California has large plans for enhancing psychological well being. Medicaid cuts might upend them

By Ana B. IbarraCalMatters

This story was initially printed by CalMatters. Enroll for his or her newsletters.

California underneath Gov. Gavin Newsom has made sweeping modifications to its behavioral well being systempouring billions of {dollars} into new companies and assist applications.

However the state’s bold plans face a looming risk: the proposed federal spending cuts that Congress is at present contemplating are seen as all however sure to influence Medicaid and will cut off a number of the headway the state has made in responding to its behavioral well being disaster.

It’s not that every one of California’s behavioral well being insurance policies are explicitly tied to Medicaid, however many state and native psychological well being applications draw funding from it. Much less Medicaid cash means much less cash for these efforts.

“When you remove resources of this size and scope everything is at risk,” mentioned Alex Briscoe, principal with the nonprofit Public Works Alliance and who beforehand led the Alameda County Well being Care Providers Company. “To be truthful, the behavioral well being reform panorama of California was simply written, and we’re nonetheless very a lot shifting from promise to apply.

“So it’s an extremely difficult time to see such fundamental threats to funding Medicaid,” Briscoe mentioned.

It’s unclear what these federal spending cuts will appear like, however a funds decision that handed the Home final month proposed $880 billion in reductions over the subsequent 10 years from the committee that oversees Medicaid. Each chambers nonetheless must agree on a joint funds decision.

Medicaid, the joint state and federal medical health insurance program for low-income individuals, pays for the care of 4 in 10 Californians. It’s by this program, also referred to as Medi-Cal within the Golden State, that thousands and thousands can entry behavioral well being companies comparable to remedy, medicine, psychiatric evaluations and disaster assist. About two-thirds of California’s $161 billion Medicaid spending comes from the federal authorities.

It’s additionally the Medicaid program that helps California pay for a few of its social assist companies for its most susceptible residents. They embrace housing navigation and meals help, which assist stabilize individuals and enhance their probabilities of finishing their course of psychological well being or substance use therapy.

The federal threats to Medicaid funding come at a time when near half of adults within the state have reported signs of hysteria or despair, and about 1.2 million of them stay with a critical psychological well being sickness, based on figures by the Nationwide Alliance of Psychological Sickness. In relation to youngsters, 1 in 6 expertise a psychological well being dysfunction yearly.

In the meantime, opioid-related deaths skyrocketed between 2018 and 2023, largely due to fentanyl use, state knowledge reveals. Opioid overdose deaths peaked at greater than 8,000 in 2023 and have been declining since final 12 months.

In response to the grim panorama, Newsom got down to revamp the state’s behavioral well being system.  This has included rising the variety of therapy beds, coaching new psychological well being employees, increasing the attain of disaster hotlines and cellular disaster companies, rising the supply of opioid overdose reversal medicine, and rising psychological well being entry in faculties, amongst different modifications.

The state pulls from a number of buckets, comparable to particular taxesto fund its public behavioral well being system, however federal funding by Medicaid is a necessary piece of it. Throughout the nation, Medicaid is the most important payer for psychological well being companies.

CalMatters requested the governor’s workplace what Medicaid cuts might imply for the state’s behavioral well being system. It launched a written assertion from Well being Secretary Kim Johnson by which she reiterated that the administration had an “unwavering” dedication to make sure that all Californians have entry to psychological well being and substance use dysfunction therapy.

“Behavioral health care is essential health care for the well-being of individuals, families, and communities across California,” she mentioned. “Investing in behavioral health services saves lives, reduces long-term costs, and strengthens our workforce and economy.”

However psychological well being advocates, well being plans, and county officers put it this manner: Medicaid funding cuts would end in extra sick individuals going with out therapy. That might improve the chance of them dropping employment or dropping out of college and ending up in want of extra acute care, or worse, on the road.

“There are tons of people on the streets who are struggling,” mentioned Corey Hashida, a senior analysis affiliate on the Steinberg Institute, a psychological well being advocacy group. “At a time when we’re trying to move forward with doing these big things to help those folks, all this uncertainty and chaos is swirling around federal cooperation … it just infuses a little fear into the safety net.”

In a current coverage transientHashida defined that along with doable funding cuts to Medicaid, key federal behavioral well being grants are additionally in danger. And California has already began to see a few of this fallout. On March 24, the California Division of Well being Care Providers, which oversees the state’s Medicaid program, acquired termination letters from the federal Substance Abuse Psychological Well being Providers Administration, pulling again $120 million in behavioral well being grants.

These grants, based on the division, have been meant for initiatives on the state and native stage, together with work to scale back overdose deaths and broaden entry to medicines for opioid use dysfunction.

