On January 10, 2023, Governor Gavin Newsom unveiled his $297 billion budget proposal for the 2023-24 fiscal year, which includes a plan to tax managed care organizations (MCO). The MCO tax, which allows the state to receive federal matching funds, had been in place for more than a decade and expired late last year.  

The California Medical Association (CMA) is urging the Governor’s administration to dedicate MCO tax revenues to raise Medi-Cal rates in order to provide access to care to the millions of Californians with Medical-Cal coverage. Through previous state budgets, universal health care coverage is now a reality in California, a goal for which CMA has long advocated. However, the state must also address the unequal access to care that currently exists. To do that, it must provide timely access to care, as that is the metric by which any system will be judged. 

California has not made an across-the-board increase to Medi-Cal rates since the early 1990s. It is clear that the state needs a new, ongoing revenue stream to improve access for Medi-Cal beneficiaries in a sustainable manner. 

"The MCO tax must be used to improve the Medi-Cal program. Health care dollars must stay in health care. We look forward to working with the Governor’s administration to build upon its landmark gains in expanding health care coverage by becoming the first state to achieve universal health care,” says CMA President Donaldo Hernandez, M.D. “As the fourth largest economy in the world, California has the chance to truly ensure all California patients get the care they need when they need it by investing in the Medi-Cal system.”

CMA will vigorously advocate for expansion of the MCO tax with the administration and legislature and to ensure that health care money stays in health care.