HCAI, which, you know, has collected emergency room and inpatient hospitalization utilization data by expected payer source, including self-pay, the uninsured, and indigent care. It is my understanding HCAI also collects equivalent data for primary care clinics and specialty care clinics. So, that, that is data that is collected today. I believe it's sort of self-reported data. I don't know if HCAI has ongoing commitments to, to continue collecting those, but they do have those in recent year.

So, that type of data exists, but it lags for several years. It's not real time, and it will take, you know, several years for the impact of HR 1 to show up in, in that data that's reported.

How far back does it lag? Is it one year? I'm just wondering in terms of what kind of data does HCAI have today as it relates to this.

So, again, I, I, I can share what I know, but I would defer to HCAI for follow-up for more information. I, I believe the emergency room and hospital data dates back to 2024. Current, that is the—I believe that is the most current data they have—is calendar year 2024 data.

And we could probably, though, look even further back before the expansion of care that has happened in the state to also look at pre, right, the—all the expansions that we've made, current, you know, how many folks, and then, at least have some kind of projections that will help us.

I think having data is gonna be critical so that we are making appropriate investments in the upcoming budget and as we're trying to create policy proposals to ensure that we're providing, you know, support to fill, fill in the gap, again, as a consequence of HR 1. But yeah, so, those are kind of my comments and questions, and I'm hoping that we can do get some follow-up from HCAI to see. And I don't know in what form do they present this data.

I don't typically sit, obviously, in Budget, but I'm very proud to be here all on the oversight because I do believe it's extremely critical that we get ready—start getting ready for this, what I, I see as a tsunami of folks losing care in the state of California.

Thank you very much, Assemblymember Soria. Assemblymember Schiavo.

Thank you. I saw someone new joined us, so I don't know if you're gonna respond to the questions, but I'll let you do that if you wanted to do that.

Yes. Certainly. So, Sanal Patel, Department of Finance. I think I would just offer on to my colleague's comments regarding HCAI's data, so, yes, it is accurate that HCAI does collect some emergency department encounter data from California hospitals.

But I think two things I'd like to just reemphasize—one, there is always a data lag, and that is due to just overall collection, verification, validation, reporting of the data. And secondly, there is limited insight specifically into insurance information regarding hospitals. Right now, the data is largely around patient encounters. It doesn't necessarily speak to, like, insurance status and things like that.

And in terms of what is reported, all of the data is reported on their public-facing website. But as my colleague mentioned, there are always data lag, so, the data that you'll see today may be at least several months old, potentially older than that too.

So, so, I appreciate you responding to not necessarily being able to have the Cadillac, but what we can pull together. And I wonder if there's creative solutions where we can pull together all of the agencies, including the health plans, which I feel like they probably have pretty current data on at least if they're losing or gaining, and demographic data on who, you know, they're insuring or not.

But if there's ways to pull together those who have whatever type of data is out there to be able to, to, to hobble together some kind of report and information that could come to the legislature because, you know, sitting on Health Budget Subcommittee, I feel like we are too often having lacking information about decisions that we're being forced to make. And, you know, on some levels at the end of the day, we know people are gonna be losing health care.

We know that's the reality, and we need to operate from that base of knowledge. But, you know, it sounds like in, you know, in the absence of the Cadillac data reporting system, that we need to get creative and, and more collaborative with different agencies and, and organizations that can pull together something that really creates the kind of picture that helps us make the decisions that we could make.

And is there something that could exist, create that table, or could be created to to make that table to bring people together for something like that?

I'm sure there's—it could exist. I don't know sort of the existing best sort of forum or convening for that purpose, but just to sort of give a little bit of a glimmer into what that would entail, just for example. So, at DHCS, we have Medi-Cal enrollment and disenrollment data. So, we, we have really timely data, more than the health plans, about who is disenrolled from Medi-Cal and what that population looks like geographically, demographically, and so forth.

But what we don't have at the Department of Healthcare Services is what happens to them after they lose their Medi-Cal coverage. For some of them, are they eligible for covered California? For some of them, do they get a job and obtain employer sponsored insurance? So, we, you know, what's easy to tell is Medi-Cal disenrollments and loss of coverage, it's not definitive, though, that that means they are uninsured three months later, four months later.

So, figuring out that part of the picture is probably the hard part because that depends potentially on survey data, which is not perfect or timely, might depend on county indigent care utilization data, which is varied—will be varied—if counties stand that up. It might depend on Covered California data, employer sponsored data, which, which we don't have at the department. So, it's just figuring out what happens to that individual after they lose Medi-Cal is hard to put together right now.

And, I mean, I guess this goes back to how much is going to be falling on counties, which I'm very concerned about. And, you know, so, I imagine that next step of if they lose Medi-Cal, where are they going next is going to be on the laps of navigators who are working with them directly to figure out that next step.

Is there, is there coordination at all with Covered California and what kind of data, like, sharing would be protecting people's privacy, but is there a way to kind of track people over between Medicaid and Covered California or no?

Thank you, Assembly member. Yingja Huang, Deputy Director for Department of Health Care Services. So, currently, we do, given that we do share one streamlined system with Covered California. So, we have an ability to track the individual only if they move between the Medi Cal program and Covered California, and I think what we were sharing is after they have left the Covered California program, this is where it gets a little difficult for us to kind of track beyond.

But currently, we do have an ability, from a data infrastructure perspective, and the fact that we do share one eligibility system with our Covered California partners, we can see where they're going in this scenario. They're over income for the Medi-Cal program, and they're now in Covered California. Or likewise, if there's a circumstances that do change in their life, and they are moving back into the Medi-Cal program.

And one unfortunate factor to consider, as a result of HR 1, is that of the slightly over 1,000,000 people who are expected to lose Medi-Cal coverage as a result of work requirements, better HR 1 prevents them from receiving federal subsidies in Covered California. So, that door is closed for them.

Well, so much bad news. I mean, I think I guess I would just say that if there is a way to pull together the table and bring together, you know, organizations in these spaces where we have blind spots where we don't have data or knowledge, I think it's to everyone's benefit because we're talking about we're making decisions about funding, right, and, and funding health care. And so, I think it's to everyone's benefit for us to have a really good sense of where things are at and where the dollars really need to go.

And so, I would hope there would be, some collaborative work to help make sure that we are getting the data we need to make those decisions. Thank you.

Thank you, Assemblyman Schiavo. Assemblymember Arambula.

Thank you for the opportunity to ask questions today. I'm gonna begin with the administration, if I can, Department of Health Care Services. My understanding of your testimony is that the work requirements will be more stringent than had been anticipated. So, I'd like to get an understanding if our current numbers are predicated on that worst case scenario, or was this on the best case scenario that we understood then? Is the million people we're going to lose an accurate number?

Or is it going to be higher than what is in our handout here today?

Yeah. So, thank you, Assembly member. That, that is exactly what I wanted to hit on in the opening remarks is that the, the disenrollment figures at full implementation, as reflected in the, in the final budget, likely understate the total disenrollment because when those numbers were produced, the interim final rule that CMS issued, that is more restrictive than the law, had not yet sort of been analyzed readily available assessed.

So, we are continuing to work through what it looks like to comply with the interim final rule and the more restrictive criteria in a way that mitigates harm to members to the maximum extent possible. And again, there is still no subregulatory guidance from CMS that will enable us to implement this in a meaningful way.

So, there's a lot that is still to be determined, but that is the—the important caveat is that at governor, at, at final budget, we estimated that we could exempt 700,000 people based on the medical frailty criteria. It is likely that if we were to implement this, in compliance with the interim final rule, it would be less than 700,000 that we can exempt, and, but we don't know what that number is.

Quantify a percentage or what's and anticipated, you know, without determinative final numbers, is it half of that number? Is, is it—what percentage would you assume it's to be at?

