In danger of losing more than $1 billion from the federal Medicaid program for California’s Medi-Cal program, the Legislature and Gov. Edmund Brown Jr. agreed on a new package of financing to protect the federal funding, reduce state debt and provide more funds to aid residents with developmental disabilities.
The problem was the state tax did not apply to all managed-care organizations. The federal government told the state its funding would end in 2016-17 unless the tax structure was changed.
The current tax produced $1 billion annually, which California used to both increase payments to Medi-Cal providers and offset health-care costs that would otherwise be paid from the general fund.
The legislation, which was passed last week and Brown signed on March 1, complies with federal rules. It also yields $300 million to help Californians with developmental disabilities and $400 million in debt relief. This is achieved by “prefunding retiree health benefits and repaying transportation-related loans,” according to the governor’s press release.
Restructuring the tax required bipartisan support. State Sen. Jeff Stone voted against the bills, but Assemblyman Brian Jones was one of 16 Republican members of the Assembly to vote for them.
Stone was adamant that the state’s budget surpluses over the past few years could have provided the added funding for the developmentally disabled. In a statement on the “Flashreport” website, he said, “Any common-sense person understands that this tax will be passed on to our hard-working families. There is nothing in this tax legislation that ensures insurance companies will not increase your premiums.”
In other Sacramento action, the Assembly joined the Senate passing legislation to raise the legal age to smoke in California from 18 to 21. Hawaii has already adopted similar legislation, as has many cities throughout the country. New York City and San Francisco approved it only last week, and Santa Clara County in California.
The Institute of Medicine determined that raising the legal age to purchase cigarettes might result in a 12-percent decrease in teen smoking. The IOM concluded that the age group most impacted by raising the minimum legal age would be 15 to 17 year olds.