Legislative Analyst's Office Analysis of the 2001-02 Budget Bill

Public Health

The Department of Health Services (DHS) delivers a broad range of public health programs. Some of these programs complement and support the activities of local health agencies in controlling environmental hazards, preventing and controlling disease, and providing health services to populations who have special needs. Other programs, such as those that license health facilities, are solely state operated.

The Governor's budget proposes $2.1 billion (all funds) for public health local assistance. This represents an increase of $5.6 million, or 0.3 percent, above estimated current-year expenditures. The budget proposes $405 million from the General Fund, which is a 12 percent decrease from current-year expenditures. The main reason for this decrease is the proposed shift of General Fund support from some public health programs to the proposed new Tobacco Settlement Fund (TSF).

Breast and Cervical Cancer Prevention and Treatment Act

Federal legislation was enacted in October 2000 that allows California to offer breast and cervical cancer treatment services as an optional benefit to low-income, uninsured persons under the Medicaid program with "enhanced" federal financial participation. We discuss related services that the state currently provides, the ramifications of this new federal law, and some options available to the state if it elects to implement these changes.

Background

Approximately 23,000 California women are expected to be diagnosed with breast or cervical cancer, and about 4,700 of these women are expected to die from the two diseases, in 2001. A disproportionate share of these women are from low-income and racial- and ethnic- minority groups. Many are uninsured and do not currently qualify for any of the state's comprehensive health care programs, such as Medi-Cal or Healthy Families.

Research has shown that early screening, diagnosis , and follow-up treatment substantially improves the health outcomes and survival rates of persons diagnosed with cancer. The state currently provides breast and cervical cancer screening services to low-income, uninsured and underinsured women who do not qualify for Medi-Cal through three programs that are discussed in greater detail below.

• National Breast and Cervical Cancer Early Detection Program (NBCCEDP). The NBCCEDP was created by the Breast and Cervical Cancer Mortality Prevention Act of 1990. This federal program provides grants to states for breast and cervical cancer screens for uninsured and underinsured women with incomes up to 200 percent of the federal poverty level (FPL). Most woman served by this program are over 40 years of age.
• Breast Cancer Early Detection Program (BCEDP). In 1993, California enacted the state version of the NBCCEDP to provide greater access to breast cancer screening services, including mammography, for uninsured and underinsured persons over 40 years of age with incomes at or below 200 percent of FPL. In addition to screening services, BCEDP provides services required for a definitive diagnosis, assistance in obtaining follow-up treatment, and outreach and education. This is the largest of the screening programs currently available. The BCEDP is funded by state tobacco tax revenues.
• Family Planning Access Care and Treatment Program (Family-PACT). This program provides family planning and reproductive health services, including breast and cervical cancer screens, to women with income up to 200 percent of FPL. It is different from the other programs in that it generally provides screens to a younger group of women—those of child-bearing age. We would note that services required for a definitive diagnosis of breast cancer are not covered. Family-PACT is jointly funded by the state and federal government.

From Screening to Treatment. For nearly ten years, the state provided breast and cervical cancer screening services for low-income women who did not qualify for Medi-Cal. However, treatment services for these women were generally not available unless they were referred to nonprofit organizations which would help to pay for their treatment. This situation changed with the enactment of Chapter 660, Statutes of 1999 (AB 1107, Cedillo), a measure which created the Breast Cancer Treatment Program (BCTP). In 2001-02, BCTP is expected to provide treatment services to an estimated 2,100 women. There is currently no state-funded program for low-income, uninsured women that provides the treatment services ordinarily required for women diagnosed with cervical cancer.

According to the Department of Health Services (DHS), there are approximately 920,000 women over age 40 with incomes at or below 200 percent of the FPL. About 270,000, or 29 percent, of these women are expected to receive a screening through the programs discussed above during 2001-02. Based upon the projected incidence of the diseases, we estimate that about 2,000 of these women will be diagnosed with breast or cervical cancer through the existing screening programs. Figure 1 shows the number of women served by the four programs.

Gaps in Existing Treatment Services. Although BCTP filled a fundamental gap in the availability of cancer treatment services for low-income, uninsured women, we note that treatment services under this program are limited. For example, women are eligible to receive services for
18 months, even though their illness may require several years of treatment. In addition, certain benefits are not available, such as bone marrow transplants, hospice care, home health care, and nutrition services. Also, because the program is limited to 18 months, many women who need tamoxifen—a standard drug treatment to control the spread of breast cancer—-are unable to receive this treatment. This is because tamoxifen has a five-year treatment protocol.

