PI Action alerts & updates ... 2004

California HIV/AIDS Fiscal Year 2004–05 Budget

UrgCalifornia has always demonstrated a strong commitment to HIV care for its residents. The state provides funding for a number of important HIV/AIDS care, prevention and research programs. The AIDS Drug Assistance Program (ADAP) is one of the most critical tools in the fight against HIV disease in California. It is funded with federal and state dollars as well as rebates from the prescription drugs delivered by the program. ADAP provides anti-HIV drugs to low-income uninsured and underinsured Californians who couldn’t otherwise afford them. California makes one of the largest state contributions to its program.

As of March 2004, almost 24,000 Californians depended on ADAP. Approximately 80 percent of participants made $18,000 or less annually. ADAP maintained a strong formulary of 151 important drugs. Without ADAP assistance, people couldn’t afford life-saving treatments, which range from $10,000–$15,000 for a simple regimen and much higher for someone with more advanced HIV disease.

The ADAP Crisis:
In January 2004 it appeared that California’s commitment to quality HIV care was faltering after Governor Arnold Schwarzenegger released his fiscal year 2004–05 budget proposal. The state was facing a $15 billion deficit and voters had not yet passed a bond measure to help bridge the gap. The Governor’s draft budget proposal funded ADAP at $207 million, while the program needed $232 million in order to provide the same level of service to those who needed it. Lacking other funding, the administrators of the program would be forced to remove whole classes of drugs from the formulary.

In addition to inadequate funding, the Governor’s budget proposed to permanently cap enrollment at its January 2004 level of 23,900 enrollees. A minimum of 1440 Californians would be placed on a waiting list annually under the cap, the largest waiting list in the nation. The California Department of Finance estimated the savings generated by the cap at only $550,000 per year. Yet, it would put hundreds of Californians at risk of severe illness and even death.

A package of savings and funding from areas other than state general funds was identified early in the process. The identified funds were sufficient to make the cap and waiting list unnecessary and keep the program whole. However the Legislature and the Governor had to agree to keep the funds in the program and not use them to lower the looming state deficit.

Therapeutic Monitoring Program:
The state also funds another important care program, the Therapeutic Monitoring Program (TMP). This program provided vouchers for viral load and resistance testing to counties to cover some ADAP participants who wouldn’t otherwise get these important tests. Since the tests assist patients and providers in knowing when to start or change treatment and what drugs will be most effective for an individual, these tests are essential to patient care and also help to ensure that ADAP delivers the right drugs at the right time. During fiscal year 2003–04, California was forced by the budget deficit and the lack of federal funding to divert $7 million of this $8 million program into ADAP to avoid program restrictions. Counties funded by Ryan White CARE Funds were expected to reprioritize funding to ensure coverage of tests.

However, federal money was also not keeping pace with the epidemic and in 2004, 10 of California’s 12 Eligible Metropolitan Areas (EMAs) received significant cuts in their Ryan White funding, making it difficult if not impossible to continue all necessary coverage. So in addition to ensuring the funding for ADAP, advocates had to work with champions in the state Legislature to ensure funding for TMP. The program was funded at $1 million, but expended close to $5 million in its last year of full operation, with about $4 million going toward vouchers.

Advocacy:
In addition to the advocacy done by Project Inform and our partners in Sacramento, Californians affected with HIV stepped forward to make it clear to the Legislature—which has traditionally been very supportive of the HIV/AIDS funding—and the new Governor that ADAP is an essential healthcare program and TMP is important to quality healthcare and an efficient ADAP.

Failing to adequately fund these programs, particularly ADAP, threatened the health of thousands of low-income HIV positive Californians. In addition under-funding ADAP and TMP would cost the state money. Without access to medications, people would be forced into much more expensive acute and emergency care and sometimes hospitalization. Also, lacking medications, people are more likely to quickly progress to disability, qualifying them to enter Medi-Cal (California’s Medicaid program). It costs the state more to serve a Medi-Cal beneficiary living with AIDS than it does an ADAP recipient.

People affected by HIV rallied in San Francisco and Los Angeles and then joined together for a large SAVE ADAP rally in Sacramento. On the same day, the Senate Budget Committee held a hearing on the ADAP issue and people living with HIV testified about the importance of the program to their health and their lives. Others met with their elected officials in Sacramento the same day. In addition to the rallies and lobby days, advocates worked with the Legislative budget committees and leadership, as well as the Governor’s office and administration to ensure that the importance, public health benefit and cost effectiveness of ADAP and TMP were clear.

The Outcome:
California’s budget process is a long and often contested one. The Governor releases his proposal in January. It is debated in the Legislature in a series of hearings usually running through April. The Governor releases a “May Revise” on May 15. This proposal takes into account revised revenue and spending estimates and sometimes actions by the Legislature. The Legislature then works out any differences that still exist between the two houses and considers differences between the May revise and their proposal with the goal of returning a budget to the Governor by June 15. That deadline often is not met. The overall goal is for the Governor to make his final revisions and sign the budget by June 30. And this year, as has been true for several years in the recent past, budget negotiations stretched way past the June 30 deadline.

The Legislature continued its commitment to both ADAP and the TMP and sent a well-funded HIV/AIDS budget to the Governor. In addition, the Legislature established a special deposit fund with a continuous appropriation for the rebates from pharmaceuticals. This mechanism will allow the state to cover unexpected shortfalls in the program without having to engage in the difficult and time-consuming process it uses currently to release funds not anticipated and budgeted into the program. Everyone including advocates, the Administration, the Legislature and the pharmaceutical industry will benefit from having a clear mechanism to account for rebates entering the program. The Legislature also included an additional $3 million in the TMP, raising the program funding to $4 million total.

The Governor has signed the budget. The Administration demonstrated its support for these essential programs by approving $27 million in new ADAP funding, including federal, state and rebate monies, and increasing by $2 million the amount advocates estimated would be needed to adequately fund the program. They also retained the full $4 million the Legislature proposed for TMP.

Due to the actions of hundreds of Californians affected by HIV and advocates across the state, ADAP will be adequately funded for the next budget year in spite of greatly diminished federal contributions and a continued state deficit. The TMP should also be able to deliver monitoring tests to those who need them. The outcome of this year’s budget battle proves the important contribution and strength of people living with HIV and their advocates to the fight to ensure quality healthcare for some of the most vulnerable Californians.