California might lose billions in Medicaid funding

The feds might roll again Medicaid spending in a lot of methods, comparable to imposing work necessities or restructuring funding formulation. They may additionally prohibit how Medicaid funds are utilized by ending federal waivers that expanded how California and different states use cash from this system.

Coverage and funds specialists say that it’s tough for states to make contingency plans when it’s unclear how or if the cuts will play out.

President Donald Trump has mentioned that he won’t contact Medicare and Medicaid as he appears to be like for spending reductions to fund extending his 2017 tax cuts. He has mentioned he’ll solely go after eliminating fraud within the applications. Nevertheless, the Congressional Price range Workplace has discovered that if cuts to Medicare, the insurance coverage program for seniors, are off the desk, then Congress must make deep cuts to Medicaid to achieve Home Republicans’ financial savings aim.

By some estimates, Republican proposals to scale back spending in Medicaid might translate into an annual lack of $10 billion to $20 billion in federal funds for California.

For instance, Congress might select to scale back the matching {dollars} that the federal authorities pays states for adults who gained protection underneath the Reasonably priced Care Act’s Medicaid growth. The federal authorities pays California 90% of the associated fee for this growth inhabitants — that’s greater than the 50% matching fee the feds pay the state for different enrollees.

This growth allowed many childless adults to entry vital psychological well being therapy, together with many fighting psychosis, mentioned Michelle Doty Cabrera, government director of the County Behavioral Well being Administrators Affiliation. Psychosis is a situation that can lead to hallucinations. It usually emerges in late adolescence or early maturity, however will be handled with medicine and remedy.

That growth “was a game changer,” Doty Cabrera mentioned. “Taking away funding for that population would be devastating.”

Counties are answerable for offering specialty psychological well being companies to individuals with extra critical psychological well being situations and substance use issues. Counties fund these companies with their very own native income, some state {dollars} and matching federal Medicaid funds.

“There’s really nowhere else to go in terms of funding,” Doty Cabrera mentioned. “We’re already maximizing local spending to try to support these services, and if the federal funding were taken away, it would just put additional pressure on the state budget that obviously is already facing a tremendous number of pressures.”

Federal Medicaid {dollars} are a good portion of counties’ psychological well being budgets. In Los Angeles County, for instance, 30% of the county’s annual funds for its behavioral well being companies division comes from Medicaid, based on the division. In Santa Clara County, a couple of quarter of it does.

“So when you’re talking about a quarter of the funding for a system, you’re talking about the ability of the entire system to function,” mentioned James Williams, county government for Santa Clara County.

Will Trump prolong California well being waivers?

California depends on particular permission, or “waivers” from the federal authorities to have the ability to use Medicaid {dollars} to fund non-traditional companies, comparable to entry to a care coordinator, housing navigation, rental deposit help, and medically tailor-made meals. Specialists say some of these assist companies go hand-in-hand with profitable behavioral well being care, and in the long term ought to save the state and feds’ cash by serving to individuals keep away from expensive emergency room care.

“Waivers are about granting some flexibility so that you can deliver more holistic services,” Williams in Santa Clara County mentioned. “And one of the biggest challenges in behavioral health care, and this is especially true for substance use care, is having people make it through a course of treatment.” To extend individuals’s probabilities, you want issues comparable to steady housing.

A few of these assist companies are simply now beginning to attain individuals. However their continuation can also be within the feds’ palms. The federal authorities has the facility to rescind the waivers or allow them to expire.

Two waiver applications are seen as key to California’s behavioral well being transformation as a result of they prolong Medicaid funding and flexibilities for these assist companies. These are BH-Join, which was simply accredited by the Biden-Harris administration in December, and CalAIM, for which federal approval is ready to run out on the finish of 2026.

The Trump administration has not indicated whether or not it would renew the CalAIM permissions, however given the dialogue of Medicaid funding cuts, it’s creating some nervousness over the way forward for this system.

Michael Schrader, chief government of the Central California Alliance for Well being, the native Medicaid plan for individuals in Merced, Santa Cruz and neighboring counties, mentioned he has been listening to issues about this from suppliers in his community.

“Providers are wondering, ‘Do we keep making investments in CalAIM?’” Schrader mentioned.

“I’ve got clinics saying, ‘I did what you asked me to do. I stepped up and I hired community health workers, I hired enhanced care managers, I put together structured programs, we’re serving these people, and I continue to make these investments thinking this is long term, and now I don’t know.’”

Supported by the California Well being Care Basis (CHCF), which works to make sure that individuals have entry to the care they want, once they want it, at a value they will afford. Go to www.chcf.org to study extra.

This text was initially printed on CalMatters and was republished underneath the Artistic Commons Attribution-NonCommercial-NoDerivatives license.