The 2010 federal health care overhaul is designed to make coverage available to millions of uninsured Americans, but part of California's strategy to implement the law could inflict a major budget blow on Fresno County.
It's a hit that could reach $7 million in the current fiscal year, and — under one scenario — more than triple that amount in the next one, which starts July 1, 2014. Fresno County officials are hoping to cut a special deal with the state to soften the blow.
"Right now, our staff is working with the state to plead our case," Supervisor Judy Case said. "This will hurt our services."
The potential blow would be the latest in a line of challenges to hit the financially struggling county. Though things are looking better, county supervisors in June set aside a roughly $11 million reserve within their $287 million discretionary fund because of changes — including the rollout of the federal Affordable Care Act — that carry with them uncertain costs.
Pension costs also are a concern.
Under California's health plan, Medi-Cal will be expanded starting in January to cover the very poor — those with household incomes below 138% of the federal poverty level, which is currently $32,499 annually for a family of four.
The state will pay for the Medi-Cal expansion by reducing health care dollars that were once funneled to counties to pay for indigent care.
Even Fresno County officials say the logic is sound. Because Medi-Cal will take over health coverage for much of the state's indigent population, it won't cost as much for counties to provide that service.
But, in this case, a few of California's counties are different — and Fresno County may be the most different of them all.
"We are unique among the 58 counties," County Administrative Officer John Navarrette said.
The reason: Fresno County is locked into a 30-year-contract with Community Regional Medical Center — which started in 1996 — to provide indigent care.
This year, the county is paying Community Regional around $21 million.
No matter how many poor local residents are moved into the state's Medi-Cal program, the county will still be on the hook to pay Community.
It also appears to be quite a deal. Community's actual cost to provide indigent care is four to five times what the county pays, according to a county-produced memo on the issue.
The current state funding formula has been in place since 1991. Each year, the state sends counties a portion of sales taxes and vehicle license fees it collects for health-related spending. Counties in turn spend the money on public health and indigent care.
For Fresno County's current fiscal year, the split is about even — $20.5 million on public health and $21.45 million on indigent care.
The state gave counties two options going forward: lose 60% of the money it had been getting for indigent care, or opt for a complex formula, designed primarily for counties with public hospitals, that allots money based on historical costs, revenues and projected savings.
Either option would "gravely impact" Fresno County's public-health funding and leave "inadequate funding" to support an expected leftover indigent population, according to a briefing paper authored by three top county health officials — David Pomaville, interim director of the public health department, Dawan Utecht, director of the behavioral health department, and Howard Himes, director of the social services department.
But a third option was inserted into a budget trailer bill back in June — special consideration for unique circumstances. It is this third option that Fresno County hopes to utilize to forge a special deal with the state.
The county briefing paper estimates that 14,000 indigent Fresno County residents will become eligible for the expanded state Medi-Cal coverage. But another 6,000 indigent residents — primarily undocumented adults who don't qualify for Medi-Cal or who don't get insurance through the state's health insurance exchange — will still need coverage.
In addition, the Community Regional contract covers inmate and juvenile ward health costs.
Pomaville said the county will look at changing the contract with Community Regional, but county officials say CRMC only is willing to negotiate a new agreement and not amend the current one. So any contract tinkering could end up increasing the county's yearly costs, officials say.
"We've had some preliminary discussions with the county," Community Regional spokeswoman Mary Lisa Russell said. "At this point, it's in the county's hands to decide how they want to proceed."
Fresno County also could deny health services to undocumented indigent residents. The board briefing memo notes that state law "applies specifically to lawful residents." It says undocumented adults could seek care at local federally qualified health centers, or care at emergency departments could be reimbursed with emergency Medi-Cal funds.
Another cost-saving option for the county is to reduce public health services — or some combination of cutting those services and care for undocumented indigent residents.
Any cut to the Public Health Department likely would be felt by a larger number of county residents.
The department's role is to investigate communicable diseases such as tuberculosis and salmonella in the county, and help with women who have high-risk pregnancies, among other things.
County officials say they must tentatively inform the state of the funding option they are seeking by Oct. 1. That choice must be made official by Dec. 4.
However it works out, all Case sees is another Fresno County budget cut.
"It just feels like another $7 million out of our general fund," she said.
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