Gov. Arnold Schwarzenegger’s proposed budget cuts not only slash state spending for health care but also imperil federal matching funds for Medi-Cal, the state’s Medicaid program serving millions of the poorest Californians, health care advocates say.

As part of his proposed 10 percent across-the-boards budget cut to deal with an estimated $14.5 billion deficit in fiscal 2009, the Republican governor would slash Medi-Cal spending by $1.1 billion.

Reimbursements to health care providers, including primary care doctors, specialists and hospitals, would drop by over $720 million. Analysts say California already has one of the nation’s lowest reimbursement rates, and as a result more than half the state’s doctors currently don’t accept Medi-Cal.

The governor is also urging an end to so-called optional Medi-Cal benefits including adult dental services, optometry, psychology, podiatry and speech therapy, to save nearly $134 million. Health policy experts say that without these vital services, many more people will seek care through emergency rooms.

A proposal that Medi-Cal recipients be recertified four times a year instead of twice as at present would supposedly save over $92 million, as thousands would lose coverage. But analysts point out that such a requirement would also bring a big rise in administrative costs.

The California Medical Association warned the cuts would also lose the state $1.1 billion in federal matching funds.

“These cuts represent a threat to our patients’ ability to access quality health care services — not only from our medical centers but from other facilities as well,” Melissa Stafford Jones, president of the California Association of Public Hospitals and Health Systems (CAPH), said in a statement. While CAPH recognizes the state’s fiscal crisis, she added, “cutting health care funds for the most vulnerable Californians is not the way to help solve the crisis, and may in fact exacerbate it.” Stafford Jones pointed out that Medi-Cal is more important than ever to families as the economic crisis deepens.

Calling the governor’s proposals for severe cuts, and his failure to prioritize among programs, “unfortunate,” Martin Martinez, policy director with the California Pan Ethnic Health Network, said in a telephone interview that a real solution has to involve a progressive tax increase with higher taxes for people with high incomes. “Everyone talks about working out solutions,” he said, “but progressive tax increases are always taken off the table.”

Martinez also said investing in prevention, which will cut down on illness and chronic disease in the long run, will save the state significant funds in the future.

Recalling that the Legislature has defeated similar proposals in the past, Martinez added, “We hope that people who are affected by these cuts will make their voices heard.”

Commentators, including Martinez, also highlight the irony of the governor calling for sharp cuts at the same time he is trying to get a health care reform bill through the Legislature. The bill, ABX1 1, which has the support of Assembly Speaker Fabian Nuñez (D-Los Angeles), passed the Assembly last month and is slated to be heard before the Senate Health Committee this week. The proposed funding must be passed by voters in a separate initiative. The measure would not require new spending from the general fund.

California Medical Association President Richard Frankenstein told American Medical News that Schwarzenneger’s proposed cuts would move the state in the opposite direction from the reform legislation, because doctors would be forced out of Medi-Cal, hospitals and clinics would close and “tens of thousands” of patients would have to use emergency rooms for care.