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Supreme Court to take up key California budget cases

January 18, 2011 |  2:10 pm

The U.S. Supreme Court on Tuesday said it will decide whether California can balance its budget by slashing how much it pays doctors and other health providers under the Medi-Cal program for the poor.

The result of the case is crucial to Gov. Jerry Brown's plan to balance the state budget. Brown has proposed to cut by 10% the amount paid to providers that serve Medi-Cal patients.

Brown's reductions would save nearly $719 million, but it requires the high court to overturn appeals court decisions blocking previous cutbacks.

The Times' David G. Savage, who covers the Supreme Court, has more on the case:

The California Legislature, responding to the state's fiscal emergency, approved in recent years a series of cutbacks in the payments to physicians, hospitals and pharmacies. The aim was to save billions of dollars in Medicaid costs.

But in each case, the providers have sued in federal court and won rulings that blocked the cutbacks on the grounds that they conflicted with the Medicaid law. The providers argued that if the cutbacks were approved, the state would not provide the level of care required under Medicaid.

But lawyers for then-Atty. Gen. Jerry Brown appealed to the Supreme Court, arguing that these private parties had no right to sue the state and no right to a particular reimbursement payment.

This appeal touched a chord in the high court. Chief Justice John G. Roberts Jr., among others, has been skeptical of the notion that by providing public money for benefits such as health or education, federal law authorizes suits by those unhappy with the level of spending.

The justices agreed to hear three separate appeals from the state, all of which raise the same issue. The lead case is Maxwell-Jolly vs. Independent Living Center of Southern California.

The cases could complicate the already fractured national debate over healthcare spending.

The Obama administration filed a brief that urged the justices to steer clear of California's appeals. Its lawyers agreed the law did not give healthcare providers a right to sue in federal court, but it said that California's planned spending cutbacks had been rejected in November by Medicaid officials in Washington.

Despite that advice, the justices voted to hear the cases.

-- Shane Goldmacher in Sacramento