By Bo Tefu
Contributing Writer
SACRAMENTO — Dr. Mehmet Oz, administrator of the U.S. Centers for Medicare and Medicaid Services, will decide whether California can move forward with a $2 billion plan to help fund Medi-Cal, a decision that could affect health coverage for millions of low-income and disabled residents.
The proposal would raise California’s managed care tax on health insurance companies to replace federal Medicaid funding the state expects to lose after the Trump administration restricted a financing mechanism that states have long used to support their Medicaid programs. Federal approval is required before the plan can take effect.
State Republicans urged Oz in a letter June 6 to reject the proposal, arguing it would increase health insurance costs for Californians.
A nonpartisan state analysis estimated the tax could raise annual premiums for an individual by about $100. Supporters of the plan say the additional revenue is needed to help maintain Medi-Cal funding and avoid disruptions to health care coverage.
“The administration cannot prejudge an application until it’s thoroughly reviewed, but Gavin Newsom proudly pushing a plan that could jack up insurance premiums is on par for California Democrats,” White House spokesperson Kush Desai said in a statement.
Christian Beltran, deputy director of legislation for the California Department of Finance, said the proposal was designed to meet federal requirements.
“If the federal government denies the proposal,” Beltran said, Newsom’s administration “will review the rationale for the denial, assess options and determine next steps.”
Medi-Cal provides healthcare coverage to about 14 million Californians with low incomes or disabilities. Last fiscal year, the federal government spent about $120 billion on the program, while California contributed $45 billion from the state’s general fund.
For years, California has used a tax on health insurers to help finance Medi-Cal while receiving additional federal matching funds. The Trump administration ended that practice it described as a loophole, prompting state lawmakers to approve a revised managed care tax as part of the recently enacted state budget.
California’s current managed care tax expires at the end of the year. If federal regulators reject the proposal, state lawmakers could be forced to identify spending cuts or alternative revenue sources to help close the funding gap and continue funding Medi-Cal.
Bo Tefu writes for California Black Media.
