Week of January 14, 2019 State Issues Legislative Analyst This week, the Legislative Analyst’s Office (LAO) released its overview of Governor Newsom’s budget proposal for FY Report on State 2019-20 that was presented last week, and saw a new leader selected to lead this non-partisan organization. The Budget Legislature appointed a new state Legislative Analyst to fill the role Mac Taylor has held for 10 years. They named Gabriel Petek to the post, who most recently worked for Standard and Poor’s Global Ratings San Francisco Office where he is currently the state’s primary credit analyst. He takes the reins on February 4. In addition to getting a new chief, the LAO released its overview of the Governor’s January budget highlighting that that state’s budget position continues to be strong. They also focus on the fact that the Governor’s proposed budget prioritizes the repayments of state debts and a great deal of one-time funding. Nearly half of the discretionary spending is earmarked to pay down state liabilities, including unfunded retirement liabilities and budget debts. Twenty-five (25) percent of the discretionary spending is for one time or temporary funding proposals, and 15 percent for discretionary reserves. The LAO applauds the Governor’s decision to focus on the repayment of state debts. The LAO points out one thing that many took note of – the Governor has outlined many priorities for budgetary spending. And at least some of the proposals are not fully fleshed out or reflected in the budget document. The LAO was not critical of this but pointed out that these un-finalized proposals give the Legislature the opportunity to weigh in with the Administration and have their say in its development. Regarding the health items in the budget, the LAO provides a brief overview of a few of the key issues, which includes a summary of the proposal to expand Medi-Cal to cover undocumented young adults. The proposal would use state-only- funded Medi-Cal services to provide access to care to 138,000 individuals, which would cost $134 million state General Fund. The LAO also comments on the Governor’s budget proposal to increase state subsidies to augment the federal funding that makes health care coverage through Covered California more affordable. The proposal notes that the additional subsidies are designed to be paid for using the revenue from the fines from those individuals who do not comply with a proposed state-only health insurance mandate. The LAO notes that the revenue from the fines from the individual mandate should decline over time as more individuals access coverage – while the demand for additional subsidy supports would increase as more individuals access Covered California coverage. The LAO will likely have additional suggestions on how California can improve the state’s coverage numbers, absent a mandate. (more) Legislative Analyst The LAO also notes that the budget does not assume the renewal of the Managed Care Organization (MCO) Tax. This is Report on State a tax that the Medi-Cal Managed Care Health plans impose on themselves to draw down additional federal Medicaid Budget revenue. It is estimated to add more than $1 billion to the Medi-Cal budget. The item would require legislative (continued) authority – which is not a problem to obtain if the health plans are in agreement. It also requires federal approval – which has been a concern in the past, but the LAO points out that a similar plan from Michigan was just approved. One worrisome note is that neither the budget nor the LAO discuss the revenues and expenditures related to Proposition 55. Last year the Governor used an inappropriate formula to calculate the item that resulted in zero dollars being provided to Medi-Cal, as was intended by the voters. This is an issue that many in the health care community will have to take up again this year. The full LAO report can be accessed here. Appointments, With the new Administration, comes new leaders in the “horseshoe” (Governor Gavin Newsom’s inner circle of key Committee advisors) and key agencies. Attached is a list of key administrative appointments by Governor Newsom related to Assignments and health care. Of note, as of this writing, there has been no official appointments for Secretary of the California Health New Senate GOP and Human Services Agency or the Department of Health Care Services. Also included in the attached are the Assembly Leader and Senate Health and other committee assignments. Also this week, the Senate Republican Caucus replaced Pat Bates (R-Laguna Niguel) with former Assemblymember and new Senator Shannon Grove (R-Bakersfield) as Republican Leader. The change takes effect March 1st. In the press release, Grove said "Our state is the fifth largest economy in the world, yet it holds the title of having the highest poverty rate in the nation. For the sake of the millions of forgotten Californians, our Caucus will work to navigate government with pragmatism and compassion and negotiate with fearlessness." Grove