CA GOP Lets Jerry Brown Pass New Health Tax

Jerry Brown (Rich Pedroncelli / Associated Press)
Rich Pedroncelli / Associated Press

On Monday, California legislators approved legislation that will levy a new tax on all managed care organizations so over one billion dollars of federal funds will continue to be granted to Medi-Cal, including millions of dollars for services for the developmentally disabled.

The legislature had fought over the proposed measure for a year; the old tax only targeted plans for patients enrolled in Medi-cal — California’s version of Medicaid — whereas the new tax targets all managed care organizations, according to KQED.

Republicans had fought in the 2014 elections to defeat the Democrats’ supermajority precisely so that they could stop tax increases. Though the new tax replaces the old, and is theoretically to be offset by increased federal funding, it will likely raise uncomfortable questions for the California GOP heading into the 2016 elections.

Sen. Ed Hernandez (D-West Covina), a leading proponent of the new tax, said delightedly, “The proposal provides a stable ongoing funding source for Medi-Cal. It allows California to maximize its share of existing federal dollars, and we’re always complaining that we don’t get our fair share. It will not negatively impact premiums,” KQED reports.

Health insurance plans expressed support; Charles Bacchi, CEO of the California Association of Health Plans, said the association appreciated the “willingness and patience of the Administration and legislative leaders to listen to the challenges posed by earlier formula and for continuing to work with health plans to find a workable solution.”

Tim Hornbecker, director of business development for The Arc of Alameda County, said that the tie between developmental disabilities funding and the MCO tax was a cynical ploy by Governor Jerry Brown, who outlined the measure in his budget, to grab GOP votes, as reported by KQED.

The new measure will allot $300 million for support services for the developmentally disabled, which will be supplemented by $200 million in federal matching funds.

Support strengthened for the bill after a rate survey to be submitted to the legislature by 2019 was made part of the deal. The survey will determine appropriate rates to be paid for services for the developmentally disabled.

The bill must be approved by Governor Jerry Brown.