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Amid the flood of campaign ads on TV, social media and on street corners, no one is opposing a ballot measure that would set aside billions of dollars to pay more doctors to treat low-income patients. Probably.
But opponents of Proposition 35 also warn that there is no money to pay for advertising. The measure could backfire and cause the state to lose billions of dollars in federal funding.
Proposition 35 would take existing taxes on health insurance plans and use the funds to increase payments to doctors and other health care providers who see Medi-Cal patients. Its supporters, drawn from groups representing hospitals, doctors and insurance companies, have raised $50 million.
Medi-Cal, a subsidized insurance plan that serves approximately 14 million Californians, has ballooned in size over the past decade due to increased eligibility and benefits. However, these changes have not been accompanied by commensurate increases in physician payments.
As a result, health care providers and advocates say too few doctors accept Medi-Cal, leaving patients with nowhere to turn.
According to the Public Policy Institute of California, the bill has the lead and is likely to pass.
But opponents, represented by a small coalition of community health activists, senior citizens and good governance activists, say the proposals put the state at risk of losing billions in federal funding. I am doing it.
The federal government, under both the Biden and Trump administrations, has warned California that taxing health plans to fund Medi-Cal services unfairly exploits loopholes in federal regulations. The federal Centers for Medicare and Medicaid Services intends to close the loophole, regulators said in a letter to California officials late last year.
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“This is the fatal flaw of this initiative,” said Kiran Savage Sangwan, executive director of the California Pan-Ethnic Health Coalition, which leads the opposition. “Everyone can have a say in how the money is spent, but first we need to raise the money.”
Opponents say the issue is how California taxes health plans and how Prop. 35 limits future changes.
Currently, the Managed Care Organization Tax, also known as the MCO tax, generates revenue for Medi-Cal by taxing health insurance companies that serve both Medi-Cal and commercially insured patients. The federal government gives California a matching amount of money raised through taxes. Proposition 35 is estimated at $7 billion to $8 billion annually through 2027.
However, California has historically placed the bulk of the tax burden on Medi-Cal insurance companies rather than commercial insurance companies. Federal regulators said in a letter to state regulators that Medi-Cal plans account for 50% of all insured people but bear “99% of the total tax burden.” This violates the spirit of the law, which is intended to redistribute revenue from commercial insurance companies to Medi-Cal plans, the regulators wrote.
Proposition 35 would limit taxation of commercial insurance companies to a minimum tax rate. Any amendments to the tax would need to be submitted to the ballot box again or approved by three-quarters of Congress. Opponents argue that this means states will be forced to reduce taxes on Medi-Cal plans due to changes in federal regulations that require commercial taxes to be equal to Medi-Cal taxes.
“The end result is that if the federal government makes good on its promise to change the rules around this tax, the revenue from this tax will be dramatically reduced and billions of dollars will remain.”Savage Sangwan he said. Said.
Supporters of the measure said the argument was false, but did not elaborate. They argue that Prop. 35 would make the Medi-Cal program more stable and that higher fees would allow more providers to see low-income patients.
According to the Kaiser Family Foundation, California’s Medi-Cal reimbursement rates are in the bottom third of other states, and reimbursement rates for certain services, such as obstetrics, are among the lowest in the nation.
“Prop. 35 is a much-needed investment to protect and expand access to care for Medi-Cal patients and all Californians,” said Molly, a spokeswoman for the Yes to Prop. 35 campaign. Vienna said in a statement. “The primary purpose of Prop. 35 is to provide stability and predictability and address the significant shortage of health care providers available to see Medi-Cal patients.”
The California Health Plans Association said the proposal does not call for a cap on commercial taxes and that it has historically supported this tax structure to pay for Medi-Cal. If tax rates on commercial plans increase, premiums could rise.
Where is Governor Newsom on Proposition 35?
The largest donors to the Yes campaign were the California Hospital Association, Global Medical Response, and the California Medical Association, which contributed a combined $38 million. Opponents have not raised any money, according to state campaign finance records.
Gov. Gavin Newsom has not taken a formal position on the measure, but at a press conference in July he expressed concern about how it would lock in tax revenue for a single purpose. said. The state budget he signed that month transferred most of the revenue from the tax on health insurance companies to the general fund, which pays for the Medi-Cal program.
If voters approve Proposition 35, the state faces a $2.6 billion deficit in its current budget and relies on taxes to cover it. That deficit is expected to rise to $11.9 billion over the next three budget cycles, according to a Treasury analysis.
“This initiative impedes our ability to have the flexibility that is needed in the times we live in. I am not publicly opposed to this, but I do have a certain point of view. You can probably read between the lines of a lot of that,” Newsom said at a news conference.
Newsom’s office did not respond to multiple inquiries about whether he would formally oppose the measure.
Savage Sangwan said the opposition party was not asking for any funds for election campaigning.
“We’re using a very small megaphone just to get the facts out,” she said.
Trade-offs in 2024 healthcare voting measures
The political division over Proposition 35 is unusual. When it comes to health policy issues on Capitol Hill, the bill’s opponents are often on the same side as its supporters. But community health activists say they are speaking out because the future implications of the initiative are too dangerous.
“I want to be clear that Propp’s goals are goals we agree with. We recognize that it disproportionately affects children, especially children of color,” said Mayra Alvarez, president of Children’s Partnership, another opposition group.
Some members of Congress agree. During multiple budget hearings, Sen. Caroline Menjivar, D-Van Nuys, came out against the proposal because the industry groups that negotiated who would get funding from taxpayers were “community providers.” This was partly due to the exclusion of “people who don’t have money.” Highly paid lobbyists. ”
“By listening to the voices on the ground, Congress has developed a plan to equitably address Medical’s many concerns in the coming years,” Menjivar said in a statement from the opposition camp.
The tax is expected to raise more than $30 billion over the next four years. The budget bill Newsom signed puts most of the money in the state’s general appropriations account for community health workers, private nurses, adult and child day centers, and at-risk children in automated medical care. Approximately $2 billion has been set aside for service fee increases, including: Cancellation of registration. If Proposition 35 passes, various groups will receive rate hikes.
Wien, of the Yes to Proposition 35 campaign, said passing the initiative would not automatically result in cuts. He said it would be up to Congress to decide how to pay for the programs that opponents fear, and that the initiative would provide about $2 billion a year in flexible funding for legislative priorities. Ta.
Supported by the California Healthcare Foundation (CHCF). The foundation works to ensure people have access to the care they need, when they need it, at an affordable price. For more information, please visit www.chcf.org.
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