Gov. Gavin Newsom last week released his proposed state budget for fiscal year 2020-2021, redoubling his commitment to making health care a top priority for his administration.

"Gov. Newsom’s budget once again emphasizes health care affordability and accessibility and initiatives that will improve public health, including important new policies to address homelessness,” said California Medical Association (CMA) President Peter N. Bretan, M.D. “We are grateful that the governor recognizes the importance of reducing administrative burdens and improving data interoperability to make health care more affordable for California patients.”

"CMA strongly supports the governor’s efforts to close the vaping loophole to ensure e-cigarettes are taxed at the same rate as traditional cigarettes, as California voters intended when they passed Proposition 56. We will work with the administration to ensure this new revenue is spent in accordance with Prop. 56, and is used to build upon the progress we’ve made in fortifying the state’s health care workforce and increasing access to care for low-income patients."

The proposed budget allocates $750 million for the creation of a new California Access to Housing and Services Fund. This fund will pay rent for individuals facing homelessness, support regions to bring on more dwelling units and help stabilize board and care facilities/homes. Unlike other state efforts, this money will go directly to service providers.

The governor has also proposed $695 million (growing to $1.4 billion) to transform Medi-Cal with the Medi-Cal Healthier California for All initiative. It is designed to move Medi-Cal to a more consistent and seamless system by reducing complexity and increasing flexibility, identifying and managing member risk and needs through enhanced care, and addressing social determinants of health. (Click here to read more about this proposal specifically and CMA’s involvement in its development.)

Gov. Newsom is also proposing a tax increase on E-cigarette products, which CMA strongly supports. The proposal would increase taxes on vaping cartridges based on nicotine levels, raising current taxes by $2 for each 40 milligrams of nicotine in the product. CMA would like to see this money directed to health care work force development programs like the physician loan repayment program and graduate medical education funding already established under the Proposition 56 tobacco tax. The administration is also supporting a statewide ban on all flavored nicotine products as of January 1, 2021.

Graduate medical education would see an increase of $2.3 million in money from the General Fund, $1.6 million of which would be ongoing, to offset declining Proposition 56 revenue.

The budget proposal also includes the formation of a new Office of Health Care Affordability, which would be charged with increasing price and quality transparency, developing specific strategies and cost targets for the different sectors of the health care industry, and establishing financial consequences for entities that fail to meet these targets. The ultimate goal is for the savings to return to consumers who are directly impacted by increasing health care costs. The office will also create strategies to address hospital cost trends by region, with a particular focus on cost increases driven by hospital consolidation. To improve health outcomes, the office will also work to establish standards to advance evidence-based and value-based payments to physicians, physician groups, and hospitals, as well as to reduce administrative waste. 

Building on the carve out of pharmacy services from Medi-Cal last year, this budget also proposes to create a state-run generic drug label and make generic prescription drugs available for sale to all Californians.

Gov. Newsom’s proposed budget must still go through the legislative review process. CMA will continue to be active in conversations that effect the budget and ensure that physician voices and concerns are a central component in shaping the budget. We will also collaborate with DHCS to support and mold the Medi-Cal Healthier California for All reform initiative to ensure patients get the right care when they need it and physicians have the tools necessary to serve Medi-Cal beneficiaries.