We would also note that while women over 40 years of age face the greatest risk of breast and cervical cancer, many younger women can and do get these diseases. Based upon our analysis, many younger low-income women are being screened for cervical cancer under Family-PACT. However, as indicated earlier, unless a woman otherwise qualifies for Medi-Cal or Healthy Families coverage, state-funded cervical cancer treatment services are generally not available to uninsured, low-income women of any age.

New Federal Legislation. The enactment of the Breast and Cervical Cancer Prevention and Treatment Act by Congress in October 2000 gives states the option for the first time to offer Medicaid coverage with federal financial participation to previously ineligible, low-income women who are diagnosed with breast or cervical cancer. The legislation provides enhanced federal matching funds of two federal dollars for every state dollar, instead of the dollar-for-dollar federal-state sharing ratio traditionally available to California under Medicaid.

Specifically, states have the option of providing full-scope benefits to uninsured women under age 65, with income up to 250 percent of FPL, who have been diagnosed with either breast or cervical cancer. Full-scope benefits means that the benefits available to such women would not be limited to those specifically required to treat breast and cervical cancer. All services for these women would be provided with enhanced federal financial participation.

Moreover, these benefits would be available for the entire length of the cancer treatment period. States would also have the option to provide these women "presumptive eligibility" to ensure that needed treatment begins as early as possible. This means an applicant is given coverage for one month based upon a cursory review of their income eligibility.

The new federal law allows women diagnosed under a state screening program (such as Family-PACT and BCEDP) to participate in the Medicaid option, as well as women diagnosed through the NBCCEDP. In addition, states have the option of expanding the provider network by certifying providers who do not currently participate in the existing programs to screen and diagnose women under the federal program.

Options for Developing an Expanded Cancer Treatment Program

If the Legislature wishes to expand cancer treatment services for women in accordance with the new federal law, it has a number of options for doing so. Below we discuss some of these options, including aligning income eligibility for treatment services with the existing screening programs, offering presumptive eligibility to ensure immediate access to treatment services for women diagnosed with cancer, and covering younger women. Finally, our analysis indicates that the state funds already budgeted for breast cancer treatment appear to be sufficient to implement the new federal Medicaid treatment option.

There are potentially significant benefits and costs for the state if it were to implement the new federal option to provide treatment services to women diagnosed with breast and cervical cancer. If the Legislature wishes to implement the new federal law, it has several specific options for structuring such a new state program. We discuss these options below.

Aligning Eligibility Rules for Screening and Treatment Programs. In order for cancer screening and treatment programs to operate effectively and efficiently together, their eligibility rules must be similar. Currently, the breast and cervical cancer screening programs in California are available to women with incomes at or below 200 percent of FPL. Under the new federal program, breast and cervical cancer treatment services could be provided to women with income at or below 250 percent of FPL. Although the federal law allows the state to cover women up to 250 percent of FPL, the Legislature may wish to consider aligning Medi-Cal income eligibility under the federal option at 200 percent of FPL to create a comprehensive system of care for at-risk women and women diagnosed with cancer.

This approach has several benefits. First, it would create a source of treatment for all women who are currently eligible for the existing screening programs. Second, it would simplify eligibility determination since these women would already have been determined to have qualifying income. Third, it would make presumptive eligibility easier to administer should the Legislature decide to adopt that option. We discuss this eligibility option below.

Offering Presumptive Eligibility. Because of the complexity of eligibility rules, Medi-Cal eligibility determinations can take 30 to 60 days. For individuals with certain life-threatening conditions, such a delay in obtaining medical services can make a significant difference in their health. The state currently provides presumptive eligibility for pregnant women, because of the potential health risks to a mother and developing child during pregnancy, thereby giving them immediate access to health care. For similar reasons, the Legislature may wish to consider extending presumptive eligibility to women who are diagnosed with breast and cervical cancer. The Legislature may wish to require DHS to report at the time of budget hearings regarding the feasibility and cost of extending presumptive eligibility to this population.

Defining the Target Population. Under the new federal law, the state has the flexibility to expand treatment services to all low-income women up to age 65, or to limit the benefit to some part of this group—for example, low-income women between 40 years and 65 years of age. There are several factors the Legislature might wish to consider in determining who to include in expanded coverage. The state screening programs provide a very limited number of cervical cancer screens for low-income, uninsured women over 40 years of age due to limited funding. Thus, the number of such women who could be diagnosed with cervical cancer and referred for treatment is limited. Similarly, fewer women under
40 years of age could be referred for breast cancer treatment since Family-PACT does not provide the services required for a definitive diagnosis. In the following pages, we offer some options for addressing problems in the existing screening programs.