We are still working on that, and a lot of it hinges on the policy guidance from CMS, which will enable us to know truly how restrictive that this is. Does it require a doctor's note, a doctor's attestation, or can this be adjudicated only with claims data? These are big contingencies that we still don't have final answers to. And so, until we have clarity on how to do this the best way we can, we, we cannot project new numbers.

Would, would it then be fair for us, as a Legislature, to assume it's 1.7 million that will, the entirety of the 700,000 you previously had thoughts to get through until you're able to better provide? I, I just want the reality, the hard truth, so that we, as a body, are able to face it head on.

I think it's fair to say that of the 700,000, we will be able to exempt a significant portion of them. And just as another caveat that that 700,000 actually didn't account for the full framework that we had planned to implement over time regarding to medical frailty. So, as a Governor's budget, we had actually hoped to actually increase that number above 700,000, based on additional data that we plan to pull in at a later point in time. We still hadn't finalized that.

So, some of these are still sort of in, in flux, in terms of how much more data can we pull in to exempt people and where will CMS land on the final policy.

So, it's hard to calibrate, but I, I don't—I would not say that the number is—drops from 700,000 to zero.

So, it's definitely higher than what we're currently assuming, which creates a worst-case scenario for us to address. I, I just wanted to bring that up as a body.

Yep.

Next, I'd like to talk about the six month renewal. That's harder than it looks.

You know, for, for many people, whether they still live at that same address, whether they ignore that because they're used to being on the one-year renewal. Are you basing this off of other programs that have decreased from one year to six months? How, how did you get to this assumption that it's only 270,000 people, give or take? Are, are there other data points for us to analyze to understand if this is an appropriate approximation?

Thank you, Assemblymember. What we did use was our experience during the Medicaid unwinding, where it's a publicly available dashboard and we assume, kind of from a monthly perspective, kind of the biggest bulk of the individuals that are disenrolled in the Medi-Cal program are probably procedural terminations, just like you were sharing, is the difficulty of the paperwork, etcetera.

And we took, you know, a percentage, you know, across the kind of the twelve to about sixteen month availability of the data, and that percentage was applied to that six month renewal figure, and State Medicaid Director Sadwith shared the number is hitting at full implementation and I think at the 278,000 figure.

And that's a projection, and this is taking into account the experience of DHCS, just from that kind of that longitudinal kind of assessment of the terminations. But I think it's important to share that, you know, we understand the experience could be better for the member, and we are working through we receive dollars into the state budget for clinic navigators. We know at the point of care, it's very important. This is where that connection to the member becomes the most important.

So, we're kind of working through standing up that navigation program, really pushing for outreach.

We did receive dollars in the state-enacted budget for communications, and just really using various modalities to really help the members kind of navigate that journey. Every six month is difficult, especially, I think when they're very used to a twelve-month timeline. So, we fully recognize that and really trying to mitigate that, to the extent possible.

I do wanna highlight the mixed status families that many of our California families are in and the fear that they have, especially us releasing information to the Federal Government. Will these six-month timelines be seen as traps? Will they be seen as harmful for them to respond to? So, I just, again, question whether those numbers are accurate. We're, we're contemplating 1.3, but I've heard the potential for up to 2,000,000, depending on what happens with the more stringent rules and here.

And, and 2,000,000 out of 14,000,000 is significant. You know, it's 15%, give or take, from what we're currently doing and, and that makes it, very important for us to be cognizant of. I, I do feel obligated to remind us there were proposals from the legislature this year. It's highlighted in our agenda, but the 70—761,000,000—and 2,400,000,000 in following years for direct support of county indigent care that have gone a long way towards helping us to address this.

Those are discussions for the future, not for today, but I feel it's important when we're talking about such a large population to make sure we're signifying what's our responsibility and what's the county's responsibility and the role we have to play.

I do wanna come back to Finance. Angel, you specifically have talked about the decrease of enrollees from the state's $300,000,000 funding of a 138% to 200%.

Correct.

I usually find it better to talk about how much they're earning. So, as an individual, it's in, again, in the agenda, approximately 22,000.

What does 200% get us up to, and what's the logic that we would support those from a 138 to 200% while ignoring those who are under a 138% from any type of subsidy?

Apologies. Sanal Patel with the Department of Finance. Do you have it?

With regards to the actual salary, I don't know that we have that data on us, but we can follow-up on the specific number. In terms of below the 100 and basically 38% FPL, The difficulty lies with what was say stated earlier. There are certain restrictions that HR 1 is creating that would make it so that individuals who are not eligible for the federal ACA subsidy cannot also then be eligible for any state subsidies.

So part of the structure of the ACA, which is predates HR 1, is that you must be eligible for each federal ACA subsidies to be eligible for state subsidies too. And given the impacts of HR 1, we're starting to see a narrowing of eligibility for the federal ACA subsidy.

So there's a little bit of a domino impact happening, but some of these impacts predate the HR 1 and some of them are being exacerbated by HR 1.

It it prohibits the state, but it doesn't prohibit us from funding counties to be able to provide support for those who are ended. And so I'm I'm just wondering if there's a technicality to make sure that we're able to address this without, breaking federal law. And

I see. Are you speaking within the covered California structure or a separate structure?

You know, I I to to be honest, I I understand we're saving 45,000 people, but I'm looking at the more broad factor that there's one to 2,000,000 people who are impacted by the changes for medical below one thirty eight. Simply if I can, and I just did back of napkin myself math. If one thirty eight is 22,000, 200% should roughly be 31,000.

And so if if that's the case, what then are we why are we saying it's okay to take care of those between 22 and 31, but ignoring those who earn less than $22,000 a year. What's our why do we have favorites in this situation versus taking care of those who have the greatest need?

So I can offer insights with respect to how this would look in Covered California. I think the bigger question you're asking is likely sort of the nature of this conversation and why we're here today. That was not funding that was included in the budget act, and I know that's of interest to this committee and other members. So I think that's a larger discussion. Specifically, with Covered California, this question did come up.

Is there an opportunity to build a mirror system that would be available to individuals who are not eligible for ACA, but could we create a smear covered California system that would allow individuals to purchase some sort of unsubsidized insurance that could potentially be subsidized through a different state subsidy. So I think a couple of factors come into play. One, there's always concerns similar to Medi Cal of potentially doing something that is in conflict with federal guidelines.

Notwithstanding that, the secondary concern is what it would take to build such such a system and the time frame it would take to do so. So conversations we had in the spring around this, Covered California did flag that it's not something they could do now.

It would take quite an on ramp. However, if that is something that is of interest to the committee, that's something, the administration in Covered California can continue to provide TA on. But the timeline to create such a mirrored system is just much greater than a few months.

Can you discuss what the cap currently is on Covered California? I believe we had increased it to 600%. Historically, it had been 400%. And and just so I get the understanding of of how much we've covered versus how high we have to continue to work for creating a truly mirrored system.

Are you speaking with respect to, just to clarify your question, what the funding included in the budget?

No. The funding seems to be up to 200%. But for covered California overall, what's our current how far up are we covering with Covered California?

Yeah. As of right now, Covered California is covering populations up into the 400% of the federal poverty level. With the twenty twenty seven state subsidy program, which we were taking into consideration of how, sustainable would a program, you know, be for those individuals that, you know, that would be receiving this this extra, help, I know, from from from the state.

And, yeah, even even beef beef when we did have the enhanced premium subsidies, that is that is when we had not only the premium help, but also, like, other cost sharing reductions given that we don't have any more of the federal enhanced premium subsidies. The state and administration were trying to figure out ways as to, you know, how to go about using state dollars and then, you know, finding the most possible way to create a a program.

Again, my back of the napkin math has 400% at 63,700 for an individual based on 22,000 for $1.38. And for for many of our constituents look, my average salary is in the thirties for a family of four. And that's why they are on Medi Cal. They're not even on Covered California. And while we've invested into decreasing 10% of those who would be benefited from the covered California, we seem to have ignored those who truly are in poverty and who have young families.

