SACRAMENTO, California — California Governor Gavin Newsom last year agreed to a tax increase that would do two things: help balance a budget with a multi-billion dollar deficit, and pay doctors more money to treat patients covered by Medicaid – the taxpayer-funded health insurance program for low-income people, which now affects one in three people in the state.
A year later, California is relying on this tax more than ever. Newsom brought it up again in March to help cover another billion-dollar deficit this year. And he proposes raising it a third time to generate even more money as the deficit continues to grow.
But many of the doctors who should have seen an increase in their Medicaid rates haven’t gotten one yet. Now Newsom, citing the budget deficit, wants to withdraw from the crisis agreement he concluded with doctors last year which would have used about $5.4 billion of the tax to raise their rates starting in January 2025.
Newsom’s proposal was no surprise to California’s medical community, which has seen the state raise its rates before, only to backtrack during an economic downturn. But doctors have something this year that they haven’t had in the past: leverage. Last week, they qualified a measure to appear on the November ballot that would force the state to pay them more to treat Medicaid patients.
If approved by voters, doctors would get their pay raises regardless of what Newsom and the state Legislature decide.
“I’ve been around long enough to live up to the promises kept and the promises broken,” said Dustin Corcoran, CEO of the California Medical Association, which supports the ballot measure. “The ballot measure changes that calculation for every provider in the state.”
It’s the latest example of budgeting through the ballot box in California, where the initiative process gives frustrated interest groups a way to bypass the state Legislature. Voter-approved laws in California already require the state to sometimes return some of its budget surpluses to taxpayers and ensure that lawmakers spend about 40% of the budget on public education each year. Another also threatens to withhold lawmakers’ salaries if they don’t pass a budget by June 15 each year.
While these measures are popular with voters, lawmakers may have fewer options as they try to close a budget deficit or prepare for one in the future. According to Corcoran, this is one reason why Newsom administration officials have had conversations with doctors about withdrawing this latest measure from the ballot. The deadline for this is June 27.
The state Legislature, which is controlled by Democrats, has its own proposal that would delay rate increases for a year instead of eliminating them entirely. Democratic Assemblymember Akilah Weber, who is also a physician, said it would fulfill the state’s promise to raise rates while convincing more doctors to accept Medicaid, but LA Care Health CEO John Baackes Plan, said the Legislature’s proposal “is a nice gesture.” , but all it does is kick the can down the road.”
“Everyone is really despondent that the state will never reimburse Medicaid at the level where it should be,” he said.
The health care tax applies to managed care organizations that contract with the state to administer Medicaid benefits. For the most part, such groups welcome the tax because it brings in more money from the federal government.
California’s Medicaid population has grown in recent years as low-income people become eligible for the program regardless of their immigration status. Newsom has vowed to protect that expansion. It’s one reason he has proposed pulling out of the deal to pay doctors more to treat Medicaid patients. He says the money could be better spent ensuring California doesn’t have to cut benefits to balance the budget, said HD Palmer, spokesman for the California Department of Treasury.
But many Medicaid patients have trouble finding doctors who will treat them, mainly because they don’t get paid much for it. This is especially true if you need to see a specialist, where a prolonged delay can often turn a minor medical problem into a major one, says Dr. Ilan Shapiro, chief health correspondent and medical affairs officer for AltaMed Health in Los Angeles.
“It takes a while for someone to actually see the patients, sometimes months,” he said.
Corcoran says the ballot measure, if approved, would convince more doctors to accept Medicaid patients because they would know the rate increases would stick this time.
“The first question shouldn’t be, ‘Do you have commercial insurance or are you on Medicaid?’ if you’re trying to make an appointment,” he said.