Reproductive health clinics warn they could lose $1B under Newsom budget cut

Wednesday, May 27, 2020

By Victoria Colliver for Politico Pro

OAKLAND — Gov. Gavin Newsom’s proposed budget cuts could have an outsized impact on Planned Parenthood and other clinics that provide reproductive health services.

That’s because the federal government has a long-standing program that gives family planning and women’s health services — excluding abortion — get an enhanced match of nine dollars from the federal government for every one dollar from the state, possibly resulting in nearly $1 billion in losses for sexual and reproductive care services sought by low-income Californians.

Health providers all over the state would be hard hit by Newsom's proposal to stop providing $1.2 billion in rate supplements from the 2016 voter-approved cigarette tax, Proposition 56. The governor instead wants to use that money to pay for nearly 2 million new patients expected to seek Medi-Cal coverage after losing benefits during the pandemic.

In a letter sent Tuesday to the governor, 72 lawmakers said hundreds of thousands of constituents rely on Planned Parenthood’s 108 health centers.

“While we are ready to make the difficult decisions to address the state’s immense fiscal challenges, this proposal defies the promise made to Californians who voted for Proposition 56 to ensure timely access, limit geographic shortages, and ensure quality care,” they wrote in the letter, led by Assemblywoman Sydney Kamlager (D-Los Angeles).

The Prop. 56 money includes $100 million that reproductive health providers receive, with Planned Parenthood getting the bulk of those funds. That money has been added to the budget in recent years as California revenues have grown.

“While we of course recognize that cuts to the California state budget due to the Covid-19 pandemic and consequent recession are hurting everyone, and have to come from somewhere, Planned Parenthood is unique in our position as both a health care provider and advocate,” said Jennifer Wonnacott, spokesperson for Planned Parenthood Affiliates of California.

Wonnacott called the $100 million the backbone for the organization’s ability to stay open. “Prop. 56 has allowed us to keep our doors open and protect and increase our access to services,” she said. Even if the cut doesn’t go into effect until July 1, she said the effect would be magnified because it would apply to delayed payments for services rendered earlier in the year that have yet to be reimbursed.

Planned Parenthood already suffered a financial hit last year when it removed itself from a $260 million federal family program due to rule changes by the Trump administration that bar Title X clinics from making abortion referrals or from providing services in the same offices where abortions are performed. The rules took effect last year while multiple legal challenges are still playing out.

Planned Parenthood is also battling the federal administration over $80 million in Covid-19 emergency business loans its affiliates received under the Paycheck Protection Program that the Small Business Administration now claims they were ineligible to receive due to company size standards. That SBA position comes as conservative lawmakers have also said abortion providers should be disqualified from the funds.

Department of Finance spokesperson H.D. Palmer said California could avoid the reduction if the federal government provides another aid package to help states reeling from coronavirus impacts. Otherwise, he said the state needs the Prop. 56 money to sustain the Medi-Cal safety net.

"This proposal is on the table because of the catastrophic overnight drop in revenues caused by the COVID-19 Recession," he said in an email. "It doesn’t single out reproductive health care; other supplemental payments to doctors and dentists are affected as well."

California’s estimated $54.3 billion budget deficit prompted Newsom in his May budget revision to slash numerous health services, including supplemental payments to other providers who treat Medi-Cal patients as well as “optional” or state-funded services such as adult dental, podiatry and acupuncture.

“Moving this money away from its intended purpose will devastate provider networks for low-income people especially in rural areas where provider networks are already challenged,” said Assemblyman Jim Wood (D-Santa Rosa) at Tuesday's Assembly Committee of the Whole to review the state budget . “And where will people go? To expensive emergency rooms costing the state more money.”

About 85 percent of Planned Parenthood’s California patients are covered through Medi-Cal or the state Family PACT program, which provides free family planning services to low-income men and women.

The California Medical Association has gone so far as to argue the Prop. 56 cuts are against the law and that they would consider legal action if they were to go through.

“We believe we’re on firm legal ground. This money was earmarked by voters to be used to expand access to health care,” said Anthony York, spokesperson for the medical association.

York called the cut “unconscionable” while Medi-Cal is expected to serve nearly 2 million more people, given that provider rate cuts would reduce access. He acknowledged that Planned Parenthood would be disproportionately affected due to the higher federal payments.

Other providers generally receive a 1:1 match from the federal government, he said.

Planned Parenthood’s Wonnacott declined to comment on the possibility of any legal challenge, but hope for a resolution that restores the funding. “We are reliant on the state to keep our doors open, and these cuts completely decimate that stability,” she said.