So I just wanna ground us that we're, you know, we're saving 50,000, but we're losing somewhere between one to two million people who are on medical. And so while we're doing that, I I have some concerns that we're not addressing the root of the problem. And and just wanted to bring that up for you, Mister Chair, to make sure that the numbers we're seeing are most likely inaccurate and will be worse when we come back next year.

And that our current investments are helping those, not to say that they don't need help, but that we're not creating parity with their those who are truly poor in our state and that historically has not been what we've done. Thank you, Mister Chair.

Thank you for those comments. And I think that highlights the complexity of this challenge and, you know, the inadequacy of what we're even talking about. We're we're talking about trying to stand up in some way the county's indigent health care program that has evaporated over time because of other better interventions that are now evaporating because of federal action. So we don't have a good case scenario here. We have a less bad case scenario, and that's what we're gonna hear about, from the county representatives, next.

Are there are there any other questions for this panel? Thank you all for your expertise. You described things. Well, actually, before you get away, one question I did have. Do you need any statutory authority from legislature to collect the data that is gonna be enormously difficult to get and take a long time?

Is there anything this session right now in the month of August that we need to do to at least, you know, give you the tools that you need to work with the counties to get the minimal data we need to be able to put together a program for next budget cycle or to have a program this budget cycle?

The answer is it depends. Likely, depending on what if it is about new data collection, it is it is possible that new statutory authority would be required for the department to to require that of counties.

Well, thank you. That's Happy to provide TA on That is probably the first thing on our pin. We may may need to do that in the next few weeks to make sure that we don't get a lag of till January. Thank you for that. Next, we'll have the county panels.

If you all just come up, we have representatives from, Santa Barbara, San Diego, and Tulare County to present the county perspectives on health. And again, whatever order you'd like to do, and just please introduce yourself and begin when you're ready. Thank you.

Chair and Members of the committee, I'm Tanya Heitman, assistant county executive officer for Santa Barbara County. Thank you for the opportunity to speak today about our county's indigent care program. The growing pressure facing our local safety net system and wide renewed state partnership is essential. For more than a decade, Santa Barbara's indigent care program has been largely dormant. Since 2014, only a small number of residents required screenings and all were ultimately eligible for medical or private insurance through Covered California.

But this is no longer our reality. Analysis prepared in partnership with our county's managed care plan shows that the number of residents who will lose access to existing coverage and who will instead rely on the county for indigent care will grow significantly. By 2029, more than 21,000 residents may meet eligibility criteria for the program with annual enrollment projected between twenty four hundred and forty two hundred individuals. These are residents who fall into a narrow but critical gap.

Adults ages 21 to 64 who are citizens or permanent residents, long term county residents not eligible for medical, and whose incomes fall between a 138200% of the federal poverty level.

They have limited assets, real medical needs, and no other pathway to care. When every other door closes, they come to us. Because the program has been inactive for years, we do not yet have a modernized scope of services built for this population. We do, however, have a strong foundation, five federally qualified health centers that provide comprehensive primary care, behavioral health, women's health, and prenatal services. These clinics serve large numbers of Spanish speaking patients and a substantial Misteco population.

Many of whom face significant transportation, language, and access barriers. And although our medium income mirrors the states, more than 13% of our residents live below the poverty line, a higher proportion than most California counties. To prepare for the expected surge in need, the county set aside half of the estimated annual cost about 5,700,000 in this year's budget. But this set aside required difficult choices. That meant other departments could not fully cover rising operational costs and were forced to make reductions.

Federal changes such as the new medical work requirements and HR 1 only add to these pressures by potentially increasing the number of residents who lose coverage and enter the indigent care system at a time where we're forced to provide layoff notices to a 190 employees who provide services and support to our community members. What concerns us most is a long term sustainability of this mandate. Before the Affordable Care Act, counties received nineteen ninety one realignment funds that covered about 60% of indigent care costs.

After medical expansion, AB 85 redirected most of these dollars. Over time, the remaining funds have been absorbed by other essential county health care programs with growing obligations.

Today, Santa Barbara County's general fund must shoulder far more of the cost than ever before. Santa Barbara is one of four counties that elected the sixty forty AB 85 methodology. A decision made more than a decade ago based on assumptions that no longer reflect today's indigent care needs.

As demand grows, counties like ours have the ability to transition to the counties like ours must have the ability to transition to the formula methodology, which is based on actual county costs and savings and provides a more accurate reflection of what counties need to retain to meet their Section 17,000 obligations. Counties are requesting a technical statutory amendment simply to clarify our authority to petition for a change in methodology.

We are rebuilding a vital safety net program at the exact moment, need is rising, and long state long standing state and federal funding has diminished. We are committed to caring for our residents, but without updated state partnership and more flexible tools, this obligation becomes increasingly difficult to sustain. Thank you for your attention and your commitment to ensuring access to care for the most vulnerable members of our community.

Thank you so much, miss Hyman. It's great to see you again.

Yes, well.

Next. Good morning, Mister Chair and and Members of the subcommittee. My name is Elizabeth Hernandez. I serve as the interim deputy chief administrative officer for the county of Of San Diego Health And Human Services Agency. Thank you for the opportunity to speak and for your leadership in confronting the realities ahead.

San Diego County is California's second most populous county and 1 of its most diverse. Like you've heard, HR 1 has profound impacts on our residents. We estimate roughly 309,000 people will be subject to new work requirements with about 68,000 unable to meet them. These numbers represent real people, workers, families, older adults, who depend on consistent care to stay healthy and stable.

Our indigent care program, also known as County Medical Services or CMS, is a program with limited eligibility criteria to address immediate medical needs as a payer payer of last resort.

Services are restricted to primary care evaluation, approved follow-up care, and emergency treatment. Preventive services are excluded. Because San Diego County does not operate public hospitals or primary care clinics, we rely entirely on our community health partners to care for these CMS patients. In 2010, nearly 11,000 residents were enrolled in CMS with annual program cost around 70,000,000. After ACA implementation, enrollment plummet plummeted.

In comparison, last month, CMS had four enrollees. It is also important to recognize that community expectations have evolved significantly since the implementation of ACA. Through extensive engagement with hospitals, clinics, advocates, and consumers, we hear a common message. People need compassionate access to care that prevents emergencies, not just a place to go when conditions become life threatening. Community partners describe residents skipping insulin because they cannot afford it.

Patients cycling in and out of emergency rooms and families struggling to find mental health care. What they describe is full scope medical, which is different from county indigent care. Our board of supervisors is exploring reforms such as broadening eligibility and covered services using one time funding. However, these reforms require a significant investment of resources, and we know state support will be essential.

Even absent these reforms, medical costs have risen sharply, and even a fraction of newly uninsured residents seeking care through CMS will create a substantial strain fiscally.

These pressures are further compounded by the recent expiration of the COVID era funding that supported critical public health positions and programs across the county, as well as ongoing threats to social service funding. Together, these factors are likely to increase demand for county funded services while further straining local government's ability to meet community needs.

In addition to rising indigent care enrollment and associated costs, San Diego County and several other counties received a letter from DHCS indicating the state would begin redirecting a fixed percentage of our 1991 health realignment in perpetuity instead of using county data to calculate the annual redirection amounts. These rules switched counties from getting money based on a formula to getting a fixed percentage, and that change assumes all things would stay stable.

It did not expect a situation like HR 1 where counties suddenly have to rebuild a large safety net system from scratch.

We are committed to doing our part, but to protect our communities, we need a funding framework and a modest technical correction to statute that reflects the moment that we are in. Thank you for your consideration and your leadership.

Thank you very much, Mister Hernandez. You described that. Just the daunting situation you're facing very well.

Thank you. Thank you. Yes. Thank you, Mister Chair and members of the committee. My name is Jason Britt, and I'm the county administrative officer for Tulare County.

