Make permanent a tax on managed care health insurance plans
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What did voters decide?
What would it do?
Proposition 35 would require the state to spend the money from a tax on health care plans on Medi-Cal, the public insurance program for low-income Californians and people with disabilities. The revenue would go to primary and specialty care, emergency services, family planning, mental health and prescription drugs. It would also prevent legislators from using the tax revenue to replace existing state Medi-Cal spending. Over the next four years, it is projected to generate upwards of $35 billion.
Earlier this year, Gov. Gavin Newsom proposed using the tax revenue to cover other Medi-Cal program expenses, walking back a deal to support new investments.
Why is it on the ballot?
Lawmakers have dramatically expanded Medi-Cal in the past 10 years to include all low-income residents regardless of citizenship. Benefits have also been restored from Great Recession-era cuts to include dental insurance, hearing aids and doulas. Today, more than 14 million Californians — roughly a third of the state population — use Medi-Cal. Over the same time period, payments to doctors and other Medi-Cal providers have increased only incrementally if at all. According to the Kaiser Family Foundation, California’s reimbursement rate falls in the bottom third nationally. As a result, many providers won’t treat Medi-Cal patients.
The coalition of doctors, hospitals and clinics that gathered signatures to place this issue on the ballot want the tax revenue to go toward increased payments.
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For
$54.6M raised
Supporters argue that California has relied on this tax — known as the Managed Care Organization Tax — for decades to offset general fund spending on Medi-Cal. Managed care health plans pay a tax to get a dollar-for-dollar matching amount of money from the federal government. Health providers who serve Medi-Cal patients argue that the tax revenue should be used for new investments in Medi-Cal rather than supporting the state’s general fund. Supporters also state that the measure leaves some money unrestricted to give lawmakers flexibility in balancing the budget or investing in additional Medi-Cal services.
Supporters
- California Medical Association
- Planned Parenthood Affiliates of California
- California Hospital Association
- California Dental Association
- California Primary Care Association
- California Democratic Party
- California Republican Party
Media Endorsements
Against
$0 raised
Gov. Newsom has indicated he will oppose the measure even though there is no official registered opposition group so far. He argues restricting how the tax revenue is spent “hamstrings” future legislators and governors’ ability to balance the state budget.
Opponents
- League of Women Voters of California
- California Pan-Ethnic Health Network
- The Children’s Partnership
- California Alliance for Retired Americans
- Courage California
- Western Center on Law and Poverty
- ACCE Action
Media Endorsements
Commentary
For
Against
Funders
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