Obama Special Friends, Union, Pressuring California on Budget

The budget deal that the Legislature grudgingly approved in February left few Californians unbruised. State programs were slashed and taxes and fees were hiked in an effort to close a $42-billion budget gap, causing many to decry the impact on vulnerable residents and struggling businesses. Some of those voices carried further than others, however. Now, the state could lose $6.8 billion in supplemental Medicaid dollars because of a complaint lodged by the union representing home healthcare workers, many of whom face reductions in their already low wages. Although we don’t like the cuts, we don’t think the federal government should use its leverage to pressure California on behalf of a well-connected group.

Counties negotiate the home healthcare workers’ wages and benefits, with the federal government covering half the cost and the state about a third. The state’s contribution is capped, however, so it doesn’t pay any share of the costs above $12.10 an hour. The budget deal lowers that cap to $10.10 on July 1. Twenty counties exceed the new cap, and some are contractually bound to make up for the loss in state dollars.

The Service Employees International Union, whose negotiators won those contracts, is now using them as ammunition against the wage reductions. The economic stimulus package that Congress enacted in mid-February offers billions of dollars to states to help them keep their healthcare programs for the poor from running short of cash. The bill includes a “maintenance of effort” clause to prevent states from using the new federal dollars to lower their spending on healthcare at counties’ expense. The SEIU argued that California’s cuts violated that clause, and at least one attorney at the federal Department of Health and Human Services has agreed.

From The L.A. Times

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