The powerful health care interests who put Proposition 35 on the ballot last November had a simple pitch for the complex initiative: a tax no voter paid would provide a long-awaited pay bump to doctors and hospitals who serve the state’s lowest-income residents.
Californians overwhelmingly accepted the offer, giving Prop 35 more than two-thirds of the vote, but are no closer to seeing the changes they were promised. Government has yet to direct a dollar for the initiative’s intended purposes or even develop a framework for doing so. There’s no telling when state regulators will figure it out, and the most optimistic predictions say it will be at least a year before doctors see those raises.
“The MCO tax was widely popular, I think, across California, and I certainly supported it, with the hope that we would hurry up,” Dawn Addis, chair of the Assembly’s health budget subcommittee, said at a recent hearing. “How do we light a fire under this, to get some urgency?”
Prop 35 was an unusually detailed piece of ballot policy: 18 pages of text describing how $4.7 billion in annual revenue from an obscure tax on managed-care organizations would be protected from the churn of Sacramento politics. For years, the governor and Legislature had tapped the funds whenever they needed to balance the budget. Health care industry bigwigs like the California Medical Association and Planned Parenthood wanted to lock the funds away so they could be used for increasing doctor and clinic payments.
While Prop 35 laid out broad spending priorities on designated beneficiaries like abortion providers and mental-health specialists, it left the nitty-gritty details of exactly how that would happen up to an advisory committee. So while the measure mandated that $90 million should go to reproductive health care or $691 million to primary care, it’s up to a 10-person panel to develop a set of recommendations to the Department of Health Care Services for the precise way the money will actually be awarded.
The makeup of the committee is almost painfully specific, the product of an initiative drafted by a half-dozen interest groups. The governor will appoint people to represent doctors, hospitals, ambulances, reproductive health care, insurance plans and clinics. The Assembly will find someone to represent dentists and insurers, and the Senate’s appointments will speak for labor groups and air ambulances.
Nearly five months after Prop 35 became law, one of those posts hasn’t been filled yet — the governor still needs to select a representative for ground ambulance providers — and even once all slots are chosen, the committee can’t meet without 10-day notice to the public. (Gov. Gavin Newsom could convene the committee, which needs only a six-member quorum, but has not done so. A Newsom spokesperson said an announcement of one is “forthcoming.”)
“We are hopeful that we will start to see some movement from the state in implementing Prop 35 which 68 percent of voters supported,” Erin Mellon, a spokesperson for the coalition that passed the initiative, told POLITICO in a statement. “With federal cuts looming, it is more important than ever that we fight for Medicaid and on behalf of the 15 million Californians who depend on it.”
In the meantime, the money raised by the managed care organization tax is desperately needed to balance the Medi-Cal budget, which Newsom’s administration said this month is running billions of dollars over. The administration attributes $1.5 billion of this year’s shortfall and $2.7 billion of next year’s cost increases to Prop 35’s passage.
In some ways, the proposition is doing what it was always supposed to do: seal off the money so it couldn’t be put toward the very budget gap Newsom is facing right now.
But for now that money isn’t going anywhere, all because the coalition that passed Prop 35 locked it away tightly with a process that requires an ambivalent governor to help get it out. That adds up to a useful case study in the perils of budgeting via ballot box. To have enough flexibility in spending and buy-in from the industry, the details have to be determined beyond the ballot through a stakeholder committee. And creating the bureaucracy to do that is taking longer than the normal budget process ever would.