Olivia Allen-Price: Medi-Cal covers some of the state’s most vulnerable patients. Low-income people, seniors and people with disabilities.
Ericka Cruz Guevarra: Despite it being a lifeline for so many people, some folks are worried that state funding for Medi-Cal isn’t stable.
Olivia Allen-Price: I’m Olivia Allen-Price, host of Bay Curious.
Ericka Cruz Guevarra: And I’m Ericka Cruz Guevarra, host of The Bay and welcome to Prop Fest, a 10 part series where we break down all the statewide ballot measures you’ll be deciding on this November.
Olivia Allen-Price: Today on Prop Fest, Prop 35 aims to guarantee state funding for Medi-Cal through this wonky tax that no one really pays much attention to.
Ericka Cruz Guevarra: But it could make the difference between some Medi-Cal providers getting money and others losing out.
Olivia Allen-Price: We’ll get into all that and more right after this.
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Ericka Cruz Guevarra: Today we’re digging into Prop 35. Here’s how it reads on your ballot.
VO: Prop 35 makes permanent the existing tax on managed health care insurance plans, which, if approved by the federal government, provides revenues to pay for Medi-Cal health care services.
Ericka Cruz Guevarra: We hit up KQED health correspondent Lesley McClurg to help us understand how this lifeline for so many Californians is currently funded and how Prop 35 could change that.
Prop 35 is about funding Medi-Cal, right? What is the backstory here? Exactly? How did this get on the ballot?
Lesley McClurg : Medi-Cal is the insurance that the state offers to folks with a limited income or who are on disability. Unfortunately, the problem with Medi-Cal is that there aren’t enough providers willing to give those services or open up their doors to Medi-Cal patients because reimbursement rates for Medi-Cal patients are much lower than for private insurers. More and more people need Medi-Cal, so you want to increase what those providers are making so they have the incentives to do so.
So the California Hospital Association, the California Medical Association, these big groups, are arguing that we need to increase pay to providers to ensure that patients get that care. One way that they get paid or they get funding for Medi-Cal is through this very obscure policy called the managed care tax. This is basically a tax that the state can levy on managed care plans.
A managed care plan is like a Kaiser Permanente or an Anthem Blue Cross and when the state taxes these health care plans, they actually like it. Because the way this sort of works is that the state taxes the health care plans and then the federal government matches those dollars. Let’s say a plan covers 100 patients, a dollar a patient. When the state taxes them that dollar, the feds give the states $2. It doubles the amount of money that’s available for Medi-Cal patients. And this is one way that, since 2009, the state of California has been able to get more money and filter it towards Medi-Cal patients.
Ericka Cruz Guevarra: So what exactly would Prop 35 change?
Lesley McClurg: So right now, every few years, there’s what’s called an MCO tax. This managed care tax has been voted into place by the legislature. What would change under Prop 35 is that it would make this tax permanent. So we’re not giving over the possibility that it wouldn’t be voted into place. Right now it’s a little open about how those funds are going to get spent once they make it from the feds to the state. And Prop 35 narrows that window and make sure that certain groups, certain providers get those funds. So it makes it permanent and it directs the funding more specifically.
Ericka Cruz Guevarra: Yeah, so let’s talk more about who is behind this. I mean, who is really pushing for Prop 35’s success?
Lesley McClurg: So the areas where the allocations will be increased would be primary care, specialty care, emergency services, family planning. These are all areas that would would get more direct funding from this tax. And so it’s not surprising then that the groups that represent these doctors are in favor.
Jodi Hicks: What we’re doing is ensuring that this fee is extended permanently and that it’s sustainable, permanent funding that providers can count on.
Lesley McClurg: So Jodi Hicks is the president of Planned Parenthood Affiliates of California, and she has been a major supporter because family planning is a group that will benefit from this bill. And she says that this will increase access to her patients.
Jodi Hicks: What we want is a primary care provider in any part of the community to be incentivized to take all patients in that community.
Ericka Cruz Guevarra: And what’s the argument for directing the funds through this tax specifically?
Lesley McClurg: No one is arguing that you should take away the MCO tax. In fact, the MCO tax is a necessary way to pull down money from the feds, or a good way for the state to pull down money from the Feds. What is important about Prop 35 is that it is going to make this tax permanent and it also, again, allocates these dollars in a very specific way, rather than giving it up to the legislature to decide how those funds are going to be spent. This has come to a head in our current environment because right now, for example, we’re in this situation where we have a huge budget deficit and there is fear that these dollars that are supposed to be spent on Medi-Cal funding will be used in some other way for different services. And so proponents want to ensure that these dollars coming from the feds go only to health care and go towards Medi-Cal funding.
