California’s health care industry was mostly united behind Proposition 35, which would strengthen Medi-Cal by earmarking money for it from a tax on health insurance plans.
Stay up to date with free briefings on topics important to all Californians. Subscribe to CalMatters today for nonprofit news in your inbox.
Doctors who treat low-income patients could get a significant pay raise next year, according to early poll totals that show Proposition 35 taking a significant lead.
Prop. 35 asks voters to bond between $2 billion and $5 billion annually for Medi-Calthe state’s health insurance program for low-income earners and people with disabilities. The money would come from an existing tax on health insurance companies that lawmakers can currently use to spend in other ways.
Gov. Gavin Newsom has not formally opposed the measure, but he has expressed concern about its potential to limit how lawmakers spend money while facing a multibillion-dollar state deficit. But proponents of the measure, which include organizations representing nearly the entire health care industry, are tired of politicians promising to fully fund Medi-Cal and not delivering.
Nearly 15 million Californians, a third of the state’s population, depend on Medi-Cal. During the last decade, the state has taken measures to expand access and benefits to their poorest and most vulnerable population.
That expansion, however, has not come with incentives for doctors to see more patients, and the Medi-Cal system is plagued by long wait times and poor outcomes.
Prop. 35 aims to ensure a permanent investment in Medi-Cal. According to polls by the Public Policy Institute of California, a majority of likely voters support the proposal.
What does Prop. promise? 35?
Payments to doctors and others who serve Medi-Cal patients have not kept pace with state benefit and eligibility expansions. According to Kaiser Family FoundationCalifornia’s reimbursement rate falls in the bottom third of state Medicaid systems.
Prop. 35 earmarks a majority of the state’s Managed Care Organization Tax — or MCO tax — To raise prices for certain providers in an effort to improve access to health care.
The tax on health plans comes from a longstanding deal with the federal government: Health insurers agree to put tax dollars into the Medi-Cal system to get a dollar-for-dollar match from the feds. California has levied the tax on health insurance companies on-and-off for the past two decades but has never specified how the money is to be used.
Some of the winners who will be better paid if Prop. 35 passes include doctors and some specialists, behavioral health departments, outpatient clinics, hospitals, ambulances and doctors in training.
What happens to the state budget?
Medi-Cal receives about $35 billion from California’s general fund, and the state currently uses about $7 billion from the MCO tax against that program. Newsom and lawmakers agreed in this year’s budget to use some of the tax to pay for some rate hikes and program expansions, but they aren’t necessarily the rate hikes supporters of the measure want.
If voters approve Prop. 35, the state would face a $2.6 billion shortfall in the current budget because the ballot measure would redirect money dedicated to other things. That deficit would increase to $11.9 billion over the next three budget cycles, according to a Treasury Department analysis.
Lawmakers won’t have to address the shortfall until next year’s budget deadline in June. But the majority of the MCO tax would no longer be available for public spending.
Some of the rate increases that would be canceled if the proposal passes include those for air ambulances, pediatric and adult day services, shared health facilities, private nursing care and continuous Medi-Cal coverage for children under 5.
Who supports it?
A broad healthcare coalition that includes doctors, hospitals, dentists, community clinics, emergency personnel and Planned Parenthood-backed Prop. 35.
Supporters raised more than $55 million with the largest donations coming from the California Hospital Association, the California Medical Association and Global Medical Response, an ambulance company.
They argue that without a serious investment, Medi-Cal patients will continue to receive health care in a second-tier system that does not have enough doctors to meet their needs.
In a campaign statement, Jodi Hicks, campaign chair and president of Planned Parenthood Affiliates of California, said, “Prop. 35 is desperately needed now to address the health care crisis facing millions of patients. We are confident that voters will pass this measure to take addressing our most urgent health care priorities.”
Who is against it and why?
Prop. 35 is opposed by a small but growing group of advocates for community health care and Medi-Cal providers, including the California Pan-Ethnic Health Network, The Children’s Partnership, the Western Center on Law and Poverty and Disability Rights California.
They acknowledge that providers need to be paid more for their services, but say the proposal could fight back and cause Medi-Cal to lose billions in federal funding. That’s because California has been reprimanded by the federal government for taking advantage of a tax loophole. If the proposal passes, it would make it extremely difficult for the state to change how it funds Medi-Cal, opponents say.
“The bottom line of that is when the federal government keeps its promise to change the rules on this tax, the revenue we get from this tax will drop dramatically and we would be leaving billions of dollars on the table,” said Kiran Savage-Sangwan, executive director of California Pan -Ethnic Health Coalition
Supported by the California Health Care Foundation (CHCF), which works to ensure that people have access to the care they need, when they need it, at a price they can afford. Visit www.chcf.org to learn more.
