Proposition 35
Should California make permanent an existing tax on health insurance companies and restrict how those funds can be used?
Since 2005, California has taxed managed-care organizations (MCOs) – otherwise known as health plans, like Anthem Blue Cross and Kaiser Permanente – to help shore up funding for Medi-Cal, the state’s insurance program for lower-income residents. The tax is set to expire in 2026. The proposition would make the MCO tax permanent and restrict California lawmakers from reallocating those funds. The tax is expected to generate $7 billion to -$8 billion annually.
Yes Argument
About 2 in 5 Californians rely on Medi-Cal for their health care, yet they often wait months to see a specialist; not all physicians accept Medi-Cal patients and they are reimbursed lower rates for services. Proposition 35 is intended to alleviate inequity without raising rates for consumers. The proposition will use the existing MCO tax to ensure permanent increased funding for Medi-Cal payments including hospitals and ambulance services. The proposal will prevent the state from redirecting revenue from this tax for non-health care purposes.
No Argument
While Gov. Gavin Newsom has not explicitly voiced opposition to Proposition 35, he has suggested to reporters that he wants flexibility on how to use the MCO tax revenue in light of California’s multibillion-dollar budget deficit. Several groups, including Western Center on Law and Poverty, California Pan Ethnic Health Network and private duty nurses, also worry about tying up billions of dollars permanently.
Key Supporters
In Support
- California Democratic Party
- California Hospital Association
- California Medical Association
- California Republican Party
- Emergency responder and community health centers
- Labor unions
- Planned Parenthood Affiliates of California
In Opposition
- None
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