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California Leaders Tussle With Health Industry Over Billions of New Dollars for Medi-Cal

California Leaders Tussle With Health Industry Over Billions of New Dollars for Medi-Cal

California Gov. Gavin Newsom speaks at an event in Berkeley, California, on May 29. (Tayfun Coskun/Anadolu via Getty Images)

Gov. Gavin Newsom, state lawmakers, and health industry leaders have a small window to reach an agreement on billions of new dollars for Medi-Cal before it鈥檚 put to voters in November.

, supported by of the state鈥檚 health care industry as well as the local Republican and Democratic parties, would lock in the money for Medi-Cal, California鈥檚 version of the Medicaid health insurance program for low-income residents. The funds would be used primarily to increase payment rates for health care professionals who serve Medi-Cal patients.

Newsom, a Democrat, using the money for that purpose. But after California鈥檚 fiscal situation darkened, he reversed course in May, proposing to divert most of it to reduce the state鈥檚 $45 billion budget deficit.

The money is from a tax on managed-care health plans that鈥檚 been around for two decades but has historically been used to offset existing state spending rather than support new investments in Medi-Cal.

鈥淭he importance of this ballot initiative is finally being serious about investing in the viability of the Medi-Cal system,鈥 said Adam Dougherty, chief of emergency medicine at Sutter Medical Center in Sacramento. 鈥淭he MCO tax literally touches every aspect of the Medi-Cal system, and it can鈥檛 be at the mercy of year-to-year budget crises.鈥

Michael Genest, a former finance director under Republican Gov. Arnold Schwarzenegger, noted that several ballot initiatives approved by voters in the past continue to narrow the state鈥檚 fiscal choices, including one that limits property tax increases and another that guarantees a large share of the state budget to schools.

鈥淲e do ballot-box budgeting in the state of California. We鈥檝e done it forever. And everything we鈥檝e done in that regard has turned out to be very hard on fiscal stability,鈥 Genest said.

It鈥檚 possible that the , made up of doctors, hospitals, health plans, and other medical providers, could settle their differences with state leaders before a June 27 deadline to withdraw the initiative.

Newsom鈥檚 desire to claw back most of the promised money puts him at odds with proponents of the initiative, many of whom have long counted themselves among his allies. Elana Ross, a spokesperson for Newsom, declined to comment on the status of the initiative.

In May, Newsom proposed using about $6.7 billion previously earmarked for Medi-Cal pay hikes and some other health care priorities, mostly in 2025 and 2026, to offset existing state spending. His proposal would retain Medi-Cal payment increases totaling around $300 million a year for some primary care, mental health, and maternity services.

The legislature passed a new budget on June 13 largely following the governor鈥檚 wishes by canceling the planned Medi-Cal increases in 2025. But Newsom hasn鈥檛 signed off.

鈥淲hat was approved represents a two-house agreement between the Senate and the Assembly 鈥 not an agreement with the governor,鈥 said H.D. Palmer, spokesperson for the state鈥檚 Department of Finance. 鈥淲e鈥檒l respectfully decline to speculate on what the contours of a final agreement would look like.鈥

Revenue from the managed-care tax allows the state to draw matching federal dollars, more than doubling the amount available. Federal and state money would also be used to reimburse the health plans for nearly all the taxes they paid, theoretically having no effect on insurance premiums.

California is among 19 states that have such an 鈥淢CO tax鈥 in place to help fund their Medicaid programs. Using the tax revenue to pay Medi-Cal providers more is 鈥渁 generational opportunity to fundamentally fix access to care for Medi-Cal recipients,鈥 said Dustin Corcoran, CEO of the California Medical Association and a spokesperson for the ballot initiative.

Corcoran said internal polling shows the initiative has public support by 鈥渧ery healthy margins,鈥 though he declined to share specific numbers.

If the initiative does end up on the November ballot and is approved, it would override any compromise Newsom strikes with lawmakers. It would restore the previously planned Medi-Cal investments for 2025 and 2026. And it would make the increased funding, and more of it, permanent starting in 2027, though that would require federal approval.

Proponents of the initiative say it is fundamentally a question of health equity. Medi-Cal covers medical and mental health services for nearly 15 million Californians, well over a third of the state, many of them among the poorest and most vulnerable residents. The program has a budget of , including recent expansions to cover all immigrants regardless of legal status and a experiment to offer socioeconomic supports not traditionally covered by health insurance.

But access to care is notoriously spotty for many Medi-Cal patients, in part because low payment rates discourage providers from seeing them. The shortage is particularly acute in .

鈥淥ur patients wait months for access to specialists or travel great distances to see them,鈥 said Joel Ramirez, chief medical officer of Camarena Health, a chain of over 20 community clinics based in Madera. 鈥淗igher rates would allow for more providers.鈥

Ramirez said 60% to 70% of Camarena鈥檚 patients are on Medi-Cal, many of them farmworkers. 鈥淚t鈥檚 a tall ask for them to find time off work and get the transportation to travel an hour for an appointment,鈥 he said. 鈥淲hatever condition that patient has that needs the attention of a specialist is being either untreated or incompletely treated.鈥

Dougherty, Sutter Medical Center鈥檚 ER chief, said that over half of his patients are on Medi-Cal and the ER is always at full capacity, with the waiting rooms jammed and an insufficient number of beds. The initiative, he said, 鈥渁llows us to hire more staff, add more beds, create more infrastructure for the volume we鈥檙e seeing.鈥

This article was produced by 天天看片 Health News, which publishes , an editorially independent service of the .