I have served my county for thirty one years, and I was previously the director of our indigent health care program prior to the Affordable Care Act. More than half of Tulare County residents are enrolled in Medi Cal, and our county is home to hospitals recognized by the state as financially distressed. County estimates include that at least 22,000 residents are at risk of losing medical coverage, and we estimate approximately 7,000 of them may ultimately seek assistance through the assistance through the county's indigent health program.

Before the Affordable Care Act, indigent patients faced eligibility standards that varied by county, long waits, delayed care, increased reliance on emergency room, very limited specialty treatment, and chronic conditions that went untreated until it became life threatening and more expensive. Many of those problems could return and likely will return.

Medical expansion has been in place for thirteen years and many recipients have never experienced the far more limited county indigent care system. County indigent care cannot provide the same benefits, provider access, or continuity of care as Medi Cal, nor are we mandated to do so. And the funding mechanism the state dedicated only envisioned very basic levels of care. A more comprehensive benefit would be best accomplished at the state level with dedicated resources.

Most Article 13 counties substantially reduce its indigent care program after nearly all individuals transition to Medi Cal.

Article 13 counties face a particular disadvantage because we do not operate public hospital systems, and many long no longer operate county clinics, capable of serving this population. However, public hospital counties are also facing an estimated $3,000,000,000 in additional revenue losses due to financing changes in HR 1, and CMSP counties only have enough revenue to get through the end of the budget year. To fulfill the statutory obligation, counties must quickly restore its capacity to serve these residents.

We must hire physicians, establish eligibility and treatment authorization processes, provide nursing support, process claims, negotiate provider agreements, monitor cost and quality of care. Sounds like maybe data collection and all other coverage losses without dedicated funding.

In '91, the legislature established realignment funding to support the county indigent health care. But after the Affordable Care Act expanded coverage, of course, AB 85 re redirected much of that funding based on assumptions that counties would realize substantial savings. Just one quick caveat. Pre ACA, my county specifically received about $14,000,000. I mean, I'm sorry.

In AB 85, my county receives $7,000,000 in AB 85 realignment. I'm estimating that county indigent care would cost me over 20. Just to give you as an idea. Finally, I just urge the legislator to provide an immediate one time bridge funding that so that provider counties and Article 13 counties can use both to prepare their indigent care systems, pay for medical care, and that the funding must be available before January 1 so that counties are ready to serve these residents when when losing coverage.

I appreciate your time, and I'd be happy to answer any questions.

Thank you, Mister Britt. Appreciate that. Yes.

Good morning, Mister Chair. Michelle Gibbons with the County Health Executives Association in California. Just here to assist on any technical questions. Thank you.

Thank you very much. Mister Britt, you talked about a one time you need money now to pay for January. How much money?

We'd like a $100,000,000.

Okay. That's that's the start of the conversation. Yes. So thank you. Yep.

Appreciate that. Questions? Doc doctor Arambula?

I I wanna get a sense if I can versus full scope to indigent care. Can can you describe what your what the differences are? I I heard it would decrease provider access, continuity of care, and provides a basic level of care. What does restricted medical offer? What do you offer in addition to that?

How are we able to prevent disease rather than simply reacting to it?

So I think I'll I'll handle that first. I'll just sort of describe sort of the pre ACA, at least for Tulare County. So in the Internet care categories in I would say in a lot of counties, the individuals come and go out of the system. They may they will only typically come, when they have a need. Right?

Or will get alerted to their need through the through the emergency room unless you have a county that's got a contract with a managed care provider or they have some other system. But I would say the a good majority of them come in and out of the system.

So we only know about them as they get sick or they have delayed their care so long that they're now getting, you know, something extreme like an amputation for diabetes or some other types of, form of life saving care. So the the the primary care is very minimal. You may get a little more primary care in some counties if they operate a clinic versus counties who do not because every encounter is, as you know, is a cost.

And so so there is little preventive care. It is really a it is really a reactionary system to really relieve pain and suffering once your condition's gotten to a point that it's no longer alleviating pain. And so it's it's it's a very, basic, rudimentary system that does not, come anywhere near what medical or even emergency medical services provide, under today's structure.

Please.

I I would just add that in Santa Barbara County, it is kind of a mixed bag because we do have our, FQs, q's, our federally qualified health centers where we are providing some in primary care preventive type of services to this population. But as is indicated in Tulare County, a lot of individuals are just hitting the system because they're going into the emergency room. They aren't already in a relationship with our our clinic, and they have had some catastrophic situation.

Could be through our ambulance system as well or through the, ER. Unfortunately, the level of preventative care or early care is gonna be much more limited because we really will not have the same scope of outreach to this population.

Just as a reminder, I spent a previous lifetime as an emergency room doctor. And many of these disease processes can be prevented if prescribed medications in advance rather than dealing with the end sequelae. The fact that we're able to talk about amputations or dialysis, which are much more expensive than us treating them at the root cause, highlights the dangerous area that we're about to enter into. An ounce of prevention is worth a pound of cure.

And then here we are talking about how we're alleviating pain and suffering rather than practicing medicine and preventing disease in anticipation of knowing where the cost drivers are in our system.

Ultimately, I believe this drive costs up. It makes it more expensive for the counties to have to do this, especially if they don't have relationships with their FQHCs or if they're working in collaboration. Our ER times go up. Everyone then suffer longer wait times. That means it's more difficult to access doctors when you need to.

There's pain and suffering on the horizon For us as California with this current system. Love to hear from you, Michelle.

Yeah. Thank you. Good morning, Assembly Member. With CHEAC, as you know, we are more than interested in prevention, and and I think counties are interested as well across the board. But I just wanna take us back to a time thirteen years ago where we had not had the coverage gains in the Affordable Care Act, and we hadn't had this recognition across the health care industry.

And so Medi Cal didn't have the expansion that they had today. So, really, what the counties were required to do and afforded funding to do was that basic life saving care. And when you think about the the things that you just said about prevention and keeping people connected to a system, that is not what indigent care is.

And allowing individuals who fall out of Medi Cal because of these federal reforms to then just go and push their luck in the indigent care program essentially and be able to receive whatever the county is able to to offer and afford is not the best way to go.

And so I think from a county standpoint, we do not wanna take off the table the possibility for the state to step in and provide an alternative coverage option that keeps people connected to the medic health system, could utilize the provider networks that have already been established, and make sure people are getting that preventative care.

There is an investment if you shift and allow folks to fall into indigent care. There could be a better investment if we find a way to keep them in state coverage, whether that's retaining all of the benefits in Medi Cal today, whether that's retaining a slimmer benefit, and then helping them to get connected back into full scope medical at the earliest possibility.

Those things being connected to a state coverage program is going to aid in that and help them transition smoother than coming to the indigent care program.

Tulare? I would just add to that that, you know, we're all committed and we think that, you know, we wanna create you know, we wanna provide the best services to our to our constituents. But counties like mine in the Central Valley who are resource strapped, I just don't have the ability to do that. It's not a it's not a a lack of desire.

And we've learned a lot of things with the ACA, and we've learned how to improve a lot our systems and navigate people through systems and connect them to care that we didn't really fully understand or perhaps weren't even willing to work together prior to the ACA.

So a lot of that has been a benefit of the ACA, but it's it's really the lack of resources that allows that. If the state is willing to invest in prevention to prevent that pain and suffering, we'd be happy to have that conversation.

Can you speak about the role of restricted medical in this conversation? Has there been changes through HR 1 that would diminish the role? Are are you able to answer those questions? Because my understanding is that was 60% of what full scope medical costs. And yet we eliminate the ability for us to really get towards prevention when you're solely taking care of them in the ER, taking care of pregnant patients.

Patients? For the individuals that fall out of Medi Cal coverage, let's say for the because of the work requirements, they will not have access to emergency coverage in Medi Cal. So they're the only care that can be afforded to them will be through the indigent care program.

One of our prior proposals that we tried to introduce to the legislature and appreciate your leadership in getting that at least into the final negotiations was creating a a similar emergency coverage program so that people could at least get, that parity and be able to be connected to the medical system so that when they could transition into full scope coverage, it happened much faster and in a streamlined way. We also understand, though, that that's not the full array of benefits.