Fiscal Effect of Implementing the New Law. The proposed state budget provides $20 million for BCTP in 2001-02. The Governor's budget, however, does not take into account approximately $4.7 million in current-year savings in the program that could be reappropriated for the budget year. Although $20 million was provided for the program in 2000-01, a contract with California Health Collaborative, the non-profit organization retained to administer BCTP, will cost the state $15.3 million, resulting in a current-year savings to the state of $4.7 million.

Thus, about $25 million in state funding potentially is available to draw down nearly $50 million in additional federal funds, providing a total of about $75 million that could be used to offer Medi-Cal coverage to women diagnosed with breast and cervical cancer. Based upon our analysis, this would be more than enough to cover our estimate of the cost of such Medi-Cal coverage in 2001-02.

We estimate that the budget-year cost of adopting the new Medicaid option for women over 40 years of age with incomes up to 200 percent of FPL would range from $7 million to $12 million (all funds), with the state General Fund share ranging from $2 million to $4 million. Thus, there could be state savings ranging from $21 million to $23 million in the budget year if treatment services were expanded under the federal law. Our estimate does not include the cost of offering presumptive eligibility to women diagnosed with breast and cervical cancer. However, we believe such costs would be minimal. The full-year costs in subsequent years would be greater.

The Legislature might wish to require DHS to report at the time of budget hearings on its projection of the cost—in the budget year and upon full implementation—of offering this Medi-Cal coverage to women with income up to 200 percent of FPL.

Options for Improving Cancer Screening Services

In this section, we discuss some of the problems in the existing cancer screening programs which we believe limit the state's ability to maximize federal funding under the new Medicaid option. Specifically, we found that the funding for screening services is decreasing, cervical cancer screens for high-risk women are limited, and that the limited number of providers certified for screening and diagnosis in the existing programs can limit access to treatment services. We have identified several options the Legislature may wish to consider to address these concerns.

Alternative Funding Could Stabilize BCEDP. Our analysis indicates that state funding from tobacco tax revenues is eroding, with significant consequences for any expansion of treatment services under the new Medicaid option. We explain why this is the case below.

The BCEDP was originally funded by a 2-cent per pack tax increase on cigarettes. However, growth in program caseload, combined with a decline in tobacco tax revenue, resulted in a shift of support for the program to the Proposition 99 Cigarette and Tobacco Products Surtax Fund. Due to a continued decline in smoking, Proposition 99 tobacco tax revenues are also declining and will eventually erode the funding available for BCEDP.

If the Medicaid option were adopted, BCEDP would be the primary source of referral of women diagnosed with breast cancer. If fewer low-income persons are able to obtain BCEDP screens as a result of a decline in program funding, fewer would be referred for treatment under the new Medicaid option. If the state intended to maximize its available federal funding for treatment services, an alternative and more stable state funding source would be needed in the long run for BCEDP.

Expanding BCEDP to Include Cervical Cancer Screening. Our analysis indicates that relatively few low-income women at greater risk for cervical cancer are receiving cervical cancer screens. While more than 230,000 women over 40 are expected to receive breast cancer screens in 2001-02, only 63,000 women over 40 years of age, who constitute the at-risk group, are projected to receive cervical cancer screens.

The relatively small number of cervical cancer screens reflects limitations of the programs available to do such screening. As we discussed earlier, cervical cancer screens are currently provided in two programs: the NBCCEDP and Family-PACT. Although NBCCEDP primarily serves women over 40 years of age, the amount of federal funding available for this program means that only a very limited number of women, approximately 23,000, can receive cervical cancer screens. Moreover, only about 40,000, or 7 percent, of the women in Family-PACT, which is limited to women of child-bearing age, are over 40 years old and considered to be at higher risk of having cervical cancer. These program limitations mean that many low-income women at risk of cervical cancer will not have the benefit of early identification and treatment of the disease.

One approach to improve access to cervical cancer screens would be to expand BCEDP to include cervical cancer screens. Our analysis indicates that this could increase the number of women who receive cervical cancer screens by more than 200,000. This is because BCEDP has approximately 2,200 providers—a relatively large network compared to NBCCEDP's 150 providers.

We would note that the women who are at the greatest risk of having breast cancer also happen to have the greatest risk of cervical cancer. If the screens are provided by the same program, women can receive both screens during the same visit to a doctor's office. Based upon information provided by DHS, we estimate the state cost of this option would be about $11 million annually. We note that this would also increase the cost of providing treatment under Medi-Cal, since a greater number of women would be diagnosed with cervical cancer and referred for treatment. The Legislature may wish to direct the DHS to report on the feasibility, costs, and benefits of expanding BCEDP to include cervical cancer.

