In summary
California’s health care industry mostly united behind Proposition 35, which would bolster Medi-Cal by dedicating money for it from a tax on health insurance plans.
For the second time this year, California voters are being asked to make a major change to the state’s health care system. During the March primary, the issue was mental health. Today, it’s health care for low-income Californians.
Proposition 35 asks voters to commit between $2 billion and $5 billion annually to Medi-Cal, the state’s health insurance program for low-income residents and people with disabilities. The money would come from an existing tax on health insurers that lawmakers are currently able to use to spend in other ways.
Gov. Gavin Newsom has not formally opposed the measure, but he has voiced concerns about its potential to restrict how lawmakers spend money while facing down 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, rely on Medi-Cal. Over the past decade the state has taken steps to expand access and benefits to its poorest and most vulnerable populations.
That expansion, however, has not come with incentives for doctors to see more patients, and the Medi-Cal system is plagued with long wait times and poor outcomes.
Prop. 35 aims to secure a permanent investment in Medi-Cal. According to polling from the Public Policy Institute of California, a majority of likely voters supports the proposal.
What does Prop. 35 promise?
Payments to doctors and others who serve Medi-Cal patients have not kept up with the state’s benefit and eligibility expansions. According to the Kaiser Family Foundation, California’s reimbursement rate falls in the bottom third state Medicaid systems.
Prop. 35 earmarks a majority of the state’s Managed Care Organization Tax — or MCO Tax — to raise rates for certain providers in an effort to improve access to health care.
The tax on health plans comes from a long-standing agreement with the federal government: Health insurers agree to put tax money into the Medi-Cal system in order to get a dollar-for-dollar match from the feds. California has levied the tax on health insurers on-and-off for the past two decades but has never specified how the money should be spent.
Some of the winners who will see better pay if Prop. 35 passes include doctors and certain specialists, behavioral health facilities, outpatient clinics, hospitals, ambulances and doctors-in-training.
What happens to the state budget?
Medi-Cal gets about $35 billion from California’s general fund, and the state currently uses about $7 billion from the MCO Tax toward that program. Newsom and lawmakers agreed in this year’s budget to use a portion of the tax to pay for some rate increases and program expansions, but they aren’t necessarily the rate increases supporters of the measure want.
If voters approve Prop. 35, the state would face a $2.6 billion deficit in the current budget because the ballot measure would redirect money that’s dedicated to other things. That deficit would increase to $11.9 billion over the next three budget cycles, according to an analysis from the Department of Finance.
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 general government spending.
Some of the rate increases that would be canceled if the proposition passes include ones for air ambulances, pediatric and adult day services, congregate living health facilities, private duty nursing and continuous Medi-Cal coverage for children under age 5.
Who supports it?
A broad health care coalition that includes doctors, hospitals, dentists, community clinics, emergency responders and Planned Parenthood supports 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 get health care in a second-tier system that doesn’t have enough doctors to meet their needs.
In a campaign statement, Jodi Hicks, campaign co-chairperson 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’re confident voters will pass this measure to address our most urgent health care priorities.”
Who opposes it and why?
Prop. 35 is opposed by a small but growing group of community health advocates and Medi-Cal providers, including the California Pan-Ethnic Health Network, The Children’s Partnership, Western Center on Law and Poverty and Disability Rights California.
They acknowledge that providers need to be paid more for their services, but argue that the proposition could backfire and cause Medi-Cal to lose billions in federal funding. That’s because California has been reprimanded by the federal government for exploiting a loophole in the tax law. If the proposition passes, it would make it extremely difficult for the state to change how it funds Medi-Cal, opponents say.
“The end result of that is when the federal government makes good on their promise to change the rules on this tax, the revenue we raise from this tax will be dramatically reduced and we would leave billions of dollars on the table,” said Kiran Savage-Sangwan, executive director of the 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.
