California Governor's Budget Will Revamp Health Plan Tax

The tax would replace California’s current tax on health plans that participate in Medi-Cal, which provides state-subsidized health care to the poor. The Obama administration has said the tax must be overhauled to include all health plans.

In an effort to break a political and policy logjam, Gov. Jerry Brown will unveil a state budget that revamps a controversial tax on health plans to avoid jeopardizing federal healthcare dollars. Sources who spoke on the condition that they not be identified prior to Brown's scheduled Thursday announcement said the reworked tax plan reflects intense behind-the-scenes negotiations with California's biggest insurance companies. (Myers and Mason, 1/6)

When Gov. Jerry Brown (D) unveils his fiscal year 2016-2017 budget proposal on Thursday, one of the big unknowns may be answered -- what he plans to do about the pending loss of the MCO tax and the $1.1 billion hole it leaves in the budget. The managed care organization tax is due to expire June 30, 2016. The state imposed a 3.9% tax on revenue generated by health plans through Medi-Cal managed care and received federal matching funds for the MCO tax. The state then reimbursed the MCOs. (Gorn, 1/6)

This is part of the Morning Briefing, a summary of health policy coverage from major news organizations. Sign up for an email subscription.

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