SACRAMENTO, Calif. (AP) – California lawmakers are expected to take action Monday on a tax package aimed at appeasing federal regulators and preventing a $1.1 billion funding hole in the state’s health insurance program for low-income Californians.
The state Senate and Assembly were expected to consider three bills that are the culmination of a special legislative session Gov. Jerry Brown called last year to adjust taxes on health insurance plans.
President Barack Obama’s administration has said it will discontinue certain contributions to Medi-Cal unless a tax on managed care organizations that take part in the program is extended to all health insurance companies.
To prevent providers from passing the price hike on to consumers, Brown agreed to eliminate other taxes paid by insurers.
The industry as a whole is expected to pay about $100 million less in taxes, even as the state increases its revenue thanks to the federal matching dollars. But each insurer will be affected differently depending on its corporate structure and client base. Most of the state’s insurers and their lobbying group, the California Association of Health Plans, supported the arrangement.
The tax package also includes hundreds of millions of dollars in incentives for reluctant lawmakers whose votes are needed to reach a two-thirds majority required to approve taxes. There is also more than $300 million for services for people with developmental disabilities, much of it to increase payments to care providers, who will get a 7.5 percent increase in wages and benefits.
The funding has been hailed as a lifeline to people with disabilities and their caregivers. It has also become a political touchstone this year as lawmakers from both parties argued it was one of only a few programs that have not seen funding increases following deep cuts made during the recession.
Brown, a Democrat, called the extraordinary session last year to work on health care financing and spent months negotiating a package that could win bipartisan support.
Enough Republicans agreed to the deal after insurance companies signaled that they would not raise premiums and Brown agreed to GOP spending demands.
The package also includes:
– $173 million to repay transportation loans.
– $240 million for future retiree health care costs.
– $123 million in relief from prior rate cuts for hospitals with skilled nursing facilities.
– $105 million for fire recovery and debris removal.
Copyright 2016 The Associated Press.