We are open to discussions whether it's, you know, at the state level with resources and discussing how to make that benefit possible and any other benefits that could be attached to that. And then as Mister Britt said, to the extent that we are talking about things happening at the county level through indigent care, anything beyond this kind of emergency, life and death situation requires a new investment of resources beyond what has the funding source has been given to us for.

Earlier, I had said two steps forward and one step back. This actually looks like it's a further step than we had thirteen years ago.

It feels like it.

People who qualified for emergency medical that currently do not.

Absolutely.

And and that's problematic when we think about our young mothers, When when we think about the families again, I'm gonna bring up mixed status families. How many of Californians live with one or both parents who are immigrants? And when that occurs, we're not really creating parity. You you have a two tiered system. And that really is problematic for us as a state to say you have certain value and others have less.

And I'm sure I'm preaching to the choir with those of you who are fighting for indigent care, but just wanted to highlight that here in this committee.

And I'm sure I'm preaching to the choir with those of you who are fighting for indigent care, but just wanted to highlight that here in this committee.

if I could just add one point real quick. So I just wanna leave a final point is some of the conversation earlier is, every county is gonna has a different standard and has different coverage. And so I just wanna caution that we can't compare every one county and blanket it to all counties because it is very standardized and I mean, different across. It's not standardized.

Mister Chair,

And just as you think about and the legislature contemplates any type of data collection or requirements for data, this is not an apples to apples comparison because there are court cases.

There are counties are under court order to provide different levels of care than other counties based on advocate, lawsuits, etcetera. So just wanna caution that that that is it's you gotta understand almost every county's position to make those kind of comparisons because it is it is much more complex than just, say, having a state system like Medi Cal that you can get all the information you need.

Just to remind you, Mister Chair, Jason speaking from Tulare County, which is a Central Valley County, and I think he's reinforcing what I had mentioned earlier. Some of us just have it rougher.

So there are gonna be geographical disparities as well.

Yeah.

Well, that's an extremely point important point. It's, you know, one of the core missions of today is to try and figure out how we're gonna move forward and, prevent more harm by developing a system that can do something. And the data collection part is important. It's critical. We gotta we gotta know what we're doing.

And yet the disparities between this is a really great panel. We've got You know, smaller county, medium sized county, and a large county here. And the capabilities and the ability to, provide the data is wildly different. Is there any effort at the CSAC level to kinda put a working group together to talk about this to say, you know, what is it that we could do? What what is the minimum data that would help the state, you know, and how prepared are you?

Do you need is that part of the $100,000,000 ask just to create the data that we need to make future decisions here in Sacramento?

The data piece isn't part of the 100,000,000. That is for direct services. It's just to Kinda bridge us until we can have a discussion about longer term solutions.

And how

are we spending the $100,000,000 if we don't know what we're doing and we don't have any data?

Yeah. People are gonna show up. Yeah. And so we are gonna be spending it to provide the services. But I did wanna say a couple of things on the data piece.

The California Health Care Foundation has done profiles on county and digit care programs for a number of years, and and I know you have, miss Heidrain, that'll come and can share a little bit more about that. One of the things that I would just mention too is that you can't look at just a point in time. So if you and I've been doing this wonky stuff.

But if you look at, like, 2005 and then you look at 2009, and I think they have one in 2015, it looks like sometimes, like, maybe pre ACA, we were a bit more strict and restrictive on what those services could be in some jurisdictions, and then post ACA people became more generous.

Well, there's a rationale behind that and a reason, and it's because counties tried to do their best to as people moved into coverage, they tried to cast a wider net, offer more services because they had whatever resources that remained.

So I would just incur and I know the California Health Care Foundation is also exploring this. I will say that there's still a lot of things in flux because counties and what they offer today may not be what they offer tomorrow because similar to the enrollment as or disenrollment estimates that the state partners were discussing, counties are also trying to think through, okay, In this scenario, if this many people return, do we have resources to provide our mandate?

And if so, can we provide anything beyond that? Or do we have to scale back because we really wouldn't be able to serve and be as generous as we are in a post ACA world? So counties are making those decisions in real time right now.

That, I I understand, is not real time data that you all may be looking for, but the one thing that I would maybe leave you an offer is that counties have to begin this work whether the data is you know whether we're able to analyze this data and have it in real time or not. Counties are also faced with investments without the full array of information. We don't quite know how many people will be disenrolled.

We don't actually know how many people will show up, but we do need the dollars as a bridge to be able to serve them as they do. Some people, some counties may have, eligibility criteria that's beyond the medical threshold.

And so if somebody is losing coverage in Calvert California, they may already start to seek care through the indigent care program. But we certainly know that when folks do lose coverage because of the work requirements at the top of the year, they will start to seek care through the indigent program. And we just wanna have some funding and some investment to be ready to serve them. But we are more than happy to continue the discussion on data. We're happy to provide point in times.

It just may not be as real time as folks hope because we don't have that data infrastructure to be able to provide that.

Thank you. That's a great segue to their next panelist who will help us transition into what are we gonna do. So let's you stay where you are, I think. We have another Chair here. Yes, please.

We've got representative Katie Heidorn, the director of state health policy from the California Health Care Foundation. Thank you, Katie. You looked anxious and ready to come and talk.

There's been such good conversation already. Okay. Good morning, Mister Chair and members. I feel like I'm talking to an empty room, so I apologize

for those that

It is a strange layout.

Exactly.

You're reminded in a funny way.

As as you said, I'm Katie Heidorn. I'm the director of state health policy for the California Health Care Foundation. Thank you for having me today. As many of you know, the foundation is an independent nonprofit philanthropy that works to improve the health care system for all Californians, especially those facing the greatest barriers to care. You've heard today about where we are.

Federal and state policy changes are going to result in large scale coverage losses among medical enrollees, and unfortunately, this is happening and soon. We should be really clear eyed about the scale here. While we've there's been a lot of discussion about data today. So while we don't know the full extent of what this is actually going to look like until implementation happens, I did wanna provide you with some data, the data that we do have.

So they're in the packet in front of you on the first page if you turn from the cover page.

There are some projections county by county, so you can find the counties that you represent. These are done by the UC Berkeley Labor Center in partnership with UCLA. These aren't real numbers, but these are projections, and it just gives you we we have an understanding of the magnitude of the problem. These are real people. These are people who are becoming newly insured because of state and federal policies.

These are people who have health care coverage today. They understand how to access the health care system, and they're going to lose it. And so they're actually going to show up in all of these counties sitting next to me today expecting some level of coverage. And as you heard, it's very varied across the different different counties. So make no mistake, we're going backwards, very backwards as doctor Arambula pointed back even before you know, even further than we were before.

This is going to be big. And, unfortunately, we've spent the last decade making real progress in coverage. We reduced our uninsured rate to the lowest level ever. We have built that progress on statewide coverage, consistent statewide coverage focused on primary care, and no barriers to access. And these pillars are absolutely what's at stake.

So this question is simple. When these people lose coverage, how do we, as a state, respond? What is the solution? We believe the answer has to be a statewide one. Prior to the implementation of the Affordable Care Act, covered California and our many medical enrollment expansions.

As you heard from the county sitting next to me, California had and still has a patchwork of county based indigent care programs for uninsured adults. As miss Gibbons mentioned, the California Health Care Foundation about a year ago actually published sort of a historical look back. There's a link in your packet, and it's online, and I'm happy to provide and speak with your staff as follow-up. We had a consultant go out, and they literally called every single county.

There's a chart in that report about what the current state of those indigent care programs are today, what their eligibility requirements are, and you're gonna look at it and go, wow.

This really it's really, really varied. And it is, and it will continue to be. So as we face this crisis, we can't just solve this problem at the individual county level. The counties are working really, really hard and are so are our colleagues at the state to figure all of this out and to mitigate the harm, but it's still going to happen. This is a statewide problem and requires a statewide solution.

