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Calif. Lawmakers Work To Save $1B in Federal Medi-Cal Funds

California lawmakers are working to come up with a plan to avoid the loss of $1 billion in federal matching funds for Medi-Cal, the state's Medicaid program, the San Francisco Chronicle reports.

Background

About 12.5 million Californians -- nearly one-third of the state population -- are enrolled in Medi-Cal (Gutierrez, San Francisco Chronicle, 8/30). California enrolled nearly three times as many consumers as expected in Medi-Cal under the Affordable Care Act's expansion of the program (California Healthline, 7/20).

However, the program stands to lose $1 billion in federal matching funding because the state's tax system -- which only taxes health plans that accept Medi-Cal patients -- is not in compliance with federal law, according to the Obama administration.

To prevent the loss of funding, the state must tax all health plans, a move that is being fought by insurers that don't participate in Medi-Cal.

The current tax on Medi-Cal plans expires in mid-2016.

Finding Funding

Anthony Wright, executive director of Health Access, said, "If you take a billion dollars out of the health care system it will be felt across the board," adding, "People recognize that it's not enough to just prevent the hole in the program, we need to invest in it. We've had grievous cuts to the program."

Ahead of the Legislature's special session on health care financing, Gov. Jerry Brown (D) encouraged lawmakers to find a source of long-term funding for the program other than the state's general fund.

So far, democrats have proposed new taxes -- including an expanded tax on insurers and an additional $2 tax on tobacco -- to provide funding for Medi-Cal. However, lawmakers are evaluating whether it would be better to tax all health plans equally or implement a tiered tax system, which Brown has recommended.

Meanwhile, Republicans in the state have remained opposed to raising taxes, according to the Chronicle.

Jennifer Kent -- director of the state Department of Health Care Services, which administers Medi-Cal -- said, "There is progress being made," but "[w]e aren't there yet."

Time Is Running Out

The regular session is scheduled to end Sept. 11, but the special session could continue past that date.

Chris Hoene, executive director of the California Budget & Policy Center, said, "It's advisable to get this moved this session, though."

In addition, state Sen. Mark Leno (D-San Francisco) noted that it could be more difficult to reach a plan as the 2016 election approaches. "The political dynamic only increases the closer we get to the election. If we don't do it now and we do it next year, the clock runs and you get less thoughtful public policy when you are up against that deadline" (San Francisco Chronicle, 8/30).

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