What We’re Tracking in 2024: California Policy Issues

February 28, 2024 |  By Sarabeth Zemel, J.D.

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There’s no shortage of health policy initiatives being undertaken by California. The state is in the process of Medicaid transformation while tackling issues related to behavioral health, housing, health care affordability, workforce challenges, and more. These health policy initiatives are in line with public opinion: each year the California Health Care Foundation (CHCF) fields a survey and publishes results on Californians’ opinions and experiences on health care issues. This year’s survey identifies a number of the same issues as priorities that Californians believe state government should act on. In this blog, we spotlight a few of the policy developments that we’re tracking in California. Stay tuned for an upcoming blog where we’ll focus on key policy issues we’re tracking across the states and federally.

Behavioral Health 

According to CHCF’s survey, 84 percent of Californians believe that mental health care is an extremely or very important priority for government in 2024, and the state agrees. The California Health and Human Services Agency, Department of Health Care Services and the California Legislature have taken on a number of behavioral health initiatives, including CalAIM, Children & Youth Behavioral Health Initiative, and behavioral health system modernization. In the last legislative session, the Legislature passed a package of behavioral health system reform legislation, composed of two main efforts:  

  • Modernizing the 20-year-old Mental Health Services Act (MHSA) and allowing counties to use the funding to help individuals with substance use disorders in addition to mental health issues, as well as making changes to how counties allocate funds, including putting money towards housing interventions. 
  • A $6.38 billion bond to pay for behavioral health treatment and residential facilities and supportive housing. The bond would allow the state to build 4,350 housing units, half of which would be reserved for veterans. It would also fund 6,800 mental health and addiction treatment beds.

Both will go on the ballot as Proposition 1 this spring for voters to approve, but some worry that the updates to the MHSA would divert funding away from those with serious mental illness as well as take away counties ability to prioritize individual funding decisions. The additional funding for housing is also contentious as some consumer advocates worry involuntary treatment facilities could be built with the funds. 

Workforce 

Another pressing health care issue in California is the health care workforce. The CHCF survey identified that 42 percent of Californians believe their community does not have enough nurses or primary care providers. One in four Californians believe that employment is an extremely or very important issue for state government and the rising costs of goods was identified as an extremely or very important issue for 89 percent.  

In the 2023-24 legislative session, these issues coalesced when the legislature passed SB 525, which increases the minimum wage to $25 for health care workers over the next several years. The law targets low-wage workers and would increase the wages of nursing assistants, medical technicians, health facility janitors and housekeeping staff. The UC Berkeley Labor Center recently revised its estimate that the minimum wage increase would impact wages for 426,000 health workers most of whom are workers of color and women. While the wage increase could provide an average 25 percent increase in pay by the time it is in the fourth year of implementation, it also comes with a significant price tag: $4 billion according to the Administration (while others believe it would cost $2.7 billion). 

In light of the hefty cost – as well as the $38 billion shortfall faced by the state – the Newsom Administration is seeking action by the Legislature to add a trigger to the wage increase, making it subject to General Fund availability. 

Affordability 

Over the past 20 years health care costs have skyrocketed in California. Premiums and deductibles have doubled. Half of the state’s population reports skipping care in the past year due to the cost. More than 80 percent of Californians said that reducing what people pay for health care is extremely or very important.  

In 2022, California joined the ranks of states taking action to curb unsustainable cost growth in their respective states by creating the Office of Health Care Affordability (OHCA) to set and enforce targets that limit the state’s health care spending. Recently, the OHCA Board proposed a 3% target for 2025-29 to try to slow the growth in health care spending. By 2028 the target would become enforceable with financial penalties and corrective action plans for those who exceed the target in later years. While providers are critical of the target, the OHCA Board has not yet approved the final spending target and will need to do so by June 1 of this year. 

Housing as Health Care 

Eighty-four percent of Californians surveyed believe housing and homelessness is an extremely or very important priority for California. CalAIM is already making inroads to improve the housing of Medi-Cal enrollees by offering housing support interventions, such as navigation services, housing deposits, and tenancy and sustaining services through the Community Supports program. Last fall, DHCS submitted a waiver amendment application to the Centers for Medicare & Medicaid Services (CMS) requesting the federal agency to approve the addition of six months of rental assistance as a Community Support in CalAIM for certain populations beginning in 2025. If approved, California would join Arizona and Oregon in allowing Medicaid to pay for rent. Governor Newsom’s preliminary budget for FY 2024-25 preserved the funds for this program to begin in 2025. 

California also submitted an 1115 waiver called BH-CONNECT , which would allow counties to offer more community-based behavioral health services through Medi-Cal, as well as rental assistance for populations covered under the waiver. If approved by CMS, the state hopes to implement the waiver in 2025. 

Budget Outlook 

There are many other issues raised in the CHCF survey that are important to Californians, including climate impacts on health and artificial intelligence in health care. While we may see state agencies or the California Legislature tackle some of these issues this year, the state’s $38 billion shortfall (or higher according to some estimates) means  we’re unlikely to see major healthcare initiatives that require new spending. Importantly, the Administration’s preliminary budget preserves some important initiatives, like the Medi-Cal expansion to undocumented adults as well as CalAIM. The state will also seek to increase the MCO Tax, to increase Medi-Cal provider rates and pay for the Medi-Cal program. As we move further into this budget cycle, and as these policy initiatives develop further, we’ll provide further updates. 

Transform Health is a nationally certified women and minority led health care consulting firm. Reach out to us today if you would like to work together. Contact Heather Bates, COO, and VP of Stakeholder Engagement at heather@transformhc.com We would love to hear from you!