"I'll Gladly Pay You Tuesday for a Hamburger Today" - J. Wellington Wimpy or the Great State of California

California has perhaps replaced Wimpy as the most famous example of borrowing against the future to address today's appetite. This year marked another significant erosion of California's financial situation, forcing the governor and Legislature to grapple with a multibillion-dollar budget deficit. Political observers surely felt that Sacramento had fallen into a time warp as partisan bickering overshadowed problem solving, leaving Californians to endure another historically late budget. Other pressing matters, including prison reform, water shortages, and California's ever-increasing number of uninsured took a back seat to the budget deficit.

In 2008 the governor signed two separate budget accords that were supposed to solve California's budget woes. Those deals proved to be badly out of balance almost immediately after they were signed. Facing a $40 billion budget deficit, legislators were forced to reconvene in early 2009 and pass a new budget that would supposedly keep California solvent through 2010. That budget contained $15 billion in cuts, $12.5 billion in new taxes, $7.8 billion in federal stimulus money, and $5.4 billion in borrowing. That budget also fell short, causing the state to face a $21 billion deficit by July 2009.

The continual focus on the budget and the ongoing need to make massive cuts or find new revenues paralyzed lawmakers for months. Democrats refused to consider any additional cuts and Republicans were equally adamant that they would not support any new taxes. The partisan stalemate forced California to start the new fiscal year on July 1, 2009, without a balanced budget in place. Many thousands of state workers and businesses that contract with the state went unpaid, hospitals were left without reimbursements, and some patients lost their state-provided health insurance while the governor and legislators continued to feud over a solution.

Finally, on July 28, 2009, Governor Schwarzenegger signed a new "balanced budget" that primarily relied on massive cuts and billions in borrowing to fill the deficit. But even that budget is now $4 billion in the red as California's economy continues to struggle, and next year's budget deficit may exceed $10 billion based on current estimates. It is very likely that the Legislature will once again have to take midyear action to address the deficit now and in the future.

To make matters worse, the governor continued his well-worn pattern of veiled threats toward legislators for their failure to act on issues such as the budget, water, and prisons. The governor used a variety of methods to try to force legislators to act. At one point the governor sent Senate President Pro Tem Darrell Steinberg (D-Sacramento) a bronzed sculpture of bull testicles, insinuating that the legislature needed a pair. Not surprisingly, Steinberg and other legislators were not amused.

By the end of the legislative session, the governor threatened to veto all legislation sent to him until lawmakers sent him a water deal he found acceptable. That threat caused considerable consternation among Republicans and Democrats alike. Ultimately, the governor backed off from his threat and acted on the bills before him. The continuing strain between the Legislature and the governor does not bode well as major problems facing the state continue to loom. Is it any wonder that the Field Poll recently found that both the governor and Legislature suffer from historically low approval ratings of 27 percent and 13 percent respectively? The only governor with lower approval ratings than Schwarzenegger was Gray Davis, the man whom Schwarzenegger replaced through a recall election in 2003.

For CMA it was another busy year. State budget cuts consumed many hours of hard work as we defended the already abysmally low Medi-Cal reimbursement rates. Ultimately, CMA's Center for Legal Affairs was forced to sue the state to block the governor's attempts to reduce rates by 10 percent. Fortunately, the court found in favor of physicians and ordered an injunction against the state prohibiting implementation of the cuts.

In the Legislature we faced fights difficult and sometimes ugly — fights over scope of practice, peer review, the bar on the corporate practice of medicine, and rescission of insurance policies. Fortunately, CMA was able to defeat every bill that we opposed. Not a single bill we opposed made it to the governor and every scope bill was defeated in their first committee.

The pharmacists, nurse practitioners, and physical therapists all pursued scope of practice expansions this year. Pharmacists attempted to get legislative approval to administer vaccines directly to patients without a physician protocol; that bill was overwhelmingly defeated. The nurse practitioners finally abandoned their efforts to establish independent practice and worked proactively with CMA to provide greater clarity to their practice protocols. The physical therapist legislation proved to be the most contentious scope bill of the year with their legislative staff asserting that physical therapists were more qualified to diagnose patients than physicians. Needless to say, that argument did not carry the day and the bill was soundly rejected.

This year the fight to preserve the prohibition on the corporate practice of medicine was difficult, to say the least. Three bills were introduced to destroy or undermine the corporate bar and allow for the direct employment of physicians by hospitals. Both the California Hospital Association and the American Federation of State, County, and Municipal Employees union sponsored measures to take direct control of physicians through employment. The bills were passed out of the Assembly but were defeated in the Senate. Both organizations have made it clear that they intend to pursue their efforts next year, so the fight will continue.

CMA sponsored several bills and ultimately three made it through the legislative process and to the governor. The first bill, AB 2, would have prohibited insurance companies from rescinding a patient's insurance policy without proving that the patient intentionally misled the company when they sought coverage. Unfortunately, this bill was vetoed by the governor. Our second sponsored bill, which would have made needed changes to the peer review system, was also vetoed. The governor did sign our third sponsored bill, SB 606, to expand the Steven M. Thompson medical school loan repayment program to provide additional funding to physicians willing to practice in underserved areas.

Overall, it was another year that was lost to the budget morass that the state continues to find itself in. It is likely that the final year of Governor Schwarzenegger's term will again be dominated by budget deficits. The projected $10 billion shortfall will be extremely difficult to address since the state is out of easy or politically acceptable means of bridging the gap.

Perhaps Wimpy will take Minerva's place on the Seal of the Great State of California.

CMA-sponsored/supported Legislation and CMA-opposed Legislation

CMA-sponsored and Supported Legislation:

• UNLAWFUL RECISSION: INDEPENDENT REVIEW (AB 2 • De La Torre) • Passed by Legislature, Vetoed by Governor on October 11, 2009
• PEER REVIEW (AB 120 • Hayashi) • Passed by Legislature, Vetoed by Governor on October 11, 2009
• STEVEN M. THOMPSON LOAN REPAYMENT PROGRAM: OSTEOPATHIC PHYSICIANS (SB 606 • Ducheny) • Signed by Governor, Effective January, 1, 2010
• HEALTH CARE PROGRAMS: CALIFORNIA CHILDREN AND FAMILIES ACT OF 1998 (AB 1422 • Bass) • Signed by Governor, Took Effect on September 22, 2009

CMA-opposed Legislation:

• HOSPITALS: EMPLOYMENT OF PHYSICIANS AND SURGEONS (SB 726 • Ashburn) • Killed by CMA!
• PHYSICIANS AND SURGEONS: EMPLOYMENT (AB 646 • Swanson) • Killed by CMA!
• RURAL HOSPITALS: PHYSICIAN SERVICES (AB 648 • Chesbro) • Killed for 2009 by CMA
• PHYSICAL THERAPY DIRECT ACCESS (AB 721 • Nava) • Killed for 2009 by CMA
• THE PUBLIC EMPLOYEES' HEALTH CARE ACT: BILLING DISPUTES (AB 1126 • Hernandez) • Killed for 2009 by CMA
• HEALTH INSURANCE RATE REGULATION (AB 1218 • Jones) • Killed for 2009 by CMA
• DRUGS: ADVERSE EFFECTS REPORTING (AB 1458 • Davis) • Killed for 2009 by CMA
• WRITTEN ACKNOWLEDGEMENT: MEDICAL NUTRITION THERAPY (AB 1478 • Ammiano) • Killed for 2009 by CMA
• PEER REVIEW (SB 700 • Negrete McLeod) • Killed by CMA!
• SINGLE PAYER HEALTH CARE (SB 810 • Leno) • Killed for 2009 by CMA