Our View: Vote YES on Proposition 35

Two healthcare propositions appear on the November ballot. Proposition 34 would restrict the spending of revenue derived from a federal pharmaceutical discount. Proposition 35 would permanently impose a tax on some managed care health insurance providers and designate how the money can be spent. Vote NO on Proposition 34 and YES on Proposition 35.

Proposition 35

Proposition 35 would permanently impose a tax on managed care health insurance providers that arrange or provide services on a monthly payment basis. The measure also designates how the tax revenues can be used.

The tax has been imposed for years. Last summer, as it was set to once again sunset, Gov. Gavin Newsom and state lawmakers extended it to help Medi-Cal provide health services to an expanded group of Californians.

Healthcare providers have long complained that Medi-Cal reimbursement rates are inadequate. Expanding Medi-Cal coverage will only exacerbate the shortfall.

The state legislative analyst estimates renewal of the tax will generate between $6 billion and $9 billion annually through 2026.

In extending the tax, legislators dedicated some revenues to increase provider reimbursement rates. However, providers insist rate increase assurances are needed to prevent service shortages and long patient waits.

Proposition 35 would designate how the tax revenue can be spent and limit the ability of the Legislature and governor to divert the money for other uses. At least a vote of three-quarters of the members of the Assembly and state Senate would be needed to amend Proposition 35 in the future. Proposition 35 also would establish a committee to advise the Department of Health Care Services on use of the tax money.

Initially, Proposition 35 would allow the tax revenues to be used according to Newsom’s and the Legislature’s recently adopted state budget plan. The money would be used to somewhat increase providers’ reimbursement rates, and to train healthcare workers, among other things. Beginning in 2027, a formula will be implemented to designate funding for specific uses.

Proposition 35 enjoys overwhelming support. It is backed by the Coalition to Protect Access to Care, which includes a range of groups involved in healthcare. Among them are the California Hospital Association, the California Medical Association, Planned Parenthood Affiliates of California, labor unions, emergency responders and community health centers. Both the California Democratic Party and the California Republican Party support it.

Although there is no “official” opposition, Newsom indicated he opposes the measure because restricting the use of tax revenues “hamstrings” the ability of future legislators and governors to balance the state budget. Vote YES on Proposition 35.