Proposition 52: Medi-Cal Hospital Fee Program.

Share:

Passed
The Question: 

Should (a) a fee charged on private hospitals to facilitate Medi-Cal funding be made permanent; (b) the Legislature’s ability to change it be limited; and (c) the State Constitution be amended to exclude this revenue from California’s education funding calculations?

The Situation: 

The Medi-Cal program provides basic health care benefits to eligible low-income Californians (currently 13 million people). Generally, the state and federal governments share the costs of the program equally, but for some costs the federal government pays more than the state.

Since 2009, the state has charged most private hospitals a fee (currently $4.6 billion) which funds the state’s share of increased Medi-Cal benefits and generates state General Fund savings. Between state and federal funds, hospitals realize a $3.5 billion net benefit in payment for services rendered.

Since it began, the Legislature has extended the fee four times, and could potentially extend it again beyond its current ending date of January 1, 2018. Any extension of the fee by the Legislature or by Prop. 52 must also be approved by the federal government.

The Proposal: 

Prop. 52 would make the fee permanent. The Legislature could end the fee by a two-thirds vote in each house, an increase from the current majority requirement. Changes to the fee generally would require future voter approval in a statewide election. However, the Legislature—with a two-thirds vote—could make certain specific changes without voter approval, such as to obtain federal approval of the fee.

The State Constitution requires an annual minimum funding level for K-12 education and community colleges, based on state General Fund revenue. As under current practice, Prop. 52 would exclude the fee from these calculations (requiring an amendment to the State Constitution).

Fiscal Effect: 

The fiscal effect of this measure is uncertain primarily because it is not known whether the Legislature would have again extended the fee. 

  • The fiscal effect of this measure is uncertain primarily because it is not known whether the Legislature would have again extended the fee.
  • If the fee would have been extended, Prop. 52 would likely have minor fiscal effect on the state and local governments.Without Legislative extension of the fee, Prop. 52 would have a major fiscal effect on state and local governments. The fiscal effects under this scenario would likely be similar to the Medi-Cal revenue and state benefit experienced through the fee in past years.

These impacts, however, could be affected by new federal requirements impacting the fee, which are not known at this time. 

 

What a YES or NO Vote Means
A YES Vote Means: 

An existing charge imposed on most private hospitals that is scheduled to end on January 1, 2018 under current law would be extended permanently. It would be harder for the Legislature to make changes to it. Revenue raised would be used to create savings, increase payments for hospital services to low-income Californians, and provide grants to public hospitals.

A NO Vote Means: 

An existing charge imposed on most private hospitals would end on January 1, 2018 unless additional action by the Legislature extended it.

Support & Opposition
Supporters Say: 
  • This proposition ensures that the state will continue to receive more than $3 billion a year in federal matching funds for Medi-Cal that would otherwise not be available.                                 
  • Prop. 52 prohibits the Legislature from using the fee revenue for any other purpose.
Opponents Say: 
  • Prop. 52 gives $3 billion a year in federal health care benefits to hospitals with no oversight or accountability, and no guarantee it will be spent on health care.                                 
  • Prop. 52 rigs the system in favor of corporations and hurts low-income people.