Even back in January, you heard the CEO of my foundation, doctor Sonder Hernandez, testified in front of the Assembly committees and said, we need a statewide solution. We still believe that that's really important. We also if we continue to do a county approach, it creates, a system of haves and have nots, and it would very much deepen those gaps that we've tried so very hard to close.

This statewide approach does the opposite and creates consistency so that a person's access to care doesn't depend on their ZIP code, and it matches the scale of the problem. So people ask, can the state afford this?

Right? We're in a budget committee today. The real question is, can can we afford the alternative? Delayed care is expensive care. When people lose coverage, they don't stop getting sick.

They delay care until they end up in emergency rooms. That drives up premiums and strains our already distressed hospital infrastructure. This is a predictable and preventable crisis, and we can solve it. So doing nothing isn't the cheap option. It's actually the expensive option.

So the good news is, as I said, we don't have to start from scratch. We at the at the California Health Care Foundation have published several works to talk about not only the good models, some statewide models, like the low income health program that led up to our first major medical expansion with the ACA, the county medical services program that still covers a large region of rural counties in California. It's still active today. Healthy San Francisco is a is an example of a successful county program.

So we have a lot of history here to build on successful models.

And then just to add to this, in April, we also worked with consultants at Health Management Associates and several partners here to come up with what a statewide model could look like and could cost. And that's based on using full scope medical benefits as a baseline and then sort of cutting off benefits and changing rates from there. So there's some examples there just to start this whole conversation. Happy to answer any more questions. I'm thrilled that there's a data conversation.

We, and you heard the Department of Health Care Services, we're all planning to collect emergency room utilization data, enrollment, utilization data, and also that data is gonna lag. So thank you very much.

Thank you. And your thoughtful presentation is a ray of hope and a tough day. You know, I just I I have to say that, you know, sitting here and, you know, having been a local elected official at the county level, seeing the progress that was made to ensure people preventive care cost less and is the only humane choice we should be making.

But, you know, this all started because the Trump administration and the Republican Congress needed to pay for the tax cut to the richest people in the country. This is not about health care.

This is the reason the health care cuts that we are suffering through and enduring and trying to patch together as a solution at the state level are frankly just the price for the tax cut. They did they didn't care about this. They didn't wasn't an agenda they got elected to do. They just needed to pay for their tax cut under the federal budget rules. And they did that by chopping health care because it's where the Federal Government spends a lot of money.

And the state is now picking up the the damage from that, and counties, in turn, are trying to triage the damage. And we don't have any good solutions here. We have aspiration that we should do better, and we should have a safety net that actually works, that prevents increased costs rather than just incurs them and and absorbs them in the system because everybody will pay those additional costs, the emergency ward. But, you know, we don't have the money at the state level to do that either.

That's the reality.

It's the Federal Government is the Federal Government and the state government is not. And that's you know, we're all dealing with that. So understanding that, being angry and frustrated and ashamed by that, you know, what are we gonna do?

So the first thing that the LAO said is we need better data collection, and it sounds like you are you recognize that problem, but that that is an enormous financial burden and that it's looks very different county to county because of resources and ability to provide that data. And and what is the data that's impactful and and necessary in the short run-in order to do something, you know, immediately?

So, I'm at a bit of a loss as to what that is. It sounds like a daunting task all by itself, and the clock is ticking. We're trying to do something before January. You know, we have another three weeks in the session here, you know, a $100,000,000 program to staunch the bleeding and provide some level of service and data collection.

And then we will work in that intervening time to develop, hopefully, a more practical status, you know, or statewide integrated system that can begin to put back what we had.

Won't adequately do that, but it's something and necessary, but inadequate. So there is a big long speech with no question mark at the end. Anything else you wanna add to the urgency of the moment? What what can we do? What do we need to do in the next month to give us the best case?

I'll speak on behalf of my colleagues here and just sort of say, again, my name is Jason Britt from Tulare County. But today, we sort of offer a couple clear recommendations. One is, address the county's immediate needs to provide, a $100,000,000 in one time general fund support so that the funds can also become available before January 2027 so that we can prepare for these individuals. So you asked earlier, what would we do with the $100,000,000?

I can tell you in Tulare, on January 3, someone's gonna show up and expect me to pay their emergency room bill With no money.

And what do I tell my financially distressed hospital? What do I tell the ambulance company who took them there? What do I tell the provider who helped them in the emergency room? What do I tell any

of the How far will that $100,000,000 go, though? Because you're a $100,000,000 statewide, what does that translate to to Tulare County? Is that $2,000,000? Million dollars?

I mean, I don't we'd have to figure out how that breakdown works. I don't have a number for you.

It's probably like that though. Right?

But but what I would say is it is it is it it will address the immediate needs because we have the well, it it will it will depend on how quickly people show up in the emergency room. But what the message is, we're trying to use it for immediate services. It's not for a lot of other fluff. It's really the immediate services that people will will come into as counties need immediate resources to serve individuals discontinued from Medi Cal and to pay for those services.

Without the bridge funding, counties will be forced to use general fund resources from public safety and other essential services to pay for those.

The funding should be flexible enough to recognize that counties are starting from a very different place. For example, as we heard earlier, some counties still operate clinics and hospitals, but article Article 13 counties do not generally, and rely heavily on contracts and other it will also help us, address we also recognize that it's not addressing the long term need. If this is a stopgap, just, hey, we need January to to June just like everybody Yep. To figure out what's happening. Right?

Who's showing up? What is that playing out on the

I would say we need it from, you know, it's August to January.

We'll take it September 1 if you'd like. But but but we but that's the message. We needed to figure out get through the fog of sort of what's happening, who's really falling out, what does that look like, how do they show up, when do they show up, what do they show up with, what do we have to pay for. And right now, we're we're counties are faced with paying for that.

At least the at least the 12 or 13 Article 13 counties, we're faced with nothing or gutting public health programs or gutting public safety.

That's what we're faced with today. And so, finally, as a long term solution, I would offer or I would encourage the state to really look at that state option. Look at state funded Medi Cal options, whether that be full benefits, partial benefits, emergency benefits. Yeah.

You need you need to qualify it always like that. You can't just say, state, pick up the people who are falling out of the medical medical system. No. We don't have the money to do that.

I understand that. My point my point is is that we already have a structure where we have we have claims. We have providers. We have we have a way to get people connected to the care and eligible and to get preventive care. Like, so we already it's it's about the structure of the state Medi Cal program and and The infrastructure.

Right. The infrastructure. And to the extent that the state wants to give a more robust indigent program, you have the ability to hang services on that tree as you like when you have the funding available. And so keeping people connected to the Medicall chassis, is something that, could prevent people from losing at least the basic emergency care. It would help move them into the cover California system when they got employed or if that whatever that triggers that.

And so it's really about that piece of it. And then you gotta and then the state has to contemplate the cost of administration. You know, administrating all these different programs at the county level also creates, funding challenges. So so those would be the two things that I would offer just as a consideration, and we do appreciate your time today and giving us a lot of time to explain our situation.

I really appreciate your expertise and information. Let me check with miss Hernandez and excitement. Anything you would add to this conversation right now?

I I I think Jason did a great job in terms of sharing that information. I would also add in terms of a low hanging fruit, AB 85. Having that modest technical correction to statute k. Would be a significant significant support to our our local jurisdictions.

Thank you. Miss Simon?

Thank you, Chair Hart. I would echo the same. The, Article 13 counties are, particularly vulnerable right now, and I think this is really trying to meet their immediate need. And then the formula the formula is a significant issue that we would like to see taken up as quickly as possible.

Well, thank you all. And then miss Heidorn, any final words?

I mean, you heard you heard from the counties about the immediate solution. Yep. Even by June or July next year, I don't know that we're gonna see the full picture you heard from the department. It's gonna take a while to get to full implementation. So when I think I'm thinking about this more in the medium to long term, whereas my colleagues are have immediate people they need to serve.

