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Highlights of recent LAO publications

In response to the changes to the state’s budget process required by the pandemic, our office will be publishing shorter, more focused budget analyses over the next few months. Given this change, rather than sending out an announcement for each publication, we will provide periodic updates with the key takeaways from our recent pieces. The highlights of our recent work are below. All of our 2021-22 budget analyses to date can be found here.

The 2021-22 Budget: CalAIM: Equity Considerations

  • CalAIM Proposal Aims to Reduce Health Disparities and Improve Health Equity. Certain population groups suffer worse health outcomes than others. These differences in health outcomes among different groups represent health disparities, and reducing health disparities, in turn, would improve health equity. As a safety-net program, Medi-Cal provides health care coverage to state residents who disproportionately suffer worse health outcomes than other Californians. The administration’s California Advancing and Innovating Medi-Cal (CalAIM) proposal is a far-reaching set of reforms to expand, transform, and streamline Medi-Cal service delivery and financing.
  • CalAIM Would Target High-Risk, High Needs Beneficiaries. A primary goal of CalAIM is to improve health outcomes for Medi-Cal’s highest-risk, highest-need beneficiaries, who disproportionately lack stable housing and suffer from one or more chronic conditions, such as serious mental illness and diabetes. CalAIM aims to expand the capacity of Medi-Cal to coordinate care for these beneficiaries and address their medical and nonmedical needs. Key related CalAIM reforms include the introduction of the enhanced care management benefit, authorization and funding for managed care plans to provide nonmedical benefits (such as housing services), and various changes to Medi-Cal’s behavioral health programs.
  • While CalAIM Could Improve Health Equity… Overall, we find that CalAIM has potential to improve health outcomes for Medi-Cal’s highest-risk, highest-need beneficiaries. Improving health outcomes for these beneficiaries could lead to reduced disparities and improved health equity since the improvements likely would be concentrated among groups who today suffer disproportionately worse health outcomes. These groups include low-income Californians (who make up the entire Medi-Cal population), individuals experiencing homelessness, and members of certain racial or ethnic groups.
  • …The Proposal Faces Several Risks, Challenges, and Limitations. While CalAIM has potential to improve health equity, the reform effort faces several risks, challenges, and limitations. First, there are many drivers of health disparities that CalAIM likely would face challenges in addressing. For example, the limited availability of housing in certain areas of the state will make it difficult for CalAIM’s new housing-related services to successfully link Medi-Cal beneficiaries experiencing homelessness to housing. Second, CalAIM builds upon and replaces similar, existing programs whose effectiveness is not fully understood. For example, several CalAIM reforms collectively would replace the Whole Person Care pilot program. Preliminary evaluations of Whole Person Care demonstrate improvements on certain dimensions, but do not show systematically improved clinical care outcomes for program beneficiaries. Third, important details around how CalAIM would ensure equity are lacking. For example, managed care plans would be required to establish processes for identifying their highest-risk members in order to connect them to enhanced care management and other services. Research indicates that existing processes for identifying high-risk individuals can exhibit racial bias. How the administration would prevent, oversee, and correct such biases from impairing these managed care plan activities is unclear.
  • Recommend Formulating Specific Equity Metrics to Ensure CalAIM Is Meeting Equity Goals. While CalAIM holds promise in improving health equity, its success is not certain. This makes monitoring the performance of CalAIM critical. To do so, we recommend that the Legislature formulate a set of metrics related to the health equity goals of CalAIM and require the administration to report on these metrics periodically. In addition to including metrics related to care delivery and utilization, we also would encourage inclusion of metrics that more directly measure beneficiary health outcomes to the fullest extent possible.

The 2021-22 Budget: University Capital Outlay

  • No Concerns With This Year’s Projects. In 2021-22, CSU has two capital outlay proposals totaling $299 million and UC has one proposal totaling $117 million. The proposals would make various campus infrastructure improvements at CSU and construct a replacement building at CSU Chico and at UC Berkeley. We do not raise concerns with these proposals, other than recommending that the Legislature receive a specific list of CSU infrastructure improvement projects prior to funding those projects.
  • A Few Key Concerns With Previously Approved Project at UC Merced. In September 2020, UC submitted a plan for a $210 million medical education project at the Merced campus. (The state authorized UC to pursue such a project in the 2019-20 Budget Act.) UC’s plan includes costly research space as well as space for non-medical academic departments. In addition, UC has not identified funding for the project’s costs beyond preliminary plans. Were the Legislature to share these concerns, it could direct UC to provide stronger justification for these parts of the project.
  • Some Concerns With Project Approval Process. In the years since the state established its current project review and approval process for university capital outlay projects, we have observed several weaknesses with this process. To address these weakness, we offer four recommendations that would increase transparency and strengthen legislative oversight.
This article was released by the California Legislative Analyst’s Office.