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A Progressive Illness

CODE BLUE. The Crisis in Los Angeles County Health Care . One in a series

October 29, 1995

Los Angeles County's health care system came close to disintegrating this year, but the forces and decisions that created the massive bureaucracy and its troubles were years in the making.

1964: City Health Department merges with county, laying groundwork for vast network of hospitals and health facilities.

1965: Federal Medicare and Medicaid programs adopted to provide health care for the poor, aged and disabled. The federal funds spur growth of health systems in county and across nation.

1967: Lanterman-Petris-Short Act limits involuntary detention in the state of all but the most gravely mentally ill and provides "patients bill of rights" regarding treatment. Program cuts leave many mentally ill on the streets.

1972: County Supervisors follow recommendations of blue ribbon panel and create county Department of Health Services to coordinate care primarily for the poor and protect the public from communicable diseases.

1976: After New York City's brush with bankruptcy, county report warns county to downsize its health system and other operations to decrease reliance on outside funding. "Financial danger signals are beginning to appear," report says.

Nurses at County-USC hospital quit by the hundreds, complaining of poor working conditions and long hours.

1978: Tax-slashing Proposition 13 imposes strict limits on property tax increases and effectively curtails local governments' ability to raise taxes to pay for services.

1981: After supervisors cut $75 million from county health care programs, about 1,200 health workers are laid off. Eight health centers close; services reduced at six hospitals and other facilities. It is early warning of crisis to come.

1982: Alarmed by health-care costs, Legislature passes law allowing insurers, including Medi-Cal, an exemption from antitrust action so they can negotiate lower costs from certain doctors and hospitals. Law is heralded as first practical test of health-care competition in nation and launches revolution of health maintenance organizations. But bill also gives county responsibility for treating indigents.

1983: Federal government overhauls Medicare, trimming payments to hospitals by setting up fixed reimbursement rates for various diagnoses. Goal is to encourage efficient medical care while discouraging prolonged hospital stays and excessive tests and treatments. County is heavily dependent on such aid.

Vast trauma care network of 23 hospitals is established--a major partnership between public and private emergency facilities.

1984: Supervisors mortgage Hall of Administration and 23 other major facilities as collateral for issuance of $262.5 million in certificates of participation, which are more expensive than voter-approved bond issues. This begins a decade of steadily increasing use of debt to build new facilities.

1988: Proposition 99 raises state tax on cigarettes 25 cents per pack, with a portion going to shore up underfunded state health care programs.

1990: Severe economic downturn takes hold and state slashes overall payments to counties by nearly $800 million. L.A. County closes seven public mental health centers.

Proposition 134, a "nickel-a-drink" liquor tax to raise about $760 million a year for social health programs, is defeated.

By this year, nearly half the hospitals in trauma network have pulled out, making county even more critical provider of emergency care.

A $2.2-billion master plan based on heavy borrowing is OKd to rebuild and improve health facilities.

1991: Deepening recession eliminates many jobs and drives down sales and property tax revenues, forcing record numbers into county-run health and welfare programs.

1992: Gov. Pete Wilson shifts $1.3 billion in property tax revenues from local governments, a 45% decrease in state's contribution to county coffers. L.A. County is worst hit.

1993: Desperate to balance state's budget, Wilson and lawmakers shift $1 billion in property tax revenues from counties, leaving Los Angeles with a gaping hole in its budget.

Supervisors mortgage one of the county's prime real estate assets, Marina del Rey, to pay one-time operating expenses.

1994: Under pressure to fix a projected $1-billion deficit, health officials seek to squeeze more than $600 million from a federal health program, but only a fraction is ever collected. Though balancing county budget on paper, failure to realize the money puts county finances in turmoil.

Proposition 187 approved to crack down on illegal immigrants by severely limiting public education, non-emergency health care and welfare services. Court challenges block it from taking effect.


May 24: Health Services director Director Robert C. Gates announces resignation, effective Nov. 1.

June 19: Chief Administrative Officer Sally Reed proposes closing County-USC Medical Center in the face of $655-million deficit in Department of Health Services. Closing of clinics, dramatically reducing services and laying off more than 10,000 health workers also proposed.

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