1. Stan Rosenstein Former California Medicaid Director Retired December 22, 2008

2.  Continuing deficits at a record growing pace  Revenue has declined $15.1b, 14.7%  Workload Spending in FY 2009 has increased $1.5 b, 1.5%  $14.8 billion current Fiscal Year deficit  $41.6 billion by June 30, 2010 if unchecked  Total Budget was $104 billion  California in a fiscal emergency  Will run out of cash and issue IOUs in February  Several special legislative sessions to make current year budget cuts  Negotiations continue 2

3. 3 Health Insurance Coverage 4,877,900 children and adults, 1,067,000 persons with disabilities, 658,000 aged. MEDI-CAL: $36 billion in 2008 Support for California Health Care System 23% of total CA health spending Assistance to Medicare Beneficiaries 1,029,763 aged and disabled — 23% of CA’s Medicare beneficiaries Long-Term Care Assistance 62,400 nursing home residents; 62% of CA’s long-term care services

4.  Second largest nationally in terms of dollars expended  Lowest nationally in per enrollee spending  Covers most optional benefits  Extremely concentrated among a small segment of the enrollee population.  Seniors and non-elderly adults with disabilities account for 25% of beneficiaries and 61% of expenditures 4

5.  Sixty percent of all Medi-Cal expenditures in 2003 went to benefits for only five percent of enrollees  Forty percent of all FFS Medi-Cal expenditures in 2003 went to benefits for only two percent of enrollees 5

6.  $1.085 billion state GF increase in 2009-10  Caseload increases due to:  Number of people on TANF  Number of families enrolling in Medi-Cal  Growing number of people on SSI Growing cost of care, especially for hospitalizations 6

7.  Provider rate reductions  Range from 10 percent down to 5 or 1 percent on March 1, 2009  Mid year status reporting for children and reduction of continuous eligibility from 1 year to 6 months  Elimination of Part B Medicare payments for Medically Needy enrollees with a share of cost 7

8.  Elimination of optional benefits for adults including dental and optometry  Reduction in coverage of parents by reducing income level and redefining under- employment for 2 parent families  Reduction in the income level for non-share of cost coverage for seniors and people with disabilities  Restrictions in coverage for immigrants  Reductions in payments for the uninsured to public hospitals. 8

9.  During 2001-02 recession states were in a similar situation, but far less severe  State were facing significant budget reductions  The proposed Medi-Cal reductions were greater than today  Relief was front loaded to maximize benefit  Congress adopted a maintenance of effort that prevented states from reducing eligibility levels or increasing county funding  California was able to use this relief to eliminate the most difficult cuts to both eligibility and optional benefits 9