Ericka Cruz Guevarra: And that said, Lesley, not all providers are on board with Prop 35, right? Who are some of the opponents and what are their arguments against this ballot measure?
Lesley McClurg: There are some definite groups that won’t benefit from Prop 35. Community health workers, community behavioral health workers, private duty nurses. And also, these funds would not go towards Medi-Cal patients who are under the age of five. So that makes certain groups not support the proposition, like the California Pan Ethnic Health Network, The Children’s Partnership, the California Alliance for Retired Americans, Courage California, the League of Women Voters. So these groups are worried about these specific groups that are are not going to benefit from Prop 35.
Mayra Alvarez: The difference driving our opposition to Proposition 35 is the restriction imposed by the proposition on how the funds can be used.
Lesley McClurg: Mayra Alvarez is the president of The Children’s Partnership, which is an advocacy organization to ensure that health care is available for all children. And her primary argument is that there are going to be some groups that don’t benefit and that we shouldn’t limit how the MCO tax or these funds, these billions of dollars are going to be distributed.
Mayra Alvarez: The allocation of funding under Proposition 35 is decided by a group of selected provider organizations. So I don’t disagree about the specificity of making this permanent. What we are concerned with is what are the billions of dollars that will be lost as a result of locking in these rates.
Ericka Cruz Guevarra: And I guess, how do proponents respond to that argument that Prop 35 creates a sort of “winner” and “loser” situation?
Lesley McClurg: They argue that there is some flexibility in the way that it has been written. There’s not automatic funding going to those groups, but there is flexibility and in how the money will be spent and it could be allocated to those groups. So it’s not necessarily going to hurt them. They’re just not automatic recipients.
Ericka Cruz Guevarra: So, Lesley, the California Democratic and Republican parties are both for Prop 35. But one person who is not a big supporter is Governor Gavin Newsom. What is his position on Prop 35?
Lesley McClurg: He has not taken an official position. In some press conferences, he has hinted that he may not support it. And his language has been that he does not want the legislature to be hamstrung or limited in the way that they spend the MCO tax.
Prop 35 would limit the MCO taxed to just being used in health care. And in a year like right now, where we have this huge budget deficit that might hamstring other services like education, important services that may be needed. We might need to move these funds around to ensure that other services are not cut. There are some media organizations that have come out in favor of Prop 35 like the Sacramento Bee, but there’s also other media outlets like the Mercury News, the San Francisco Chronicle, the San Diego Union-Tribune. All of these media outlets have argued that this is a maze. This is a budgetary maze that should not be before voters.
Ericka Cruz Guevarra: What do we know about campaign spending on both the yes and the no sides?
Lesley McClurg : So there hasn’t been any spending so far on the no side. There’s been about almost $81 million raised on the pro side. So big, big funding is going into this right now to ensure that it passes.
Ericka Cruz Guevarra: And I guess despite the fact that this is a pretty complicated proposition, do we have any sense yet, Lesley, of whether or not this thing will actually pass or how voters are feeling about it?
Lesley McClurg: Yeah, polling data right now is showing that it would most likely pass by about 63%. So currently right now, it’s looking pretty positive for the proposition.
Ericka Cruz Guevarra: All right, Lesley. Well, thank you so much for breaking this one down. I appreciate it.
Lesley McClurg: Thank you.
Ericka Cruz Guevarra: In a nutshell, a vote yes on Prop 35 means an existing state tax on health plans that provides funding for certain health programs will become permanent, while also creating new rules around how that money can be spent. A vote no means these new rules would not go into effect and that this existing law on health plans would end in 2027 unless the legislature decides to keep it going.
Olivia Allen-Price: And that’s it for this edition of Prop Fest. You can find transcripts for this episode and past ones at kqed.org/prop fest.
Ericka Cruz Guevarra: Prop Fest is a collaboration between The Bay and Bay Curious. It’s made by Alan Montecillo, Jessica Kariisa, Olivia Allen-Price, Amanda Font, Christopher Beale, Ana De Almeida Amaral, and me, Ericka Cruz Guevarra.
Olivia Allen-Price: We get extra support from Katie Sprenger, Jen Chien, Maha Sanad, Holly Kernan, and the whole KQED family
Ericka Cruz Guevarra: Tomorrow, we’ll bring you the final episode of Prop Fest with Prop 36.
Olivia Allen-Price: You’ve already made it this far, so make sure you stick around for that one.
