California voters on Tuesday approved Proposition 35, the measure that cements an existing tax on health plans to help fund the Medi-Cal program, as election results continued to be tallied Wednesday.
California has imposed a tax on managed care organizations — health insurance providers that provide or arrange services for a monthly payment — off and on over time. The state can reap more federal money as a result of charging the tax, which is based on how many people the health plans serve.
The ballot initiative aims to make the “MCO tax” permanent and designates how the money should be used. State leaders had renewed the tax last year and pledged to increase the reimbursement rates paid to healthcare providers under the Medi-Cal program, but Gov. Gavin Newsom changed plans for the funding amid a budget deficit, ultimately approving less money for rate increases than had been previously planned.
In the short term, Proposition 35 will require the money to be allocated in generally the same way that California had been planning before Newsom sought to rework those budgetary plans.
The ballot initiative was backed by a coalition of major healthcare groups, including the California Hospital Assn., the California Medical Assn. and Planned Parenthood Affiliates of California, which gathered signatures for a petition to qualify the initiative for the ballot. Groups backing Proposition 35 said that the health system needs consistent funding to ensure that Medi-Cal patients don’t face a shortage of providers.
But opponents including the California Pan-Ethnic Health Network and the Children’s Partnership challenged how Proposition 35 calls to allocate funding from the MCO tax, saying there had been little voice from Medi-Cal enrollees in those decisions, and warned the measure could restrict future flexibility when budgets are tight. Earlier this year, Newsom was pushing the coalition backing the measure to take it off the ballot.
Passing Proposition 35 also unravels some of the existing plans for the MCO tax under the state budget, critics warned, including funding to ensure continuous coverage under Medi-Cal for young children. Proposition 35 proponents have countered that lawmakers could still choose to fund such programs.
Backers of the ballot measure, including the ambulance company Global Medical Response, spent more than $55 million in support of Proposition 35. No opposing committees reported any spending to the state.
