California Facing $1.1B Shortfall in Medi-Cal Funding

California Facing $1.1B Shortfall in Medi-Cal Funding

 

The proposed tax on health plans was the centerpiece of a special session on health care, called in May by Gov. Jerry Brown. To cover Medi-Cal (California’s Medicaid program) payments, the state currently imposes a tax on managed care plans. However, the federal government has said that the current tax - which is currently levied only on Medi-Cal managed care plans - would no longer be acceptable and must be broadened to all managed care plans whether or not they participate in Medi-Cal.  The current tax is set to expire in March of 2016.

A broader tax, however, did not sit well with the Managed Care Organizations (MCOs) that don't participate in Medi-Cal, and it lacked support in the Legislature. The plan would have required a two-thirds majority, meaning that some Republicans would have had to join the Democratic majority.

It is not clear how the state can now avoid losing $1.1 billion in federal matching funds for Medi-Cal. But because the special session on healthcare has no end date, lawmakers still have time to find a solution after they return from recess on January 4, 2016