Influential health interests are maneuvering a potential $19.4 billion infusion into Medi-Cal, California’s Medicaid program, while also seeking a 2024 election initiative to permanently block that funding, KFF Health News has learned.
The Coalition to Protect Access to Care, which includes groups representing doctors, hospitals, insurance companies and clinics, is lobbying Governor Gavin Newsom and his fellow Democratic lawmakers to allocate the proceeds of a tax to health insurance companies. The governor earlier this month proposed spending nearly $820 million from the Managed Care Organization, or MCO, fee renewal to raise Medi-Cal reimbursement rates and divert $8.3 billion to the state general fund, leaving $ 10.3 billion up for grabs.
Every industry has its own idea of how that money should be spent, though the healthcare industry presents a unified front, according to interviews with hospital executives, health insurance executives, physician groups and community clinics. The coalition also wants to cement more Medi-Cal funding into the state constitution, potentially through a ballot initiative in November 2024.
“We are actively exploring a plan to provide permanent and predictable funding and stability in the health care system,” said Dustin Corcoran, CEO of the California Medical Association, who confirmed talks with other industry groups and health care advocates about an initiative.
Medi-Cal, a massive safety net program, has failed to deliver timely and comprehensive health care and adequately meet the needs of the 15.8 million low-income and disabled Californians who depend on it. Hospitals, clinics and other healthcare providers say reimbursement rates are less than the cost of their services.
“Healthcare has eluded patients for a long time,” Corcoran said. “This is absolutely a generational opportunity to improve Medi-Cal and ensure patients can access care whenever they need it.”
California is among more than a dozen states that levy taxes on managed care organizations, a type of health plan, to tap into extra federal health care money for Medicaid. California adopted the tax in 2005 and it has been renewed five times, according to state Department of Finance spokesman HD Palmer. The latest version, which expired in December, generated $2 billion a year.
However, the tax revenue has never been earmarked for new initiatives in Medi-Cal, and Newsom wants to change that, such as by paying providers higher rates for primary care, mental health and addiction care, and maternity care.
As healthcare groups and lawmakers agree to back Medi-Cal and raise reimbursement rates, various sectors of the healthcare industry are positioning themselves to benefit from the portion still up for grabs. The hospitals say they are particularly deserving of a large share of the $10.3 billion in revenue, but have not indicated how they want the money distributed.
“It’s not like every other player isn’t important,” said Carmela Coyle, president and CEO of the California Hospital Association, which is lobbying Newsom and lawmakers for a large bailout even if not all hospitals need help. . “But we did the lion’s share during the covid”.
Corcoran, of the California Medical Association, which represents physicians, argues that all providers who serve Medi-Cal patients should benefit, not just one type. “The tax has to do with the entire health care ecosystem,” she said. “You can’t focus on just one particular part of it.”
Insurers say they are still mulling backing the fee, arguing it should benefit all Medi-Cal patients. In California, health insurance companies have agreed to be taxed by the government, which brings in extra federal dollars to plug the holes in Medi-Cal. Health insurers don’t get your money back directly. Instead, the money is spread across the entire health care system.
“We don’t go around advocating for new taxes. It’s not an easy decision,” said Charles Bacchi, president and chief executive officer of the California Association of Health Plans, which represents public and private insurers in the state. “For health plans that have to add this fee to their premiums, it has to be affordable for our customers.”
Newsom and the lawmakers hope to agree on the tax by the June 15 budget deadline. However, negotiations on how to spend the money could continue into the summer and possibly even next year.
Newsom wants to collect the tax through 2026 and spend the money over eight to 10 years. But health professionals and consumer advocates want it to be spent in about three years. The Newsom administration argues that stretching the money for 10 years protects against potential changes to federal health care rules that could result in lower revenue for California.
“We’ve been spreading those dollars over a long period of time to provide long-term sustainability and fiscal certainty for our providers,” Michelle Baass, director of the state Department of Health Services, which administers Medi-Cal, told lawmakers. week.
Healthcare industry groups, community clinics and patient advocates are pushing back, arguing there is always federal uncertainty. They say Medi-Cal, which has undergone major expansions, including to cover unauthorized immigrants, needs a cash infusion now.
“We should be investing today because the need is so great,” said Francisco Silva, president and CEO of the California Primary Care Association, which represents community clinics that overwhelmingly serve low-income patients.
Anthony Wright, executive director of Health Access California, is pushing industry groups and the administration to agree to address the disparities by putting all the money into improving patient care and promoting more equitable access to doctors.
“Frankly, your Medi-Cal program experience is really different across the state — county to county, floor to floor,” Wright said, arguing that investments need to be made “in those areas where there are real problems.”
Physicians and insurance industry leaders are advocating using the $10.3 billion for even higher Medi-Cal rates, and health plans specifically say there should be bigger rate hikes for specialty care and loan forgiveness for doctors in underserved areas.
Community clinics, which offer one-time care, want multiple payments that reimburse them each time a patient shows up for care rather than bundling them into one visit for one fee. And public hospitals are looking to revenue to offset the expected losses from caring for a disproportionate share of low-income people. The Newsom administration wants to raise Medi-Cal rates for hospital emergency department and outpatient visits, Baass told lawmakers.
If healthcare interests can reach an agreement, it’s an opportunity for them to secure and direct billions in spending as they see fit. But the coalition could also fall apart.
“It has to be done in a way that is fair to everyone,” said Democratic state Sen. John Laird of Santa Cruz, who sits on the budget committee. “The concern is that everyone wants a piece.”
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