The Medi-Cal Program comprises the second largest share of the state’s General Fund. Spending has nearly doubled over the past decade, reflecting an average annual increase of 7%. With the continuing rise of health care costs and increasing demand at a time when general revenues are declining, the Medi-Cal Program has been facing a daunting list of challenges. Over the past several years, in an attempt to slow the program’s growth, state lawmakers have made substantial cuts to coverage and provider reimbursement. The cuts would most likely be much deeper today were it not for the federal stimulus bill.

According to the American Recovery and Reinvestment Act of 2009, the Medi-Cal Program stands to benefit in these ways:

  • California’s Federal Medical Assistance Percentage (FMAP) will increase from 50% to 61.6% between October 2008 and December 2010, for an estimated $10 to $11 billion in additional matching funds. States with high unemployment rates are eligible for additional increases. 
  • California could receive more than $3 billion in federal funds allocated to health IT. This is meant to encourage the adoption and use of certified electronic health records (EHRs). This includes full reimbursement for state spending for payments to providers for adoption and operation of certified EHR technology, as well as 90% reimbursement for state costs in administering the EHR program. 
  • The state’s public hospitals could receive up to $54 million in additional federal DSH payments from October 1, 2008 through September 30, 2010. 
  • Provides flexibility for California to expand eligibility in certain programs. Also, this new funding requires eligibility rules to be no more restrictive than they were on July 1, 2008 (to be eligible to receive additional federal funds).