Administration’s Proposition 35 spending plan leans toward base rate support and time‑limited supplements; stakeholders say plan diverts voter intent

Summary

DHCS presented a two‑year expenditure plan for Proposition 35 MCO tax revenue that mixes uniform supplemental payments, workforce and data investments, and support for managed‑care base rate growth; providers and hospital associations say the plan redirects funds voters expected would boost direct provider payments.

The subcommittee reviewed the administration’s proposed spending plan for Proposition 35 revenue, the managed‑care organization (MCO) tax voters approved in 2024. Proposition 35 made the MCO tax permanent and established domains for how the revenue can be spent. The administration released a two‑year plan for calendar years 2025 and 2026 as part of the May revision.

What the plan proposes

The administration’s plan totals about $2.27 billion per year in augmentations and includes a mix of uses across the domains required by the proposition. The Department of Health Care Services described the largest elements as: - Maintaining certain base rates for primary and general care, maternity care and non‑specialty mental health services at a floor (the plan references maintaining certain rates at no less than 87.5% of Medicare for some services) and using MCO tax revenue to support increased program costs tied to expanded benefits and workforce investments. - $1.6 billion across 2025 and…

Administration’s Proposition 35 spending plan leans toward base rate support and time‑limited supplements; stakeholders say plan diverts voter intent

Summary

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