Expanding the Provider Network. Program rules regarding which doctors may make a diagnosis of breast or cervical cancer could limit access to the treatment services that could otherwise be provided under the new federal law. If a woman with qualifying income is screened and diagnosed with breast or cervical cancer by a doctor who has not been certified as a provider under the NBCCEDP, she would not be eligible for treatment services under Medicaid.

However, the state has the option under federal law to expand the provider network by certifying providers who do not currently participate in the existing programs to screen and diagnose women under the federal program. Given the fact that BCEDP is projected to serve only about 25 percent of women over 40 years of age with income at or below 200 percent of FPL, the Legislature may wish to require DHS to report on the feasibility, costs, and benefits of certifying additional providers.

Conclusion

Currently, the state provides some cancer screening services, but only limited treatment services for women diagnosed with cancer. The primary screening program is funded by an unstable revenue stream. Although low-income women over 40 are at high risk for both cervical and breast cancer, the current patchwork of state and federally funded health programs does not provide broad access to cervical cancer screening services.

The federal Breast and Cervical Cancer Prevention and Treatment Act provides California an opportunity to provide comprehensive health coverage for low-income women diagnosed with cancer. We have outlined some options the Legislature may wish to consider that would address some of the problems with the existing cancer screening programs, and establish a better-coordinated and much-expanded screening and treatment system.

Tobacco Prevention Program Expansion

Background

State smoking prevention programs have traditionally been funded by Proposition 99 tobacco tax revenues. Proposition 99, the Tobacco Tax and Health Protection Act of 1988, established a 25-cent tax on cigarettes and other tobacco products. Since the enactment of Proposition 99, the state has spent more than $781 million on tobacco control efforts. Of that amount, 31 percent has been used to support the statewide antitobacco media campaign and 64 percent has been used to support locally administered smoking prevention programs. The remaining 5 percent has gone for state administration and evaluations. However, due to the decline in smoking during this period, and the resulting decline in tobacco tax revenues, less money is available now to support these programs.

The state's 1998 settlement of litigation with the major tobacco companies will provide an estimated $21 billion over 25 years, with half going to the state and half to the counties. As we indicate in our analysis of the proposed TSF, there has been significant public and legislative interest in using these revenues for smoking cessation programs and other health care proposals.

The Budget Proposal. The Governor's budget plan would provide $20 million ($15 million ongoing and $5 million one time) from the TSF for youth smoking prevention programs. The proposal would fund a four-part strategy to reduce smoking prevalence among California teenagers, providing a total of between 23 and 34 competitive grants for (1) local enforcement of tobacco laws, (2) youth advocacy coalitions against tobacco usage, (3) local activities targeting the 18- to 24-year old population, and (4) surveillance and special studies. The four components are described in more detail below. Except for the surveillance and special studies proposal, the budget does not specify how much money would be allocated to each component.

• Local Enforcement of Tobacco Laws. Under the proposal, some funds would be provided to local law enforcement agencies and nonprofit organizations to enhance enforcement activities, particularly laws aimed at eliminating tobacco sales to minors, and free tobacco product sampling. This is the only proposal that requires grantees to provide a match to qualify for the grants.
• Youth Advocacy Coalitions. Under this proposal, college mentors are joined with high school students to form coalitions which undertake various activities aimed at reducing smoking in their communities. According to DHS, six counties currently administer a youth advocacy coalition program using Proposition 99 funds. The budget proposes to provide grants to expand existing programs as well as to increase the number of youth coalitions. The youth advocacy coalitions funded under the Governor's plan would be modeled after the Contra Costa County youth coalition.
• Activities Targeting 18- to 24-Year Olds. The proposal would provide grants to local agencies to conduct programs that target this population. Activities will include expanding efforts to (1) protect nonsmokers from exposure to secondhand smoke, and (2) counter the tobacco industry's presence on college campuses and in entertainment venues frequented by this group, such as movies, music, concerts, and sporting events.
• Surveillance and Special Studies. The budget proposal includes $2 million to conduct ethnic youth-specific surveillance studies, as well as studies of at-risk youth to better plan their programs around these populations. Surveillance studies allow the department to identify youth tobacco use trends, and determine if tobacco control programs are having an impact in reducing tobacco use. This would build on similar activities currently conducted by the department.

