In summary

The student loan repayment program at risk of being cut from California’s budget is funded by Proposition 56, a tobacco tax approved by voters in 2016.  

San Bernardino County is home for Dr. Brian Savino. It is also an area of California with a pressing need for medical providers. Savino, an emergency room doctor, would like to serve the place he grew up for as long as he can.

But owing around $200,000 in student debt is a heavy weight — that’s a $3,200 payment every month, he said. Seeking relief, he applied this year to a new state loan repayment program for doctors and dentists. 

Now, the future of the program he says would provide him the financial security to work with underserved populations is hanging on this week’s budget negotiations between the governor and the Legislature. Gov. Gavin Newsom’s May budget revision eliminates funding for the  CalHealthCares program unless the federal government comes through with aid; the Legislature’s version of the budget rejects this cut, keeping the program intact regardless of federal funding.

Under the program, each recipient is awarded up to $300,000 in loan repayments in exchange for five years of service. To qualify, providers must maintain a caseload in which at least 30% of their patients are on Medi-Cal, the state’s version of Medicaid. Savino estimates his Medi-Cal caseload is already close to 40%.

In recent budget discussions, many lawmakers, both Democrats and Republicans, were quick to argue that during a pandemic, the state should not be making cuts in health care. And it should especially not be eliminating efforts to improve provider access, an ongoing problem in many parts of the state, said Assemblyman Jim Wood, a Democrat from Healdsburg.

“We’re just getting to the point where we were rebuilding this provider network to provide services to people,” Wood said during a May 19 hearing. “And now we’re going to literally pull the rug out from under that, and we are going to decimate our provider network.”

The Legislature’s budget blueprint, released last week, also rejects Newsom’s proposed cuts to optional Medi-Cal benefits, such as some adult dental services, eyeglasses, diabetes and hearing exams. Legislators and Newsom must reach a budget deal before the June 15 deadline, in which they’ll have to decide where they can afford to make cuts.  

CalHealthCares is funded by Proposition 56, a tobacco tax approved by voters in 2016. In addition to the loan program, the tax also funds supplemental payments for doctors, dentists and other medical professionals who provide certain services to Medi-Cal patients. Newsom’s budget would shift $1.2 billion in Prop. 56 revenue from funding these efforts to instead fund increased costs in the Medi-Cal program. 

The revised budget assumes 14.5 million people will be on the Medi-Cal roll by July 2020—the highest ever, and about 2 million more than in December 2019 because of the coronavirus-induced recession.

The governor’s budget does, however, leave in place $67 million from Prop. 56 that would allow for certain things to continue, such as completing the loan repayment promise for the first group of dentists and physicians.

In spring 2019, the state announced the first group of providers who would get their loans repaid under this program: 240 physicians and 38 dentists. The average debt of the program’s first award recipients was $396,768. 

While Newsom’s May budget would honor the 2019 recipients through their five-year service obligation, this year’s applicant pool— more than 1,000 providers, including Savino, who were supposed to find out last month if they were selected — are now on hold.  

“Once you graduate medical school and you are looking at your personal bet, you have to decide: ‘Am I going to follow my call and go to those disadvantaged populations, or go somewhere where I can get this debt paid off?’ Because it is suffocating,” said Savino. 

Historically, Medi-Cal reimbursement rates have been substantially lower than those paid for by Medicare or private insurance. Doctors have long blamed these low rates for keeping them from participating in Medi-Cal.

The loan repayment program also aims to help address the state’s overall physician shortage, said Lupe Alonzo-Diaz, president and CEO of Physicians for a Healthy California, which administers CalHealthCares.

For example, by 2030, California will need about 10,500 more primary care doctors to adequately serve the state’s population, according to a 2017 study by the University of California, San Francisco. The biggest shortages are expected in the state’s Central Valley, near the southern border and in the Central Coast, the study said.

“Then you add to that the very specific challenges that medically underserved communities can experience, particularly communities of color,” she said. 

And it’s not only about adding more physicians, she said, but also that the providers are diverse and go to regions in need. 

Many times, she added, providers who grow up in underserved areas want to return and work with Medi-Cal populations.

Dr. David Benavidez, a California native, first learned about the state’s  loan repayment program when he was in Alabama, where he completed his residency. “I thought, ‘How cool would it be to serve the population that I was part of 20-plus years ago?’” he said. “I was raised by a single mom; she raised four of us and we were on Medi-Cal.”

Benavidez, a child and adolescent psychiatrist, is one of last year’s CalHealthCare recipients. He sees mostly Medi-Cal patients in Fresno County. With about $350,000 in student loan debt, the only reason he can afford to see low-income patients is because of the award, he said. 

Marc Bernardo, a dentist in San Bernardino and Riverside counties, says not having to worry about repaying off his student debt allows him to serve the area's most vulnerable patients. Photo courtesy of Marc Bernardo
Marc Bernardo, a dentist in San Bernardino and Riverside counties, says not having to worry about repaying his student debt allows him to serve the area’s most vulnerable patients. Photo courtesy of Marc Bernardo

Marc Bernardo, a dentist who works in Riverside and San Bernardino counties, said having to worry less about money and more on his craft has allowed him to really focus on the most vulnerable patients. Like Benavidez, he is part of the first group providers who are expected to have their loans paid off.

He works part-time in his family’s dental practice, and the other half of his week is spent providing dental services to people with developmental disabilities. These are people who can’t physically make it to a dental office, so Bernardo goes to their home.

“It’s important to serve not only those who are in the lower income brackets, but also those with disabilities, who are not even earning,” Bernardo said. “I think that’s a big population that gets overlooked.”

He estimates close to 70% of all of his patients are on Medi-Cal, he said. 

Eliminating this program at such an early stage ultimately hurts patients, Savino said, and it is a step back on the governor’s promise to create a “healthier California.”

“Physicians will be OK. We’re people who are of the more privileged and we’ll find somewhere to support ourselves,” Savino said. “I think the focus here is the vulnerable populations who are depending on Medi-Cal. It makes very little difference if you have Medi-Cal, but you can’t get to a physician.”

Our health care reporting is supported by the California Health Care Foundation and the Blue Shield of California Foundation.

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Ana covers health policy and the COVID-19 pandemic. She joined CalMatters in 2020 after four years at Kaiser Health News. She started her reporting career at McClatchy’s Merced Sun-Star. Her work has...