A special legislative session committee in the California Legislature approved a far-reaching bill on Thursday that imposes a $2-a-pack tax on cigarettes and a similar tax on electronic cigarettes, institutes a revised version of the current tax on managed care organizations, funds programs to curb tobacco use, pays for a 7% restoration in In-Home Supportive Services (IHSS) hours, provides money to bolster services for the developmentally disabled and boosts pay rates for providers of those services.

The Senate Committee on Public Health and Developmental Services on Thursday met for two hours to go over all the provisions of the bill, and then voted 9-4 to pass SBX2-14 by Sen. Ed Hernandez (D-West Covina).

State officials hope the new MCO tax will generate $1.1 billion a year. In the first proposal, managed care organizations that don’t participate in Medi-Cal were asked to contribute about $680 million a year. The revised plan calls for those plans to contribute $320 million, which will be softened by other tax breaks to a total outlay of about $118 million. If the non Medi-Cal contribution remains at $320 million, managed care Medi-Cal plans would be expected to contribute about $690 million if the state is to reach its $1.1 billion goal.

“Some plans still have difficulties with what we have proposed but this is about as good a proposal as we can get,” said Jennifer Kent, director of the Department of Health Care Services.  

Hernandez said it’s vital to make sure the $1.1 billion hole left by pending loss of the MCO tax money must be replaced now, even though it isn’t due to expire till next year.

“We have a role to fulfill in the special session called by the governor — to make sure we have an MCO tax and to look at additional revenues for Medi-Cal reimbursement rates and the developmentally disabled and IHSS,” Hernandez said.

“What we wanted to do is put them together in a package,” he said. “The reason why I put the developmental disabled services into the MCO tax bill is to make a statement that that is absolutely my highest priority. That needs to get funded … That’s why it’s all in one particular bill.”