Medi-Cal provides free health care to low-income people, including families, seniors, people with disabilities and children in foster care. Nearly a third of the state — 12.5 million people — are enrolled in Medi-Cal, which saw a dramatic increase under the Affordable Care Act.
But the state stands to lose $1 billion in federal funding after the Obama administration warned California that its tax system — currently California only taxes the plans that accept Medi-Cal patients — doesn’t comply with federal law. The federal government provides matching funds to California for Medi-Cal.
To prevent the $1 billion loss of matching federal funds, California must tax all health plans — not just those that accept Medi-Cal enrollees. Insurers that don’t participate in Medi-Cal are fighting the broader tax.
If all health care plans are forced to pay a new tax, it is likely the costs will be passed down to customers.
Lawmakers are weighing whether to tax all health plans at the same flat rate. ...