Report critical of Schwarzenegger's plan on Medi-Cal re-enrollment

The concept is not new: Make people renew their Medi-Cal eligibility more often when California is facing a big budget deficit and the state will save money because many recipients will not complete the paperwork.

A new report has concluded that Gov. Arnold Schwarzenegger's budget proposal to require most enrollees in the health care program for the poor to file eligibility forms more often will "hit" children the hardest but won't save money in the long run.

The report, commissioned by the California Endowment, noted previous studies showed that up to two-thirds of beneficiaries dropped from Medi-Cal for reasons related to missing or incomplete midyear reports were back in the program within eight months. But the "churning" cost the state $120 to $160 to re-enroll each child, and the savings from reducing enrollment will be offset by pent-up medical needs when children are re-enrolled, according to the report.

"The data clearly show that a more frequent requirement would result in more children losing their health coverage, which causes lapses in health care that result in higher medical service costs once the child is re-enrolled," said the report's author, Gerry Fairbrother, a researcher at Cincinnati Children's Hospital.

Administration officials expect the governor's proposal to require the forms four times a year – not annually – will result in 122,000 people being dropped from Medi-Cal in the next fiscal year, saving the state $95 million.

Stan Rosenstein, director of Medi-Cal, said the new report overstates "churning costs." "We've built in enormous checks and balances to minimize the churning," he said. "(Disenrollment) only occurs if somebody has to reapply and they haven't responded to two notices we sent them."

The proposal would apply to about 4.5 million of the 6.5 million enrollees in Medi-Cal, the costliest state expense after education. It would not affect the elderly and disabled. Rosenstein said only those no longer eligible will be disenrolled.

"Going to a simplified form to catch people who no longer are eligible is a far better reduction proposal than some other options," Rosenstein said.

A similar plan was last proposed by then-Gov. Gray Davis during the budget crisis of 2003, then rejected by the Legislature.

Angela Gilliard, an advocate for the Western Center on Law and Poverty, said the concept is a cynical ploy. "It keeps coming back because it's seen as an easy target," she said. "But it's an added expense because people get caught up in the bureaucracy and it costs money to get them back on (Medi-Cal)."

Earlier this month, the state awarded a multiyear contract extension worth from $208.4 million to $411 million to Maximus, a Virginia-based government-consulting company, to provide enrollment services to Medi-Cal.

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