Editorials

A health care tax deal worthy of support

Gov. Jerry Brown and Democratic leaders earmarked $300 million for 300,000 people with developmental disabilities.
Gov. Jerry Brown and Democratic leaders earmarked $300 million for 300,000 people with developmental disabilities. The Associated Press

Although they aren’t exactly singing kumbaya, the California Chamber of Commerce, health insurance corporations and proponents of greater access to health care are backing a major tax deal devised by aides to Gov. Jerry Brown.

The Legislature appears set to approve the package as early as Thursday, and it should.

As part of the deal, Brown and Democratic leaders earmarked $300 million for 300,000 people with developmental disabilities. The goal is to attract backing from Republican lawmakers who have made aid to developmentally disabled people a priority. It’s unfortunate that vulnerable people become the subject of horse-trading, but that’s the way of the Capitol.

The $300 million would raise rates and wages for programs and caregivers serving those with autism, Down syndrome, cerebral palsy and similar conditions. The overdue raises would be the first in a decade.

Details of the tax package are complex. But it boils down to this: The state must restructure how it taxes managed care organizations in order to comply with federal law and continue collecting $1.35 billion a year in federal health care funds.

The state intends to eliminate the corporate and gross premium taxes it imposes on health plans such as Blue Shield and Anthem, at a collective cost of $371 million. That would be offset by a separate tax on managed care organizations.

Overall state tax collections would fall by about $100 million. But assuming Uncle Sam OKs the details, the state would remain eligible to receive the $1.35 billion in federal funds earmarked for Medi-Cal providers.

As it’s written, the tax swap would expire after three years. If it creates a windfall for insurance companies, lawmakers could restructure it, though that would be tough. Closing tax loopholes requires a two-thirds vote, and that’s never easy to obtain.

Anthem Blue Cross and Blue Shield of California, nursing home operators, physicians’ groups, the Chamber of Commerce and others support the deal. Kaiser is neutral, as is the anti-tax lobbying group the Howard Jarvis Taxpayers Association.

The breadth of the support reflects the Brown administration’s ability to find common ground. It’s also a reminder of the collective power of the Third House – the lobbyists and entities that hire them. Without their consent, Brown would be unable to win the necessary two-thirds support in the Legislature.

In this instance, leaders seem to have averted a crisis that would have hurt the 13 million Californians who rely on the Medi-Cal program. And people with developmental disabilities stand to receive better care. All things considered, it’s a harmonious result.

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