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Prop 35 explained: A permanent tax on health insurance providers

By Ashley Zavala

Prop 35 explained: A permanent tax on health insurance providers

Proposition 35 asks California voters to make permanent a tax on health insurance providers, also known as managed care organizations. The measure also sets rules around how the state uses the money collected from that tax. California has expanded those who are eligible for Medi-Cal, the state's Medicaid program. Healthcare providers have complained the state reimburses doctors, nurse practitioners and others too little for providing services to Medi-Cal patients. The measure requires the state to use the money collected from the tax to be used only to reimburse those Medi-Cal providers for primary, specialty and emergency care plus family planning, mental health and prescription drugs. Earlier this year, state lawmakers and the governor agreed to use funds from a temporary managed care organization tax to pay for some state healthcare costs broadly as California grappled with a budget deficit in the tens of billions of dollars. As a result, Medi-Cal provider reimbursement rates were not as high as some groups were expecting. The proposal would restrict the state's ability to do that in the future. The federal government would also be involved and would provide revenue to the state as a result of the tax. It would need to ultimately approve this as well. Who supports it? Planned Parenthood Affiliates of CA, American College of Obstetricians & Gynecologists, American Academy of Pediatrics and other healthcare groups. "Prop. 35 will address our most urgent healthcare priorities by securing dedicated, ongoing funding -- without raising taxes on individuals -- to protect and expand access to care," the groups said in a statement. "Hospitals and health clinics are closing in rural and urban communities across California. Emergency rooms are overcrowded. More than 40 California hospitals have stopped offering labor and delivery services. Patients wait months to see a doctor for important preventative care, and often cannot get an appointment for specialty care when needed."How much money has the supportive campaign raised? As of Sept. 9, state campaign finance data showed the effort raised $48.3 million. Top funders include the California Association of Hospitals with $15 million and Global Medical Response with $13 million. Who opposes it? Courage California, the Children's Partnership, California Pan-Ethnic Health Network, California Alliance for Retired Californians and the League of Women Voters. They announced their opposition on Sept. 5, even though the state's official voter guide shows the measure has no registered opposition. "While we strongly support boosting access to health care providers serving our communities, Prop. 35 throws away the hard work communities have done to make health care more equitable," said Kiran Savage-Sangwan, Executive Director of CPEHN. "Care for people served by Medi-Cal now could be cut by billions of dollars, and California's progress in expanding health care to all would be stalled or reversed." How much money have opponents raised to fight it? Campaign finance data show they have not raised any money yet. Learn more here. See more coverage of top California stories here | Download our app | Subscribe to our morning newsletter

Proposition 35 asks California voters to make permanent a tax on health insurance providers, also known as managed care organizations. The measure also sets rules around how the state uses the money collected from that tax.

California has expanded those who are eligible for Medi-Cal, the state's Medicaid program. Healthcare providers have complained the state reimburses doctors, nurse practitioners and others too little for providing services to Medi-Cal patients. The measure requires the state to use the money collected from the tax to be used only to reimburse those Medi-Cal providers for primary, specialty and emergency care plus family planning, mental health and prescription drugs.

Earlier this year, state lawmakers and the governor agreed to use funds from a temporary managed care organization tax to pay for some state healthcare costs broadly as California grappled with a budget deficit in the tens of billions of dollars. As a result, Medi-Cal provider reimbursement rates were not as high as some groups were expecting. The proposal would restrict the state's ability to do that in the future.

The federal government would also be involved and would provide revenue to the state as a result of the tax. It would need to ultimately approve this as well.

Who supports it?

Planned Parenthood Affiliates of CA, American College of Obstetricians & Gynecologists, American Academy of Pediatrics and other healthcare groups.

"Prop. 35 will address our most urgent healthcare priorities by securing dedicated, ongoing funding -- without raising taxes on individuals -- to protect and expand access to care," the groups said in a statement. "Hospitals and health clinics are closing in rural and urban communities across California. Emergency rooms are overcrowded. More than 40 California hospitals have stopped offering labor and delivery services. Patients wait months to see a doctor for important preventative care, and often cannot get an appointment for specialty care when needed."

How much money has the supportive campaign raised?

As of Sept. 9, state campaign finance data showed the effort raised $48.3 million. Top funders include the California Association of Hospitals with $15 million and Global Medical Response with $13 million.

Who opposes it?

Courage California, the Children's Partnership, California Pan-Ethnic Health Network, California Alliance for Retired Californians and the League of Women Voters. They announced their opposition on Sept. 5, even though the state's official voter guide shows the measure has no registered opposition.

"While we strongly support boosting access to health care providers serving our communities, Prop. 35 throws away the hard work communities have done to make health care more equitable," said Kiran Savage-Sangwan, Executive Director of CPEHN. "Care for people served by Medi-Cal now could be cut by billions of dollars, and California's progress in expanding health care to all would be stalled or reversed."

How much money have opponents raised to fight it?

Campaign finance data show they have not raised any money yet.

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