The proposal would also provide a total of $1 million for technical assistance and consultation related to each of the strategies outlined above. We note that, in addition to the proposed $20 million, the budget includes a separate proposal requesting $1 million for additional youth advocacy coalitions funded by a grant from the American Legacy Foundation.

Governor's Proposal Is Flawed

The budget proposal to expand youth smoking prevention efforts is flawed because the effectiveness of the proposed new programs has not been demonstrated. Additionally, the proposed new state programs are not coordinated with local tobacco prevention efforts. We therefore recommend the deletion of $18 million from the Tobacco Settlement Fund. We withhold recommendation on the $2 million requested for surveillance and special studies, due to the lack of fiscal detail on the estimated cost of this component. We recommend approval of the $1 million requested for youth advocacy coalitions funded by the American Legacy Foundation. We further recommend that the Department of Health Services report at the time of budget hearings regarding the potential cost of implementing three of the four proposals as pilot programs. (Reduce Item 4260-111-3020 by $18 million.)

Surveillance and Studies Component Has Merit, But No Fiscal Detail. Based upon our analysis, the surveillance and special studies component of the Governor's proposal could serve to enhance smoking prevention programs by providing the information needed to allow the department to more effectively target ethnic subgroups and at-risk youth, particularly youth attending continuation school, teen mothers, out-of-school youth, and youth offenders. However, at the time this analysis was prepared, the department could not provide details on the $2 million cost estimate of this proposal.

No Evidence Specific Proposals Will Be Effective. At the time of our analysis, DHS could not provide information documenting that any of the proposed strategies is effective in reducing smoking. In support of these proposals, DHS points to the decline in smoking in California and research indicating that overall tobacco control spending has contributed to the decline in smoking prevalence. We note, however, that while it appears to be well-documented that tobacco control spending is generally cost-effective, this does not mean that all of the programs currently funded by the state are cost-effective.

In the case of the youth advocacy coalitions, the budget proposes to expand statewide the model currently used in Contra Costa County. Yet, at the time our analysis was prepared, the department could not provide any data demonstrating its effectiveness. Moreover, the department is not able to provide complete information on the amount of money that is currently spent on this program or the number of participants.

Given the administration's lack of evidence to support its budget request for either statewide expansion of current programs or statewide implementation of new strategies, limited pilot projects to test and evaluate these proposals may be a more reasonable approach.

State Projects Not Coordinated With Local Efforts. Given that the state's major source of funding for smoking prevention programs—Proposition 99—is declining, it is increasingly important that the state prioritize public health spending for programs that are well-coordinated with other local programs with the same purpose. Counties are estimated to receive $10.5 billion in payments over 25 years under the 1998 tobacco settlement agreement. Given the availability of this local funding, one promising approach could be for the state to test new approaches for tobacco prevention in partnership with interested counties.

The state's past experience in the administration of public health programs suggests that creating partnerships with counties for such projects, such as by requiring counties to provide matching funds as a condition of obtaining state grants, could be beneficial. This approach would maximize the use of state funds, provide a greater incentive for counties to use their share of tobacco settlement funds for tobacco prevention programs, and could result in better overall state-county coordination of such activities.

We note that the budget includes a separate proposal funded by a grant from the American Legacy Foundation to provide $816,000 in the current year and $1 million in the budget year to further expand the number of youth advocacy coalitions. In effect, this budget proposal duplicates one component of the Governor's $20 million smoking prevention package.

Analyst Recommendation. Because of these concerns, we recommend that the $20 million requested from the TSF for the proposed tobacco prevention programs be reduced by $18 million to eliminate the proposed funding for three of the four new tobacco control programs. In lieu of the Governor's proposal, we recommend that the Legislature consider providing funding for these three proposals as pilot projects. If the projects demonstrated that the Governor's proposed new programs have merit, they could be expanded at a later date. Accordingly, we recommend that the DHS report at the time of budget hearings regarding the cost of implementing these three proposals as pilot projects.

We withhold recommendation on the $2 million proposed for surveillance and studies, pending fiscal detail on how DHS estimated the cost of this component. We recommend that the $1 million requested for the American Legacy Foundation proposal be approved and serve as a pilot project to test the effectiveness of youth advocacy coalitions. We further recommend that local matching funds be required for all of the pilots, and that funding be provided for an independent evaluation of their effectiveness.

Our proposals would allow the Legislature to target available TSF monies at smoking prevention activities with demonstrated positive results, provide an opportunity for the state to partner with the counties and not-for-profit organizations, and provide an incentive for counties to use their settlement funds for smoking prevention efforts.