California's Proposition 35 is a ballot measure that aims to secure additional funding for health care, specifically for low-income patients enrolled in Medi-Cal.
The current underpayment of Medi-Cal providers has led to a shortage of doctors willing to accept these patients, and with approximately 14 million Californians relying on Medi-Cal, there is a pressing need for increased reimbursement rates.
While proponents have raised $50 million to advocate for the measure, a coalition of community health advocates, seniors, and governance activists have expressed concerns about the potential consequences.
A coalition of community health advocates, seniors, and governance activists argue that California's current tax structure could result in a loss of federal funding, as the state's tax on health plans takes advantage of a loophole that could be closed.
The Managed Care Organization Tax (MCO Tax) generates substantial revenue for Medi-Cal by taxing health insurers that serve both Medi-Cal and commercially insured patients. However, federal regulators have noted that Medi-Cal plans bear an overwhelming 99% of the total tax burden, despite representing only 50% of all insured individuals.
Proposition 35 proposes to cap the tax on commercial insurers at a minimal rate, which critics argue could lead to a situation where the state is forced to reduce taxes on Medi-Cal plans in response to federal rule changes. This could result in billions of dollars in lost revenue.
Kiran Savage-Sangwan, executive director of the California Pan-Ethnic Health Coalition, has expressed concerns about a potential shortfall in funding, estimating a risk of $7 billion to $8 billion in lost revenue annually through 2027.
The political implications of Proposition 35 are complex, with alliances forming among both supporters and opponents.
Governor Gavin Newsom has expressed reservations about the measure's potential impact on the state's budgetary flexibility, as his administration has indicated that the state could face a deficit of $2.6 billion if Proposition 35 is approved, which could increase to $11.9 billion over the next three budget cycles.
Senator Caroline Menjivar has also voiced opposition, highlighting concerns that the negotiations surrounding the distribution of tax revenue have excluded community providers.
The future of Medi-Cal and health care access in California remains uncertain as the debate over Proposition 35 continues.
While the measure is projected to generate over $30 billion in revenue over the next four years, the potential loss of federal funding raises questions about the sustainability of these investments.
Proponents argue that the initiative will provide stability and predictability for Medi-Cal providers, benefiting low-income patients, but the allocation of resources would ultimately be determined by the Legislature.