Capitol Alert

AM Alert: Stymied health plan tax back on agenda

Faith Hidalgo 12 of Meadow Vista, left, is examined by medical assistant Madeline Cardona at the Weimar Institute in Weimar on Friday, April 3, 2015. On Tuesday, a health special session conference committee will receive an overview on the tax on managed-care organizations that helps pay for Medi-Cal.
Faith Hidalgo 12 of Meadow Vista, left, is examined by medical assistant Madeline Cardona at the Weimar Institute in Weimar on Friday, April 3, 2015. On Tuesday, a health special session conference committee will receive an overview on the tax on managed-care organizations that helps pay for Medi-Cal. rbenton@sacbee.com

Lawmakers left town in mid-September after acting on hundreds of bills yet failing to reach agreement on expanding a soon-to-expire tax on California health plans that helps pay for indigent healthcare, much to the frustration of the Brown administration.

“We did everything we could to make this work,” Health and Human Services Secretary Diana Dooley said in a statement Sept. 11, blaming health plan differences and Republican lawmakers’ refusal “to consider any tax adjustments at all.” She warned of offsetting cuts in Gov. Jerry Brown’s January budget proposal.

Almost three months later, lawmakers today will revisit the issue – amid what seems to be little, if any, change in the issue’s politics since the summer.

At a Los Angeles hearing, the healthcare special session conference committee led by state Sen. Ed Hernandez, D-Azusa, and Assemblyman Rob Bonta, D-Alameda, will get an overview of California’s existing tax on managed-care organizations and possible replacements after it expires July 1.

The current tax applies to health plans that serve Medi-Cal patients, pulling in about $1.1 billion in matching federal money. That money, in turn, increases those plans’ Medi-Cal reimbursement payments, and break even.

But renewing the tax as-is is a no-go. The federal government says any future tax must apply to all managed-care plans, regardless of their Medi-Cal caseloads. That means, depending on how the tax is structured, some plans would take major financial hits.

Costs of up to several hundred million dollars annually would be passed on to consumers and, the California Association of Health Plans warns, put some plans at a competitive disadvantage and possibly prompt them to leave the California market.

Also, any new health plan tax would need a two-thirds vote, requiring the support of at least some Republicans. Although some Republicans voted for the current tax, GOP leaders have balked at proposals to expand it, pointing to last month’s projections of billions in additional state revenue. The Governor’s Office, though, contends that the state shouldn’t commit potentially one-time revenue to ongoing programs.

Health-related taxes will again be on the agenda later this month, during the health special session conference committee’s scheduled Dec. 17 hearing in Oakland to discuss the impacts of tobacco use. Both Bonta and Hernandez have put forward special session proposals to raise taxes on tobacco products.

Today’s 9:30 a.m. hearing at the Ronald Reagan State Building in Los Angeles will be webcast live here.

ZERO-SUM GAME: Few budget issues this year directly involved more high-level politicos as the debate over funding for the University of California. Brown and UC President Janet Napolitano held private sessions as a “committee of two.” Assembly Speaker Toni Atkins, D-San Diego, convened multiple hearings on UC’s budget and admissions policies. Today, the Assembly education budget subcommittee led by Assemblyman Kevin McCarty, D-Sacramento, will be at U.C. Davis for a hearing on UC enrollment and budget issues, 1:30 p.m., King Hall, U.C. Davis.

SPECIAL NEEDS: A panel led by state Sen. Richard Pan, D-Sacramento, to identify deficiencies in how the government delivers services to children with special health, mental health, physical and developmental needs will hold its first meeting this afternoon. The Select Committee on Children with Special Needs will hear from parents, researchers, top officials from various state departments, and others today, 1:30 p.m. Room 3191.

A CULTURE OF CHEATING? Away for the holiday and missed Jon Ortiz’ investigation of widespread cheating at the Cal Fire academy? Get caught up with the story and video.

HOLIDAY MUSIC: Today marks the start of the holiday music series at the Capitol. Solaris will perform at 11 a.m., followed by the Sacramento Community Homeschool Choir at noon.

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