In a packed auditorium a few blocks from the Capitol one day last week, a top adviser to Gov. Arnold Schwarzenegger and two of her deputies tried to explain to an anxious crowd exactly what the governor has in mind for the future of public health care in California.

Kim Belshe, the governor's secretary of Health and Human Services, put it bluntly: The state's increasing level of spending on health care for the poor cannot be sustained, she said. Schwarzenegger wants to slow the rate of growth, but he wants to do it creatively, to minimize the pain it's likely to cause for those who depend on their fellow Californians to pay for one of life's most essential services.

"The status quo is not acceptable," Belshe said. But neither, she said, are the kind of wholesale eliminations of services and programs proposed by past governors, including Gray Davis.
Instead, Schwarzenegger intends to seek special permission from the federal government to restructure the way California manages publicly provided health care, and then reshape the program to serve the same number of people at lower cost. Everyone now eligible for Medi-Cal will remain so, Belshe said, but some recipients might lose some benefits, and others might have to pay a share of the cost if they are not among the poorest of the poor.

"We have to redesign this program," she said. "There are going to be some very difficult decisions to make."

Why? Because even though California spends less per recipient than every other major state except Georgia, the total cost of the program has grown by nearly 60 percent since 1999, from $7.4 billion that year to a projected $11.6 billion next year.

Part of that can be explained by the general rise in health care costs. But the increase is also a result of a dramatic expansion in the number of Californians eligible for subsidized health care. Nearly one of five residents - about 6.8 million people - now qualify for the program, and about 25 percent of them were added to the rolls by decisions the Legislature and Davis made over the past five years.

Those in the audience, to put it mildly, were skeptical. Most seemed to believe that Schwarzenegger was more interested in cutting costs than making the program more effective. And their reaction, as they lined up at two microphones or waited their turn on a conference call hook-up, suggests that the governor faces opposition from many quarters as he seeks fundamental change to a program that touches more Californians than just about anything else the state does.

Among those present that day were lobbyists for groups who make money serving the poor: doctors, hospitals, pharmacists and others. They were there not only to defend their economic interests but also to warn Belshe that if she and the governor cut too deeply, their members might no longer be able to provide care or services.

Others stepped to the microphone to speak for themselves, or for those who get their care through Medi-Cal. A disabled woman feared that the governor would eliminate powered wheel chairs. Without hers, she said, she'd be trapped in her house, or forced into a nursing home. Another complained that an expansion of managed care as a way to trim costs would hinder his clients' ability to get the kind of medical equipment on which they depend for survival.

Ominously, three separate questions came from the Western Center on Law and Poverty, which frequently sues the state to block spending reductions or to try to force increases.

Schwarzenegger, as he has with just about everything else he's proposed, wants to put the Medi-Cal overhaul on a fast track. The administration is seeking feedback from "stakeholders" through May, then plans to propose at least the outlines of a new approach to the Legislature. The governor is hoping to win approval from lawmakers this summer so he can submit the plan quickly to the federal government with an eye toward final approval by December. The changes would be phased in over the next two years.

But he might be getting ahead of himself. Given the number of people who depend on Medi-Cal and the broad array of groups with a financial interest in the way it is run today, Schwarzenegger will find it close to impossible to win consensus from those with a stake in the program. That, in turn, is going to make it difficult for him to persuade members of the Legislature to cast a tough vote for change that could be highly unpopular yet won't yield savings for taxpayers for several years down the road.

This is a governor who says he thrives on challenges. In Medi-Cal, he's got himself a doozy.