For the California Medical Association (CMA), the 2024 legislative year started out with an ominous beginning. In 2023, CMA successfully negotiated the largest investment in Medi-Cal in history, including billions to increase reimbursement rates, through an expansion of the Managed Care Organization (MCO) Tax. Utilizing the MCO Tax as a funding source meant that California could finally fund the Medi-Cal program and create true health equity without raising taxes on individuals or cutting other crucial programs. While some reimbursement rates were raised under the MCO Tax in 2024, the bulk of the new funding was allocated to increase rates starting in 2025.
In January 2024, however, Governor Newsom’s initial 2024-25 budget proposal estimated a budget deficit of $22.5 billion, a number that would grow to $68 billion by the May budget revision. The governor’s revised budget proposal cut all of the proposed new Medi-Cal funding from the MCO Tax and swept the entirety of the tax, over $21 billion, into the state’s general fund coffers to cover normal operating expenses of the state.
This is why CMA led the charge to pass Proposition 35 this November. Voters overwhelmingly approved Prop 35, which will secure ongoing funding for Medi-Cal and dedicate these funds to protect and expand access to care for all Californians. And importantly, it prevents the state from redirecting these revenues for non-health care purposes.
The expansion of Medi-Cal over the last decade has resulted in some incredibly illuminating statistics that underpinned CMA’s determination for increased Medi-Cal investments:
- Half of all babies in California are born through Medi-Cal.
- The program now covers one-third of the state – almost 15 million people.
- It is the largest state Medicaid program in the country, both in overall size and percentage of the population.
- California lands near the bottom of Medicaid reimbursement rates nationally, ranking 40th, even though the cost of living and practicing in California is much higher than in many other states.
- California has not raised Medi-Cal rates across the board since 2000, and in fact has cut them twice in the past 24 years. While some physicians received increases thanks to CMA-sponsored Prop 56 (2016), those increases were limited to supplemental payments for a short list of codes for physician services, dental care and family planning services.