October 15, 2020 - From the General Fund, the 2020-21 spending plan provides $26.7 billion for health programs—an increase of 3 percent over estimated 2019-20 General Fund spending for these programs. The year-over-year net increase in General Fund spending is largely due to the projected COVID-19-related increase in the Medi-Cal caseload. The post describes major health-related actions (both policy actions and various budget adjustments) adopted by the Legislature as part of its 2020-21 spending plan. These actions include the offsetting of what would otherwise be General Fund costs with (1) revenues from the federally approved reauthorized tax on managed care organizations and (2) federal Medicaid funds that are being provided to the state at an enhanced level during the term of the public health emergency.
January 14, 2019 - This report presents our office’s initial assessment of the Governor’s Budget. The budget’s position continues to be positive. With $20.6 billion in discretionary resources available, the Governor’s budget proposal reflects a budget situation that is even better than the one our office estimated in the November Fiscal Outlook. The Governor’s Budget allocates nearly half of these discretionary resources to repaying state liabilities. Then, the Governor allocates $5.1 billion to one-time programmatic spending, $3 billion to reserves, and $2.7 billion to ongoing spending. Although the Governor’s allocation to discretionary reserves represents a smaller share of resources than recent budgets, the Governor’s decision to use a significant share of resources to pay down state debts is prudent. The Governor’s ongoing spending proposal is roughly in line with our November estimate of the ongoing capacity of the budget under an economic growth scenario. This was just one scenario, however. Recent financial market volatility indicates revenues could be somewhat lower than either we or the administration estimated.
February 12, 2015 - This report analyzes the Governor's 2015-16 state health program budget proposals. In the report, we review trends in the major health programs since 2007-08 (the last budget developed before the most recent recession), analyze the Governor's proposed restructuring of the managed care organization (MCO) tax, and describe the uncertainty regarding continued federal funding for the Children's Health Insurance Program (CHIP). The report also includes an analysis of the Department of State Hospitals budget and an analysis of the Governor's proposals to improve quality and increase staffing for the Licensing and Certification (L&C) Program administered by the Department of Public Health.
October 17, 2019 - Each year, our office publishes California Spending Plan, which summarizes the annual state budget. In July, we published a preliminary version of the report. This, the final version, provides an overview of the 2019‑20 Budget Act, then highlights major features of the budget approved by the Legislature and signed by the Governor. In addition to this publication, we have released a series of issue‑specific, online posts that give more detail on the major actions in the budget package.
Correction (10/29/19): Figure 4 total.
February 13, 2019 - In this report, we describe the major changes and proposals in the Governor's proposed $100.7 billion (all funds) Medi-Cal budget. Specifically, we advise the Legislature to seriously consider renewing the managed care organization tax, despite the Governor not proposing to do so; present issues for consideration related to the Governor's proposed expansion of comprehensive Medi-Cal coverage for young adults regardless of immigration status; and provide an initial assessment of the Governor's proposals to use Proposition 56 funding in Medi-Cal to extend and expand provider payment increases. We recommend approval of the Governor's proposals to improve fiscal oversight of the Medi-Cal budget, and also recommend that the Legislature require the administration provide additional information to the Legislature in an effort to improve fiscal oversight and transparency of this very large, complex budget going forward.
February 23, 2022 - This brief focuses on access to health insurance coverage and the affordability of health care costs. We (1) assess various Governor’s proposals intended to improve health care access and/or affordability—including expanding Medi-Cal eligibility to undocumented residents between ages 26, reducing Medi-Cal premiums to zero cost, establishing the Office of Health Care Affordability, and reducing the cost of insulin through a state partnership; (2) discuss options to improve affordability of health plans purchased through Covered California; and (3) highlight some key access and affordability challenges that remain to address.
Correction (2/24/22): Figure 2 - Number of undocumented residents has been corrected.
February 24, 2020 - This brief provides information, analysis, and key issues to consider in evaluating the Governor’s 2020-21 budget proposals for the major programs in Department of Social Services.
November 16, 2016 - Under our current projections, assuming no changes in existing state and federal policies, we estimate the state will end the 2017-18 fiscal year with $11.5 billion in total reserves. This includes $8.7 billion in required reserves, which must be deposited into the rainy day fund, and $2.8 billion in discretionary reserves, which the Legislature can appropriate for any purpose. These reserve levels reflect the continued progress California has made in improving its budget situation. Our estimates include the effects of statewide ballot measures that were approved on November 8. The condition of the state budget depends on many volatile and unpredictable factors. This uncertainty is present in the near term and becomes greater in each subsequent year. We discuss two illustrative economic scenarios for the fiscal years after 2017-18. Under a mild recession scenario, the state would have enough reserves to cover its operating deficits through 2020-21. This means, under our assumptions, the state could weather a mild recession without cutting spending or raising taxes. However, this conclusion assumes that the state does not make any changes to its current policies and programs in any year during the outlook. This outlook also assumes no changes in federal policy, even though the recent election results suggest some such changes are now likely. State or federal policy changes could have a significant impact on the state's bottom line.
