Fiscal analyst says governor overstating Medi-Cal costs

05/20/2014 6:11 PM

05/20/2014 6:12 PM

When Gov. Jerry Brown was asked last week about the reliability of his revenue estimates, which came in higher than he initially projected, Brown responded that while revenue may be outperforming expectations, costs are higher than expected, too.

“Expenditures meet the revenues almost precisely,” he said.

But according to the Legislature’s nonpartisan fiscal analyst, Brown not only continues to underestimate revenue, but may be overestimating costs, as well. The estimate is significant because it potentially puts hundreds of millions of dollars on the table as Brown negotiates a final budget with legislative Democrats and advocacy groups lobbying for increased spending.

After estimating Friday that state general fund revenue through next June will be $2.5 billion higher than Brown predicted in his revised budget plan last week, the Legislative Analyst’s Office over the weekend said costs in one of the budget’s major spending areas, Medi-Cal, appear to be too high.

At issue is the estimated per-enrollee cost for people signing up for Medi-Cal, the state’s version of Medicaid. Brown, a Democrat, has cautioned that the state faces about $1.2 billion in unanticipated costs from expanding Medi-Cal in the push to implement the federal health care overhaul.

But the LAO said the administration’s projected per-enrollee costs appear to be too cautious. It said the administration may be overestimating the cost by about $300 million through June 2015.

On Monday, administration officials told an Assembly budget subcommittee that Brown’s Medi-Cal estimates are based on enrollment data that was not available when the initial budget proposal was released in January. The LAO said it would review additional information from the administration to provide a more precise estimate.

The committee held the matter open.

Gary Passmore, with the Congress of California Seniors, told the committee, “The budget estimates for Medi-Cal right now are not rock-solid numbers. There are still some things in play, and we would urge you to give the state and advocates as much time as possible.”

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