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May Revision proposes eliminating Prop 56 supplemental payments for family planning and dental; lawmakers, advocates say cuts would hollow out care
Summary
The LAO and administration described a May Revision plan to discontinue Prop 56 supplemental payments for family planning, women's health and dental and to repurpose the revenue stream toward other Medi‑Cal base costs; lawmakers and provider groups warned the move would forgo federal matching funds and could close clinics and reduce access
The subcommittee examined the administration's proposal to end supplemental payments funded in whole or in part by Proposition 56 and instead devote available revenue to other Medi‑Cal costs.
What was proposed and what the LAO said
Karina Hendren of the Legislative Analyst's Office explained that Proposition 56 (tobacco tax) historically funded supplemental provider payments, but revenues have declined as tobacco consumption has fallen. The May Revision would eliminate supplemental payments for dental services, family planning and women's health and use the Prop 56 revenue to support physician base‑rate increases and other Medi‑Cal needs.
Fiscal tradeoffs
The administration said eliminating the supplemental payments would reduce state general‑fund costs by about $156 million, but LAO staff and committee members emphasized that doing so also reduces associated federal matching funds. Witnesses and lawmakers cited a total‑fund reduction of roughly $470 million (state plus federal) tied to the proposed elimination, meaning the general‑fund savings come with loss of roughly $300+ million in federal matching revenue.
Access and provider impact concerns
Multiple committee members and scores of public commenters — including Planned Parenthood affiliates, county clinics, dental associations and family‑planning advocates — warned the cuts risk reduced hours, clinic closures and diminished access to cancer screening, STI testing and abortion‑related care. Advocates said some Planned Parenthood affiliates rely on supplemental payments and that losing the funding could force closures or reduce service lines.
Administration and DOF response
Department of Finance representatives and DHCS officials said the state faces a difficult fiscal picture and that Prop 56 revenues have declined substantially since 2017, making continued support of the supplemental payments increasingly reliant on general‑fund allocations. Finance emphasized the proposals are part of a larger package to close a multi‑billion‑dollar budget gap and said the administration is open to legislative alternatives.
Ending
Lawmakers signaled deep reluctance about the proposed Prop 56 eliminations and asked for additional analysis of programmatic effects, alternatives that preserve federal match where possible, and clearer information about baseline reimbursement levels for common reproductive‑health procedures.
