Proposition 35 threatens California's healthcare funding and access

During a recent government meeting, significant concerns were raised regarding Proposition 35 and its potential impact on California's Medi-Cal program and broader health care access for vulnerable populations. Stakeholders emphasized that the proposition could exacerbate existing barriers to care by jeopardizing approximately $1 billion in federal funding and limiting the legislature's flexibility to effectively manage Medi-Cal.

Critics of Proposition 35 highlighted that it caps the commercial tax rate, which could drastically reduce future revenue generation for the state. Currently, California imposes a tax rate on Medi-Cal plans that is over 100 times higher than that for non-medical plans, a strategy that has been beneficial for both the state and federal government. However, federal officials have indicated that California's approach may not align with the intended redistributive nature of the law, which aims to shift funds from the commercial insurance market to support Medicaid.

The meeting also underscored the risks Proposition 35 poses to medical eligibility and benefits, as it would lock a significant portion of tax revenue into provider rate increases, potentially undermining funding for other essential safety net programs. Advocates argued that health equity extends beyond access to medical care, stressing the need for state investment in housing, income support, and food assistance to ensure overall health for Medi-Cal members.

Furthermore, the allocation of funds under Proposition 35 was criticized as arbitrary, lacking alignment with areas of greatest need. Stakeholders warned that if the proposition had been in effect during previous tax periods, the state would have faced a severe reduction in available budget resources, highlighting the potential long-term consequences of the initiative on California's health care landscape.