A federal appeals court barred California on Wednesday from lowering Medi-Cal payments to doctors and hospitals by 5 percent and from cutting in-home care workers' wages by nearly 20 percent, saying the state's budget crisis doesn't justify violating federal laws that protect the poor and disabled.
More News

In four rulings, the Ninth U.S. Circuit Court of Appeals in San Francisco rejected attempts by Gov. Arnold Schwarzenegger and the Legislature to reduce the state's deficit by paying less to the health professionals who treat 6.6 million low-income Californians, and to hundreds of thousands of workers who care for some of the neediest.

The reductions would have totaled at least $175 million a year, according to estimates by the state and employee groups. But the court said the federal government - which pays at least half of each program's costs - requires states to maintain poor residents' equal access to basic health care, and forbids cuts intended solely to save money.

Previous rulings had reached the same conclusion, including one that Schwarzenegger tried to get the U.S. Supreme Court to review.

Federal law doesn't prohibit Medi-Cal reductions, Judge Milan Smith said in one of Wednesday's decisions, all issued by the same three-judge panel. But he said the state must first conduct a study to make sure that the rates cover reasonable costs of care.

The rulings reaffirm that "the state cannot solve its budget problems on the backs of some of the most vulnerable Californians," said Stacey Leyton, a lawyer for unions representing workers in the In-Home Supportive Services program, which serves 440,000 people.

Likewise, cutting Medi-Cal rates - already among the nation's lowest - for doctors and other health care providers is both illegal and harmful to the providers and their patients, said Lloyd Bookman, attorney for the California Hospital Association and adult day health care centers.

Schwarzenegger was unyielding. Spokeswoman Rachel Arrezola noted that the governor has another appeal pending with the U.S. Supreme Court, arguing that the appeals court has misinterpreted the federal health-care law for more than a decade.

Wednesday's court action "interferes with the state's ability to manage its finances and reduce its spending to match its revenue," Arrezola said.

The governor and the Legislature first tried to cut Medi-Cal provider payments by 10 percent in July 2008, then enacted a 5 percent reduction in February 2009, but were thwarted by the courts.

A federal judge also blocked the state in June 2009 from reducing in-home care workers' wages by $2 an hour. Most of the workers now get $12.10 an hour, including benefits.

Workers provide care for low-income residents who are over 65, or are disabled or blind, and need help with everyday living tasks. Schwarzenegger has proposed abolishing the program in his 2010-11 budget unless the federal government increases state aid.

Leyton, who represents the Service Employees International Union's home-care workers unit, said the funding cuts would actually drive up state costs, because many patients would be forced into nursing homes or hospitals.

At a union-sponsored news conference, Mary Harms, a home-care worker in Contra Costa County, described the likely effect of program cuts on her 53-year-old client, Sherry, who suffers from cerebral palsy and mental retardation.

Harms said the services she has provided for Sherry for seven years, helping her get out of bed and bathing her, allow her to stay at home with her loved ones. "Without home care, Sherry would be institutionalized," she said. "She would just lay in bed and eventually die."

Read more: http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2010/03/03/BAIO1CAG36.DTL#ixzz0jasIoe1E