HCAI staff outline budget impacts, BH Connect waiver funding and HPD expansion

HCAI staff briefed the advisory committee on how the governor’s proposed 2025–26 budget could affect the agency’s programs and workstreams. The staff member said the budget, released Jan. 10, proposes ongoing support for HCAI programs, but also reflects a two‑year framework of reductions including elimination of 6,500 state positions and nearly 8% operational cuts; HCAI will be directly affected. The staff member underscored that the budget is a proposal and subject to the legislative process.

Two large items cited by staff were a Medi‑Cal demonstration waiver known as “BH Connect” and proposed ongoing funding for the Health Care Payments Data Program (HPD). The staff member said the BH Connect waiver, awarded in December 2024, includes a workforce component through HCAI eligible for up to $1.9 billion over five years to support development of the behavioral‑health workforce, with an initial spring budget change proposal to follow. The staff member described BH Connect as focusing on children and youth, people at risk of or experiencing homelessness, and justice‑involved individuals, with statewide and county components.

On data infrastructure, staff said the governor’s budget proposes to provide an ongoing appropriation of $22 million per year and 47 positions to sustain HPD (California’s All‑Payer Claims Database), moving the program from one‑time funding to an ongoing base. Staff also announced that HPD had begun accepting applications for access to non‑public HPD data and that a webinar describing the process had strong interest; staff said the HPD public advisory committee would meet soon to plan 2025 strategies and a board presentation on HPD use was planned for March.

Other budget items staff noted included a legislative change package to implement hospital seismic‑safety and clinic building standards and a proposed diaper initiative that would provide a free three‑month supply of diapers for California newborns, administered by HCAI. The staff member also said the governor asked HCAI and other agencies to develop proposals on prescription‑drug cost drivers and affordability measures.

Committee discussion touched on the broader trends in national health expenditures and drivers of spending. Several committee members urged that the office continue to examine low‑value care, utilization trends tied to primary‑care access, and how consolidation and pricing interact with utilization to drive higher spending. Committee members also pressed HCAI staff to publish more granular hospital analyses and to plan how HPD and OCA’s measurement work will incorporate both inpatient and outpatient services over time.