February 19, 2013 - Under the Patient Protection and Affordable Care Act, also known as federal health care reform, the state has the option to expand its Medicaid program (known as Medi-Cal) to cover over one million low-income adults who are currently ineligible. Currently counties have the fiscal and programmatic responsibility for the care of the low-income adult population that would be covered by the expansion. The Governor has proposed to adopt the optional expansion, but has outlined two distinct approaches to implementing the expansion—a state-based approach and a county-based approach—and has not indicated a preference for either approach. Under both approaches, the Governor indicates that the expansion will require a reassessment of the state-local fiscal relationship. We find that the expansion would have significant policy benefits, including improved health outcomes for the newly eligible Medi-Cal population. We estimate that fiscal savings to the state as a whole are likely to outweigh the cost of the expansion for at least a decade, although these estimates are subject to significant uncertainty. Despite the significant uncertainty about long-term costs and savings, on balance, we believe the policy merits of the expansion and fiscal benefits to the state as a whole likely will outweigh the costs and potential fiscal risks. We therefore recommend the state adopt the expansion. We also find that the state is in a better position to effectively deliver health services to the newly eligible population. Therefore, we recommend the Legislature adopt a state-based expansion, shifting the fiscal and programmatic responsibility of providing physical health care to the expansion population from counties to the state. Given this shift of responsibility, we further recommend the Legislature redirect a portion of funding currently allocated to counties under 1991 realignment for indigent health care.
February 12, 2019 - Presented to: Assembly Health Committee, Assembly Budget Subcommittee No. 1 on Health and Human Services, Senate Committee on Health, and Senate Budget and Fiscal Review Subcommittee No. 3 on Health and Human Services
February 7, 2019 - This report provides our assessment of the Governor's proposals to (1) create a state requirement that most Californians purchase health insurance coverage (referred to as an "individual mandate") or pay a financial penalty and (2) use the revenues from this penalty to fund additional health insurance subsidies for households purchasing coverage through Covered California.
December 16, 2022 - This brief looks at health care coverage in California; provides background on the drivers of the significant decline in the percentage of Californians without health care coverage over the last ten years; and discusses various issues that could impact the number of Californians with coverage, and how the type of coverage they have may change, in calendar year 2023 and beyond.
February 20, 2014 - The report analyzes the Governor's 2014-15 health budget proposals. In it, we (1) provide an analysis of the impact the implementation of the Patient Protection and Affordable Care Act (ACA)--known as federal health care reform--is having on the Medi-Cal program; (2) analyze the Governor's budget proposal to exempt certain, but not all, classes of Medi-Cal providers and services from retroactive recoupments of payment reductions; and (3) assess the fiscal outlook for the California Health Benefit Exchange, also known as Covered California.
February 22, 2019 - In this report, we evaluate the Governor's major human services budget proposals for programs administered by the Department of Social Services, including the California Work Opportunities and Responsibility to Kids (CalWORKs), the Supplemental Security Income/State Supplementary Payment (SSI/SSP), the In-Home Supportive Services (IHSS), and foster care.
November 20, 2013 - The 19th annual edition of the LAO's Fiscal Outlook--a forecast of California's state General Fund revenues and expenditures over the next six years--reflects continued improvement in the state's finances. A restrained budget for 2013-14, combined with our updated forecast of increased state revenues, has produced a promising budget situation for 2014-15. Our forecast indicates that, absent any changes to current laws and policies, the state would end 2014-15 with a multibillion-dollar reserve. Continued caution is needed, however, given that these surpluses are dependent on a number of assumptions that may not come to pass. For example, as we discuss in this report, an economic downturn within the next few years could quickly result in a return to operating deficits. In this report, we outline a strategic approach for allocating potential surpluses that prepares for the next economic downturn while paying for past commitments, maintaining existing programs, and making new budgetary commitments incrementally to address other public priorities.
November 20, 2019 - This web post provides detail on our projections and assumptions related to General Fund spending in Medi-Cal for the years 2019-20 through 2023-24. In the near term, we project Medi-Cal spending to grow to $23.5 billion in 2020-21. Over the long term, we project General Fund spending in Medi-Cal to grow to up to $27.6 billion.
In addition to this report, you can find the main California's Fiscal Outlook report along with a collection of other fiscal outlook material on our fiscal outlook budget page.