And so I just don't wanna lose sight of let's continue to track that data. This could be an eighteen month to two year process data collection conversations. Miss Shavo talked about convening folks to think about how can we actually get to that more statewide coordinated solution rather than just these stop gap programs. So I I think we would be very happy to help think about how we convene that, bring people together, and think about technical assistance as well.

Thank you. Well, thank you. Did you wanna add something to your I just my contact there.

Just one quick point of clarification for the 100,000,000. It would not be spread across all 58 counties. 35 are under CMS and can bridge for the first year. So it'd be for the remaining, like, 23.

Okay. That's that's helpful too. A little more money for the folks who need it. Okay. Yes. Doctor Arambula.

Thank you, Mister Chair. Some of us are in two committees at once. So I had to go vote in appropriations and came back, but was listening to the commentary while I was gone. I really wanted to come back to the, depiction that you had within your testimony about delayed care, ER usage, and compensated care. Having been in the middle, going back to being in the middle, I know what happens when we delay care.

How disease processes that were under control become unmanageable. And the need for emergency rooms to help to pick up, but without emergency medical, how does this not then lead towards uncompensated care for our hospitals and for many of our FQHCs? Can you can you really speak to how that ramps up the timeline of that? Because many of our hospitals are currently distressed,

are

currently struggling. Many of our clinics can't make ends meet. So I'm I'm just worried that while we're talking high level, we're ignoring what happens at the ground.

Yeah. I think I'm sorry. I can't look at you while I speak into the microphone. I think you you hit the nail on the head. This absolutely exacerbates the current financial distress, and I think my colleague from Tulare said, who's gonna pay that emergency department bill?

Who's gonna pay that ambulance provider? That is absolutely real. And without emergency medical, we don't have an immediate solution to that. And so as they said, keeping people connected to that medical chassis to the eligibility folks in the counties is really critical so that, we can mitigate that as much as as possible.

Tulare, do you wanna come?

No. I don't really have anything to add other than just, yes, it's, you know, continues to be a struggle and, you know, we're counties counties continually you know, we have to be we're the implementers.

We're the ones on the ground, and we're just trying to be as prepared as possible to work in partnership with the state to have a little bit of funding to serve really what is all of our constituents and and try to figure out where do we go, you know, next year and and beyond that what we can talk about and do today.

One of the comments I saw from Sandra Hernandez, our CEO, friend of mine, was that we need administrative simplicity. For many of our farm workers, they migrate. They move from county to county and the rules move. And so, there is no continuity. There there is no simplicity when they're reapplying every time they're going somewhere new to look for indigent care.

Is the statewide solution the only one that provides that administrative simplicity? Is there anything counties can do to share, or is this really a statewide problem?

Yeah. I think we, you know, and I think if doctor Hernandez would hear was here and you can see from her quote in your packet, she would absolutely agree. This is a statewide problem. I do think as we know today that even when someone is in Medi Cal and moves county to county, that's not always even a smooth process.

So there I think, you know, I I wouldn't say that that system is perfect and I know that the counties and the state work hard to make to keep people connected to care when people are migrating county to county.

But it's certainly better than individual county programs That aren't connected.

Yeah. If I could just add that I think that connection to managed care is particularly evident in the specialty services area. That's a particular vulnerability in our county right now. It is very difficult to get specialty care for individuals that that physician, it doesn't have the same level of confidence that they're going to have the support of all the care that that patient's gonna need. That's gonna become more and more difficult as we try to broker these indigent care agreements with specialty care providers.

The hospitals are already talking to us daily about what they're seeing in the ground level and are foreshadowing a lot of problems in the specialty care services.

We'll just highlight that we would not have had the success and expansion if it had not been working in partnership and collaboration with foundations. And so really do look towards philanthropy to help us to continue that necessary conversation and highlighting the responsibilities that we will have as a state despite the federal headwinds. It'd be nice to get to a place where our Federal Government was represented by someone who came from California, but we can't just jump there.

We we have to deal with the realities of today. And so I really am looking for what that band aid is to get us from here till '28 and believe that's an appropriate place for us to talk about what's our plan for the next two years Starting this upcoming budget year.

Thank you, Mister Chair.

Thank you, doctor Arambula, and thank you all. The panelists were extraordinary. You convinced me. I I'm sold on the problem and the media solution. The longer term solution is I do agree statewide challenge and problem.

And this is just the first of many conversations we're all gonna have to have to to provide the care for people who have grown to deserve and expect a better system than we're walking towards. So thank you very much for everybody, the representatives in the administration and from the Ledge Analyst Office. This is gonna conclude the first portion of our hearing. And the second part, we were asked to consider in January a budget trailer bill proposal related to the state leadership, accountability act, and risk management.

And risk management is a key management function performed by the administration, but it typically is not something the legislature reviews.

We'll have a quick discussion about the proposed changes to the government code proposed by the administration with the intent of green lighting the language to be included in budget cleanup. And today, joining us to present this language are Jennifer Arbus with the Department of Finance. Welcome. And Zach Stacy, also with Department of Finance. So thank you all.

In whatever order you would like to begin, please start.

Good morning, Mister Chairman and Members of the committee. Again, my name is Jennifer Arbus, assistant audit chief of the Department of Finance, Office of State Audits and Evaluations.

Good morning, Mister Chairman and Members of the committee. My name is Zach Stacy. I'm an audit manager at the Office of State Audits and Evaluations with the Department of Finance.

Thank you for the opportunity to be here today to present the proposed trailer bill language related to finances audit report distribution and separately the State Leadership Accountability Act or SLA as originally proposed in January as part of the governor's budget. The proposed language contains two distinct statutory changes. The first change is to repeal government code section thirteen two nine six to reflect modern processes and account for other statutory requirements finances are required to follow.

The second change repeals and reenacts government code sections 13400 to 13407. Starting with the first statutory change, government code section 13296 related to finances audit reporting distribution was enacted in 1945 and last amended in 1981.

It requires the Department of Finance to provide all audit reports to the state controller's office as well as to the legislature if the audit included a review of federal funds. The proposal eliminates the code section entirely. Finance proposes the repeal of government code section 13496 because it's the code is no longer relevant as all of the completed finance audit reports are posted to its public website.

Additionally, a process is already in place through existing statute, government code section 9795 , should a report be required or requested to be submitted to the legislature. Moving on to the second statutory change, which is unrelated from the first one I just went over.

The proposed revisions to government code sections 13400 through section 13407 related to SLAY, modernizes the language, making the code more succinct, and removes outdated information. It reorganizes existing sections to improve readability and to allow for finding information in distinct sections such as definitions, roles and responsibilities, and reporting. The proposal also changes the reporting requirement frequency from a biannual to an annual cycle and eliminates the every six month follow-up reports.

And finally, the proposal also moves a report due date from December 31 to July 31, which aligns closer to the state fiscal year. Furthermore, finance proposes revisions to government code section thirteen four hundred through section 13407 because it'll bring the language in alignment with current industry standards and best practices followed internationally by the Federal Government and by large states.

My colleague and I are happy to answer any questions you may have.

Well, thank you for the presentation. That was really helpful. Just generally, how does the department use, this tool to improve governance in California? And any examples of how it's been applied that resulted in cost savings or better efficiency?

I could give a couple examples. So when finance receives the SLA reports, we look at them for kinda statewide trends. And a not so recent example was the implementation of the state's new accounting system in Fiscow and, departments reporting risks associated with the implementation and the support that they were providing were provided related to the Fisco implementation. So we we would share the the statewide risk that we've we've compiled with with Fisco.

And in addition, our our our department redirected some existing resources to help with the Fisco onboarding.

Another example might be a lot of departments report risks associated with, like, workforce development and retention and succession planning, and we'll report we'll report that kind of information up to our leadership and to, CalHR. So those are a couple of That's

a consistent problem across every state agency, isn't it? It's challenging. That's far. And then why the increasing frequency of the reporting? Is that how is that gonna help?