is a former social worker and is a US Army Veteran. She is on the following Committees: Health, Housing, Insurance, Rules, Transportation (vice chair), and Veterans Affairs (vice chair). Senator Grove represents the more conservative side of the state GOP caucus which is comprised of 10 other Republican Senators. Shortly after this announcement, New Way California sent out a message highlighting their work to create a more socially moderate, while still fiscally conservative, Republican party. "New Way California is committed to problem solving and civility. These may seem like simple objectives – yet each week brings more evidence of how absent they are from government – proving that the old way isn't working. Whether it is standing up for DREAMers and families separated at the border or holding the federal government accountable for FEMA funds to aid wildfire recovery, we must continue fighting to put people over politics." For more information please contact Lori Dangberg at 1215 K Street, Suite 2000 § Sacramento, CA 95814 Direct line: 916.552.2633 or fax: 916.552.7652 § e-mail: [email protected] New Administrative Appointments and Health Committee Assignments January 18, 2019 ___________________________________________________________________________________ Key Administrative Appointments Below are some of the key administrative appointments by Governor Newsom related to health care. Of note, as of this writing, there has been no official appointments for Secretary of the California Health and Human Services Agency or the Department of Health Care Services (nor key policy/political roles in those critical offices). Chief of Staff: Ann O’Leary, a former aide to both Hillary Clinton and President Bill Clinton. O’Leary a senior policy advisor on Hillary Clinton’s 2016 presidential campaign and legislative director for Clinton when she was a U.S. Senator. A graduate of UC Berkeley’s law school, she joins the Governor’s office from a Silicon Valley law firm. Previously, she directed the Children and Families program at the Center for the Next Generation. Cabinet Secretary: Ana Matosantos, formerly the state’s director of finance. Matosantos was named finance director for California in 2009 by Governor Arnold Schwarzenegger and was reappointed to the position by Governor Jerry Brown. She was Brown’s chief fiscal advisor as the state closed an annual budget gap of $20 billion. Before joining the Department of Finance, Matosantos worked on health and human services policy and fiscal issues for the Governor’s office, the California Health and Human Services Agency and the California State Senate. Deputy Cabinet Secretary: Richard Figueroa. Previously, Figueroa (AKA Fig) was Director of Prevention for The California Endowment, the nation’s largest state-specific health care foundation. He served in several previous administrations, including as Deputy Cabinet Secretary for Governor Schwarzenegger and Deputy Legislative Secretary for Governor Gray Davis. Fig was also Legislative Director for Insurance Commissioner John Garamendi and served as a Legislative Consultant for the California State Senate Insurance and Budget and Fiscal Review Committees. Chief Deputy Appointments Secretary: Stuart Thompson previously served as an associate director at the California Medical Association. He was also an associate attorney at Miller and Owen, where he specialized in local state and government law with a focus on redevelopment agencies. He received his undergraduate degree from Brown University in political science and a law degree from the University of California Hastings. Stuart was long rumored as one of the administrative advisors, perhaps as the health policy advisor who would present a provider’s prospective on health care within the horseshoe. Many were surprised he was given the position leading the Appointments desk. Deputy Legislative Secretary: Tam Ma, who was previously assistant secretary of the Office of program and Fiscal Affairs at the California Health and Human Services Agency, a position she has held since June 2018. Ma was director of legal and policy at Health Access California for several years, a lecturer at the University of California, Berkeley School of Law, a principal consultant in the Office of California State Senator Mark Leno and staff attorney at Legal Services of Northern California. Tam is a health policy guru. She helped with advocacy strategy for Health Access that saw the alignment of some consumer advocates, unions, and health plans, which has been an effective advocacy coalition. 1 Health Committee Assignments Both Assembly Speaker Anthony Rendon and Senate Pro Tem Toni Atkins have announced the new makeup of the legislative policy committees for 2019. Below are the Health Committee assignments in both houses, and attached are the full lists of Assembly and Senate Committee assignments. Assembly Health Committee remains at a membership of 15 – while many committees have been expanded to accommodate the new Democrats in town.