After months of negotiations, healthcare field lawmakers and industry rivals in California have reached a $19 billion healthcare deal on how to spend the budget for tax on insurance plans and federal funds, Politico News reported.
$19 Billion California Health Care Deal
This landmark agreement marks a significant investment in the state’s healthcare system, benefiting nearly 16 million Californians.
The deal includes a tax on healthcare plans, which will generate revenue to improve the state’s publicly subsidized healthcare system. This is a departure from previous practices where the tax was used to balance the budget during economic downturns.
With the addition of federal funds, the state will have over $35 billion to invest, making it the largest-ever investment in Medi-Cal, California’s Medicaid system.
To achieve this deal, various stakeholders such as doctors, health plans, hospitals, organized labor, emergency services providers, safety net clinics, and Planned Parenthood came together to support a single proposal. Despite their differing interests, they recognized the need for a substantial investment to make a meaningful impact on the Medi-Cal program, which serves a population comparable to that of some states.
The tax on health plans will be based on the number of people they cover, leveraging additional federal funding without passing on significant costs to consumers. Unlike previous years, where the revenue from the tax was directed to the state’s general fund, this agreement ensures that the funds remain within the healthcare system.
The coalition advocated for increased reimbursement rates to incentivize physicians to treat Medi-Cal patients, addressing the shortage of doctors and reducing the burden on emergency rooms.
California Health Care Deal
While the bulk of the spending will begin in 2025, some initiatives will start next year. The deal aligns with Governor Gavin Newsom‘s proposed plan to balance the budget and increase reimbursement rates for primary care, OBGYN, and select mental health care services.
It also includes funding to create new residency slots in underserved areas and allocate resources to struggling hospitals, workforce shortages, and behavioral health beds.
This healthcare deal represents a victory for California and sets a precedent for prioritizing healthcare investments in the state. By collaborating across various sectors and focusing on holistic patient care, California aims to address historical inequities and improve access to quality healthcare services.