Prop 35: California voters asked to lock in tax for health services funds
- Proposition 35 seeks to make permanent an existing tax on managed health care insurance plans known as the Managed Care Organization Provider Tax (MCOPT), ensuring a stable funding source for Medi-Cal, the state insurance program for low-income residents.
- Supporters of Prop 35, including major health organizations, argue it will secure necessary funds for Medi-Cal without new taxes, while critics worry about spending constraints and potential federal disapproval.
- The fiscal impact of Prop 35 is projected to cost the state $1-2 billion annually in the short term to enhance funding for health programs, with long-term effects uncertain due to variables like federal approval and tax rate changes.
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What is Prop 35?
In the upcoming November election, California voters will face a critical decision regarding Proposition 35, a measure aimed at making permanent an existing tax on managed health care insurance plans. This tax, known as the Managed Care Organization Provider Tax (MCOPT), has been in place since 2009 but has never been permanently approved. If Proposition 35 passes, the state will be able to secure a reliable source of funding for Medi-Cal, the state's public insurance program for low-income residents and people with disabilities.
The Existing Tax Structure
The MCOPT is a tax levied on managed health care insurance plans, such as Kaiser Permanente, based on the number of people they cover. The tax rate is higher for plans that provide coverage under Medi-Cal, which is a federal-state program that helps low-income individuals and families access healthcare. Currently, this tax generates between $7 billion and $8 billion annually for the state, with the majority going towards funding Medi-Cal and other health programs.
Proposition 35: What It Means
Proposition 35 would make the MCOPT permanent, starting in 2027. This means that without the need for annual legislative approvals, the state would have a steady revenue stream dedicated to healthcare services. The proposition also includes new rules on how the state must use this revenue, ensuring that it is directed towards increasing funding for Medi-Cal and other health programs.
Supporters and Critics
Support for Proposition 35 comes from various health and medical groups, including the California Medical Association, Planned Parenthood Affiliates of California, and the California Hospital Association. These organizations argue that securing dedicated funding without new tax hikes is essential for protecting and expanding access to care for 15 million Medi-Cal patients and all Californians.
On the other hand, some opponents argue that the restrictions on how the money can be spent could limit future lawmakers' ability to balance the state budget. The California Pan-Ethnic Health Network has expressed concerns that the revenue structure might not receive required federal approval, potentially leaving a funding gap and few options for lawmakers.
Fiscal Impact
The short-term fiscal effects of Proposition 35 are estimated to involve state costs ranging from $1 billion to $2 billion annually to increase funding for certain health programs. In the long term, the total funding increase could range from $2 billion to $5 billion annually. However, the long-term fiscal effects are uncertain due to variables such as future federal approval and potential changes in tax rates.
Impact on Health Care
Supporters emphasize that Proposition 35 is necessary to address the urgent healthcare crisis in California. Hospitals are closing services, emergency rooms are overcrowded, and patients often wait months to see a doctor or specialist. By making the MCOPT permanent and dedicating its revenue specifically to healthcare, Proposition 35 aims to prevent the state from redirecting these funds for non-healthcare purposes.
Practical Implications
Justin Preas, who runs the United Health Centers of the San Joaquin Valley, highlights the importance of this dedicated funding. His organization serves over 175,000 patients, many of whom rely on Medi-Cal for their healthcare needs. Preas stresses that using tax revenue to fund Medi-Cal ensures low-income Californians can access necessary healthcare.
However, some citizens have expressed concerns about the potential limitations on home care. Jenny McLelland, a mother whose son requires nursing care at home, worries that Proposition 35 might lock Medi-Cal rates for home nursing care at low levels, making it difficult for families like hers to afford necessary care.
Conclusion
Proposition 35 presents a critical decision point for California voters. On one hand, supporters argue that making the MCOPT permanent will secure dedicated funding for healthcare services without raising taxes on individuals. This could be a vital step in addressing the state's healthcare crisis by ensuring reliable funding for Medi-Cal and other health programs.
On the other hand, opponents raise concerns about the restrictions on how the money can be spent and potential risks of federal disapproval. The outcome will have significant implications for how California manages its healthcare system and its ability to provide essential services to millions of residents.
References
- https://voterguide.sos.ca.gov/propositions/35/
- https://lao.ca.gov/BallotAnalysis/Proposition?number35&year2024
- https://abc7.com/post/what-is-prop-35-look-california-measure-focused-healthcare-insurance/15414298/
- https://www.nbclosangeles.com/decision-2024/prop-35-california-election-medi-cal-health-services/3538553/
- https://voteyes35.com
