Among the blitz of election ads flooding television, social media and street corners, you won’t see any opposition to a ballot measure proposing to block billions of dollars to pay more for doctors who treat low-income patients.

But opponents of Proposition 35 have a warning even if they don’t have the money to pay for advertising: the measure could backfire and cause the state to lose billions in federal funds.

Proposition 35 would eliminate an existing tax on health insurance plans and use the money to increase payment to doctors and other providers who see Medi-Cal patients. His supporters have raised $50 milliondrawing on groups representing hospitals, doctors and insurers.

Medicalthe subsidized insurance plan serving some 14 million Californians, has grown over the past decade with increased eligibility and benefits. But these changes have not been accompanied by a proportional increase in doctors’ salaries.

As a result, health care providers and advocates say too few doctors accept Medi-Cal, leaving patients with nowhere to turn.

According to the Public Policy Institute of Californiathe measure is ahead of schedule and should be adopted.

But opponents, represented by a small coalition of community health advocates, seniors and good governance activists, say the details of the proposal put the state at risk of losing billions of dollars in funding federal.

Indeed, the federal government, under the Biden and Trump administrations, has warned California that its health plan tax intended to fund medical services is unfairly taking advantage of a loophole in federal regulations. The federal Centers for Medicare and Medicaid Services intends to fill this gap, regulators wrote in a letter to California officials late last year.

“That’s the fatal flaw in this initiative,” said Kiran Savage-Sangwan, executive director of the California Pan-Ethnic Health Coalition, which is leading the opposition. “We can all have our opinions on how to spend the money, but we have to raise the money first. »

The problem, opponents say, lies in how California taxes health plans and how Proposition 35 limits changes in the future.

Currently, the Managed Care Organization Tax, also known as the MCO Tax, generates revenue for Medi-Cal by taxing health insurers that serve both Medi-Cal and insured patients commercially. The federal government gives California a dollar-for-dollar match for all funds raised through the tax. For Proposition 35, that’s about $7 billion to $8 billion per year through 2027.

However, California has historically placed the majority of the tax burden on medical insurers and not commercial insurers. In their letter to state officials, federal regulators said Medi-Cal plans account for 50% of all insured people but bear “99% of the total tax burden.” This is contrary to the spirit of the law, which aims to redistribute revenue from commercial insurers to Medi-Cal plans, regulators wrote.

Proposition 35 would cap the tax on commercial insurers at a minimum rate. Any attempt to change the tax would have to go back to the ballot or be approved by three-quarters of the Legislature. Opponents say this means changes to federal rules requiring the business tax to be more equal to the Medi-Cal tax will force the state to reduce taxes on Medi-Cal plans.

“The bottom line is that when the federal government follows through on its promise to change the rules of this tax, the revenue we get from this tax will be significantly reduced and we will be leaving billions of dollars on the table,” Savage-Sangwan said. said.

Supporters of the measure said that argument was false but did not provide details. They say Prop. 35 will make the Medi-Cal program more stable and that higher rates will encourage more providers to see low-income patients.

Medi-Cal reimbursement rates in California are in the bottom third compared to all other states, according to the Kaiser Family FoundationAnd rates for specific services like obstetrics are among the lowest in the country.

“Supporting .35 is an absolutely necessary investment to protect and expand access to care for Medi-Cal patients and all Californians,” said Molly Weedn, spokesperson for the Yes on Prop. 35 campaign, in a statement “The primary goal of Proposition 35 is to provide stability and predictability…to address the significant lack of providers able to see Medi-Cal patients.”

The California Association of Health Plans said it did not request a commercial tax cap in the proposal and has historically supported that tax structure to pay for Medi-Cal. A higher tax on commercial plans could increase premiums.

Where is Governor Newsom on Proposition 35?

The largest donors to the yes campaign are the California Hospital Association, Global Medical Response and the California Medical Association, which collectively gave $38 million. Opponents did not raise money, according to state campaign finance records.

Gov. Gavin Newsom has not taken a formal position on the measure, although he said in a July news conference that he was concerned about how it would lock up tax revenue for a single purpose. The state budget he signed that month shifted most of the tax revenue from the tax on health insurers to the general fund intended to finance the Medi-Cal program.

If voters approve Proposition 35, the state would face a $2.6 billion deficit in the current budget, which relies on the tax to fill the gaps. That deficit would increase to $11.9 billion over the next three budget cycles, according to a Finance Department analysis.

“This initiative cripples our ability to enjoy the kind of flexibility needed in the times we live in.” I have not spoken out publicly against this initiative. But I am implying a point of view. Perhaps you can read between these many, many lines. Newsom said during the press conference.

Newsom’s office did not respond to multiple inquiries about whether he would formally oppose the measure.

Savage-Sangwan said the opposition did not seek any money for his campaign.

“We use the tiny megaphone we have just to get the facts out there,” she said.

Compromise in 2024 health care ballot measure

The political division around Proposition 35 is unusual. Opponents of the measure are often on the same side as its supporters when it comes to health policy issues on Capitol Hill. But community health advocates say they are speaking out because the future ramifications of the initiative are too risky.

“We want to make it clear that the goals of the prop are goals that we agree with. We recognize that our Medi-Cal providers are paid far too little and that this disproportionately affects people of color, especially children of color,” said Mayra Alvarez, president of the Children’s Partnership, another opposing group.

Some lawmakers agree. During several budget hearings, Sen. Caroline Menjivar, a Van Nuys Democrat, came to oppose the proposal in part because industry organizations that negotiated who would receive money from the tax left alongside “community providers” and those “who have no money”. well-paid lobbyists.

“By listening to those on the ground, the Legislature has developed a plan to equitably address many medical concerns over the coming years,” Menjivar said in an opposition campaign statement.

This tax is expected to generate more than $30 billion over the next four years. The budget signed by Newsom puts most of the money in the state’s general spending account, but provides about $2 billion to raise rates for services including community health workers, private nursing, day centers for adults and children and children at risk. automatic disenrollment from Medi-Cal. If Proposition 35 passes, different groups would benefit from rate increases.

Weedn, with the Yes on Proposition 35 campaign, said the initiative would not automatically result in cuts if passed. It would be up to the Legislature to decide how to fund the programs that opponents worry about, she said, and that the initiative provides about $2 billion in flexible dollars a year for legislative priorities.