Instead of proposing a long-term, viable solution to California’s budget deficit, Gov. Schwarzenegger called for a ten percent across the board cut for all departments and the Legislature passed it. When pressed about this strategy, he stated that he did this to “rattle cages” to get the Legislature and all Californians to think about alternative solutions to the budget crisis.
However, his “solution” has caused a firestorm of anger with educators, labor unions, and health care advocates among others who have come out fighting. There’s not a group out there who won’t feel the stinging effects of these cuts beginning July 1, 2008.
However, Medi-Cal providers, most notably pharmacists and the patients they serve, will be some of the hardest hit. California’s reimbursement rate for Medi-Cal providers is already among the lowest in the nation and these cuts would further amplify the problem. The total cuts on Medi-Cal reimbursement account for $602.4 million out of the entire $15.2 billion deficit; however, pharmacy bears more than a third of these cuts at $232 million, factoring in rebates. Not only will the cuts impact the dispensing fee pharmacists receive for filling the prescription but pharmacy will also be reimbursed for the cost of the drug at a lower price than it cost them to buy it. Pharmacies will be losing money on nearly every Medi-Cal prescription they fill. This certainly isn’t a viable business model.
It is hazardous health care policy to ask pharmacy, or any profession for that matter, to provide services at a loss. Yet, that’s exactly what the state is asking of the industry. Some pharmacies may be forced to reduce staffing and business hours, or even to close their doors altogether. Such outcomes would create further access issues for patients in need.
With more than 6.5 million Medi-Cal beneficiaries in California, it would seem enacting cuts to all providers would equate to a significant savings to the state. However, these cuts will have the opposite effect. If patients lose access to prescription drugs, they will become sicker, and will need more expensive forms of medical treatment. Many patients may end up in emergency rooms that are already stretched beyond capacity. These emergency room visits will cost the state and California taxpayers significant money by further inflating the budget deficit. Even the Legislative Analyst’s Office recommended a repeal of the 10 percent cut saying, “…the proposed reductions might reduce patients access to care or cause patients to obtain care through other, more costly access points…”
And, what happens if pharmacies are forced to close their doors? Not only would that add to California’s economic downturn but it would force patients to find other pharmacies to fill Medi-Cal prescriptions. If pharmacies in rural areas close their doors, patients will have to find Medi-Cal accepting pharmacies that may be quite a distance away. And, what about our ethnic communities? They would certainly have a difficult time finding pharmacists that speak their language. Patients with mental illness or chronically ill patients rely on their local pharmacist and their Medi-Cal benefits to help them survive. California cannot afford to pursue a policy that will irreparably harm the health of our children, seniors and the disabled citizens.
What we have is a permanent reduction for all Medi-Cal providers and a short-term budget fix that likely will have long-term effects. Our state’s fragile health care infrastructure can be damaged beyond repair, affecting all Californians for years to come.
The Governor and the Legislature should work closely with interested parties to find a long-term solution that doesn’t put Californians and the profession of pharmacy at risk.