So the increase is for a couple of reasons why is, a, it it aligns with best practices followed by the Federal Government and other large states that we surveyed. And, b, it allows departments and executive management to, assess emerging risks, risks that are more more timely and they may be facing. That's we think a yearly basis allows a more, you know, on time assessment of risk. And we also the proposal also eliminates the every six month follow-up to those SLA reports.

So a typical entity in a two year period under the existing process might report to us four times.

And so this new proposal department, the Max they would be reporting to us would be twice.

Okay.

And then there's an interesting provision in law that has the ability to file a misdemeanor for somebody who does not comply with the statutory requirements for the reporting. Who is subject to that and has that ever been exercised? And

I do see that in the legislative digest counsel's notes. I will tell you, in order for our agency to be noncompliant, that means that they missed the reporting comp reporting component to finance. And to put that into perspective a little bit, out of the 174 agencies that were required to report on the SLA, a 162 complied. So we have a 93% compliance rate. But to answer your specific question about the misdemeanors, no person has ever been imposed any kind of penalty for not complying with SLA.

What happens what really what happens is we compile a list of noncompliers and post it on our website.

That's The dirty dozen in that case that didn't turn them in at a time? They get highlighted? Yeah. They get highlighted on our public website.

Then they

comply quickly? Yes. Good. And then what is the change for the rationale in the the audit reporting? What is the rationale for the change in the audit reporting?

Oh, the 13

That's the 13296.

Oh, just because I mean, we in practice, we haven't been submitting reports to the state controller's office separately. You know, our reports are available public, so we don't feel the need. They're closed. It's not what's currently practiced, and I think Jennifer mentioned that there's already a a separate code that dictates the process when a report is either required or requested by the legislature.

Twenty first century has changed how we do things. Okay. Well, thank you. That's been really helpful. I don't think we have doctor Everly, you have any questions?

Okay. Well, thank you very much. That really does conclude our work today. This was a really comprehensive hearing on a couple different subjects. Thank you for being here.

And, if there is anyone who would like to comment on either of these items, please come on up to the microphone.

Thank you, Mister Chair and Members. Brandon McCarthy on behalf of the California State Association of Counties to the first part of the agenda. Induction care. Appreciate the robust discussion. Counties are very willing and happy to partner with the state, the legislature, and the administration on the data collection element of it.

There's a very good discussion about how important it is to understand what's happening to plan for the medium and the long term state plans for how we maintain the coverage gains the state has seen in the last decade. As was discussed, counties are also requesting $100,000,000 in the current year to meet the demand that we believe will start happening. It's starting in January.

You make a very good point, Mister Chair, that we don't know what the demand is because we don't know how many people will lose Medi Cal. We don't know how many people show up.

But with the realignment dollars having been redirected by the states, counties don't have the luxury of funds sitting around to pay for the services when the demand arises. And so we think a $100,000,000 is a modest reasonable bridge to get us to the budget year where we collectively can come up with a better long term plan for how to meet both the indigent care needs but the broader coverage needs in the state of California.

And then as mentioned, there's also some technical cleanup to AB 85 we're requesting. Thank you very much, and we will look forward to working with you on this in the long term.

Thank you very much. I know you're gonna be engaged. We will too.

Sorry. Yesenia Romancha with End Child Poverty California. Just wanna say thank you and a lot of gratitude to the Chair and the members for the discussion today, especially as it relates to HR 1. We know that there has been devastating cuts across so many of our public benefit programs that serve our lowest income families. And and we know that that has applied a lot of stressors, especially on how they access medical as well for state funded resources.

One thing that I did wanna just add to the conversation and was mentioned earlier by the legislative analyst office is about as a result of realignment and as a result of AB 85, you know, the complexities of how our CalWORKs program is currently funded and just wanted to be very clear and like, as these different proposals move forward, just wanted to stress the point of, like, ensuring we protect our CalWORKs families who are among the poorest families in our state, and we still have yet to, you know, lift up the grants above the poverty levels to, address what we had committed to in terms of assistance unit plus one, which I know Assembly member has a lot of history behind on.

So I just wanted to add that to the conversation. On top of that, you know, look forward to seeing if there's any opportunities for this budget to also, resolve issues happening in our CalFresh side of things as a result of HR 1, and I know that those conversations continue to move forward as well. Thank you.

Thanks so much for the testimony.

Hi. Vanessa Flores on behalf of the Alameda County. We support the California State Association of Counties proposal for a 100,000,000 in 1 time in genetic care bridge funding in the August budget action. As federal changes under HR 1 increase, the number of uninsured residents and counties will face significant new costs while remaining legally obligated to provide care. This funding will help preserve access to essential health care services and prevent greater strain on our health care system.

Thank you.

Thank you.

Kelly Brooks. I'm here today on behalf of three clients. First, on behalf of the California Association of Public Hospitals and Health Systems, thank you so much for the hearing today highlighting indigent care issues, and thank you for the work during the budget process to provide $250,000,000 for public hospitals. We do have eight public hospital systems who have received letters similar to the one that the, witness from San Diego mentioned about being frozen in their AB 85 allocations.

We really wanna emphasize that the AB 85, technical language is really important to the public hospitals too.

And we are in a similar position to the other counties that testified today. And we are also having to figure out infrastructure for indigent care programs that, by and large, do not exist in public hospital counties. We clearly have a network to provide services, but we may not have the administrative structure to enroll people. So we're thinking about this too. We are also supportive.

And then on behalf of CUPH, the Urban Counties of California, and, the County Welfare Directors Association, we are all supportive of the $100,000,000 in bridge funding for indigent programs. We think this is, an important element to get to get to a different place on, indigent care issues. And, of course, the associations are supportive of the trailer bill. Thank you.

Thank you very much.

Sarah Dukett, on behalf of the Rural County Representatives of California, and we account counties in all three buckets, the pooled model with CMSP, the Article 13, and the public hospitals. And we desperately need the trailer bill language to get done this year. We have frozen counties that need to unfreeze so they can at least draw down a a small portion of their costs as well as counties that are sixty forty that are gonna need to transition to the formula.

So we really urge that that work gets done this year. We're also supportive of the bridge funding request and really wanna urge continued conversation about what the options are and what we need to do to make sure we have a sustainable path for indigent care and hopefully have some early action or game plan by January.

Thank you so much.

Thank you.

Hi. Rachel Blucher on behalf of Nielsen Mercsler on behalf of the counties of Contra Costa, Yolo, and Lake, and also the county of San Diego who was so well represented by doctor Hernandez on panel one. In the interest of time, just wanna really thank you for putting the time and energy into this hearing. Really appreciate the effort to, address this issue and align in my comments with the county associations in terms of support for the bridge funding and additional trailer bill. Thank you.

Thank you for joining us today.

Good morning, Chair and Members. Thank you again for who's hearing today. Beth Malinowski of the SEIU California. We wanna align our comments with their county partners, including CAPH and CSAC and CHEAC. And as have been noted, I think the urgency of the work is real, both the need for some short term solutions, which might include those technical fixes that have been referenced this morning, bridge funding, but also that longer term conversation.

Welcome for the dialogue. Thank you.

Thanks for being here.

And last but not least, Kelli L'Heureux with Resilient Advocacy here on behalf of the California Kidney Care Alliance. We appreciate the committee's discussion today focusing on how California could mitigate the impacts of HR 1 and want to flag a policy change that has already been implemented. Californians on restricted scope emergency only medical can now only receive dialysis through emergency rooms, a costlier policy path that increases the risk for negative health outcomes.

As HR 1 pushes more folks into restricted coverage, this dialysis coverage gap will widen and leave vulnerable patients in jeopardy. We urge the budget committee to reinstate outpatient dialysis coverage for emergency medical, and we look forward to continuing the discussion in the coming weeks.

Thank you.

Thank you so much for being the final word with such a clear example of how broken this is. So thank you. We are adjourned.