New California Bill Would Impose Flat Tax on Managed Care Plans

On Thursday, Assembly member Marc Levine (D-San Rafael) introduced a bill (ABX2-4) that would impose a flat tax on all California managed care plans in an effort to retain about $1 billion in federal matching funds, the Sacramento Bee’s “Capitol Alert” reports.


The bill was introduced during a special legislative session called by Gov. Jerry Brown (D). It comes after lawmakers failed to agree on a January proposal for an expanded tax that would have helped pay for Medi-Cal and home-care services, according to “Capitol Alert.” Medi-Cal is California’s Medicaid program.

Managed care organizations with Medi-Cal patients currently pay a tax of 3.9% of their total Medi-Cal revenue. According to “Capitol Alert,” the plans receive higher Medi-Cal payments because of federal matching funds, and therefore are able to break even.

The tax is set to expire in July 2016, at which point the federal government has said California must replace the limited tax with a comprehensive plan. The tax would cover 45 health plans that serve more than 21 million Californians.
Details of Bill

Levine’s bill would impose a $7.88 monthly flat tax for each plan enrollee, “Capitol Alert” reports. The tax would generate an estimated $1.9 billion — about $1.1 billion of which would continue to bring in federal matching funds.

The money would be used to:

Help pay for home care services;
Increase funding for programs that help individuals with developmental disabilities; and
Raise Medi-Cal provider reimbursement rates.

In a statement, Levine said, “This funding fix is broad-based, stable and solves the problem we were called here to address” (Miller, “Capitol Alert,” Sacramento Bee, 7/17).