LA County Could Face Health Care Cuts

Los Angeles - The Board of Supervisors today warned that severe cuts to health care services were likely unless state and federal officials provide needed funds to the county.

"You can't ignore Los Angeles County and expect that nobody else will pay the price," said Supervisor Zev Yaroslavsky. "When we sneeze, the rest of the state catches cold."

Yaroslavsky warned that the state would suffer if the county -- which he estimated manages about a third of the state's healthcare load -- starts shutting down hospitals and reducing services.

The federal healthcare system could not withstand a failure in California, he said.

"It all starts here," Yaroslavsky said

The Department of Health Services had hoped to erase most its deficit -- about $200 million last year and about $429 million this year -- with federal funds from three sources:

-- a six-month extension in an increased percentage of federal matching funds for Medicaid costs, currently set to expire in December, could provide $34 million in 2010-11 dollars;

-- a hospital provider fee, which could generate an estimated $115 million annually; and

-- a Medicaid waiver which governs payments to the county. The current waiver -- which accounts for approximately $900 million in funding for the county's healthcare system -- is set to expire Aug. 31. A new waiver could be worth $150 million in annual funding.

Despite assurances from congressional leaders during a visit by the supervisors to Washington in May and numerous follow-up calls, the prospects for funding now seem dim, based on comments by the supervisors today.

"The FMAP (federal medical assistance percentage) is on life support," said Yaroslavsky, saying that estimates had already been cut by 50 percent and it was still not clear whether the dollars would be available.

"We're gambling that we're going to get the hospital provider fee and the waiver," said Supervisor Gloria Molina. "I think we're being overly optimistic, because we haven't solved last year's deficit."

The county has yet to close its books for the fiscal year ended June 30.

Department of Health Services Interim Director John Schunhoff said the state had asked county officials to "back off" in its request for funding and support an alternate plan.

"The state's key interest in this is to balance its budget," said Shunhoff, saying that interest conflicted with county residents needs. Though the funding comes from federal government programs, it flows through the state, leaving state officials in a critical negotiating role.

"(State officials) don't see us as a partner," said Yaroslavsky. "Partners don't sell partners down the river."

To add insult to injury, county Chief Executive Officer William Fujioka said the state still owes the county $172 million in healthcare reimbursement dollars from 2005-06 which officials have said will not be paid out in the next 11 months.

The county is seeking an estimated $115 million in cost savings for all its departments through negotiations with labor unions, but the outcome of those discussions is not yet clear, said Fujioka.

The Department of Health Services hopes to reduce its annual costs by $18 million, though the details of how those savings will be realized were not discussed today.

Additional Measure B funds of $9 million and $42 million in tobacco settlement dollars can be drawn down to replace a portion of federal dollars. But that will not be enough, said Fujioka.

"The impact is catastrophic," said Fujioka, saying as many as 420,000 patients -- more than half of the estimated 730,000 currently served -- would have to be dropped from the county's healthcare system if none of the federal measures is approved.

Most of those patients are "high need, chronically ill" residents, said Molina, who warned that cutting services will push more and more sick people into already strained emergency rooms. "It's overcrowded now. We're not meeting all of the needs out there now."

Molina proposed that Fujioka and staffers to return to the board in 15 days with detailed recommendations as to what specific cuts would be made if the hoped-for funding does not materialize. She said the board needed to understand exactly which facilities would be closed and what services would be lost, in the event that none of the federal funding materializes. She also asked for a breakdown of the $18 million in department cost savings.

"I think we need to start dealing with the realities of the situation here," Molina said.

The board voted unanimously in support of Molina's recommendation.