Opposition to new taxes has been a bedrock stance for Republican legislators, one they can enforce because taxes require two-thirds legislative votes.
However, Assembly Republicans appear poised to bless a hefty tax on “managed care organizations” that Gov. Jerry Brown wants, because it would secure more federal support of health care for the poor.
“Who benefits from MCO plan? Every Californian! Cutting debt, helping disabled, improving healthcare access, saving CA $1.3B = great package!” Assemblywoman Kristin Olsen, R-Riverbank, tweeted Monday.
It signaled that she and other GOP legislators would support the package that Brown negotiated, although its fate in the Senate is uncertain.
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The new tax, replacing one that federal officials had nixed as being too narrow, would be offset by cutting other state taxes on medical insurers and gain the state an estimated $1.3 billion in net federal aid.
One provision would provide more money for services to the developmentally disabled, which has been a Republican demand.
Some Republican factions are dismayed. Jon Fleischman, who runs the influential Flash Report website, has been flogging Republican legislators, saying that voting for the MCO tax would undercut the 2014 GOP effort to gain enough seats to hold the line on taxes.
However, the Howard Jarvis Taxpayers Association, the state’s most prominent anti-tax organization, has gone neutral, thus giving political cover to Republicans who vote for the tax.
Approval of the MCO tax would be another indication that medical care has become a dominant issue in the Capitol, as well as a very important component of the state’s economy.
During Jerry Brown’s first stint as governor four decades ago, medical issues had a very low political profile – so low in the pecking order that Democratic leaders would routinely allow Republicans to chair health policy committees.
Most medical care was provided on a “fee for service” basis, paid by patients and/or some employer-provided insurance. What later became known as “managed care” was in its infancy, the poor mostly obtained care in county hospitals, and the state was still experimenting with a federally underwritten program called “Medi-Cal” to pay their bills.
As an industry, a popular preoccupation and a political issue, health care subsequently exploded, most recently with the implementation of Obamacare.
Today, it accounts for at least 10 percent of the state’s $2.5 trillion economy and far outstrips more traditional components such as agriculture and film production – even Silicon Valley. More than a third of the state’s 39 million residents are enrolled in Medi-Cal.
The explosion spawned multibillion-dollar medical care conglomerates, and the various segments of the industry, including insurers, labor unions, doctors, nurses and hospitals, are now among the Capitol’s most powerful players.
Not surprisingly, too, legislators now covet seats on the committees that control health policy.