CMS Questions California Tax on Insurers To Fund Kids’ Coverage
A California bill (AB 1422) designed to keep nearly 700,000 children enrolled in Healthy Families hit a roadblock recently when federal officials said the plan failed to meet certain regulatory requirements, the Los Angeles Times' "L.A. Now" reports.
Healthy Families is California's Children's Health Insurance Program (Bailey, "L.A. Now," Los Angeles Times, 12/14).
In September, lawmakers passed AB 1422 to help Healthy Families offset cuts from a July budget revision package.
Assembly Speaker Karen Bass (D-Los Angeles) negotiated the agreement, which extended a 2.35% tax on insurers that administer benefits for Medi-Cal, California's Medicaid program. Officials planned to use the new tax to draw down nearly $100 million in federal matching funds.
The bill also increased monthly premiums and copayments for Healthy Families beneficiaries.
Together with an $81.4 million donation from the First 5 California Children and Families Commission, AB 1422 would have generated enough revenue to let Healthy Families continue providing health insurance for about 670,000 children scheduled to lose coverage beginning Oct. 1 of this year (California Healthline, 9/23).
However, CMS recently sent a letter informing California officials that the bill's proposed levy on Medi-Cal insurers does not meet federal regulations for such taxes.Cindy Mann, CMS director, said officials intend to work with California lawmakers to clarify the policy and resolve any outstanding issues ("L.A. Now," Los Angeles Times, 12/14). This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.