[{"_1":2,"_112":-5,"_113":-5},"loaderData",{"_3":4,"_26":27},"root",{"_5":6,"_17":10,"_18":19,"_20":21,"_22":10,"_23":-5,"_24":-5,"_25":10},"user",{"_7":8,"_9":10,"_11":10,"_12":-5,"_13":-5,"_14":15,"_16":-5},"roles",[],"isAuthenticated",false,"isPremium","planName","subscriptionStatus","featureFlags",{},"insightsBudget","isDevelopmentHost","userPreferences",{},"recaptchaSiteKey","6LcvOJcUAAAAAHsB-gPGfGktcRlKpH7OTIU_dMTD","isImpersonating","impersonation","affiliateStatus","isFreedomPortal","routes/v2/article/layout",{"_28":29,"_30":31},"notFound",true,"relatedArticles",[32,76,88,100],{"_33":34,"_35":36,"_37":38,"_39":40,"_41":42,"_43":44,"_45":46,"_47":48,"_49":50,"_51":52,"_53":54,"_55":56,"_57":58,"_59":60,"_61":62,"_63":64,"_65":66,"_67":68,"_69":70,"_71":72,"_73":74,"_75":74},"mediaId",6538001,"mediaKeyId","3408361-767bfbd3cf56ef96e128b48ec401b21b","parentId",3408361,"title","Administration’s Proposition 35 spending plan leans toward base rate support and time‑limited supplements; stakeholders say plan diverts voter intent","audioSeconds",356,"startMs",2482000,"endMs",2838000,"viewUrl","/Search/View?dp=1&key=3408361-767bfbd3cf56ef96e128b48ec401b21b&start=2482&end=2838","thumbnailUrl","https://assets.pipeline.soar.com/3408361-767bfbd3cf56ef96e128b48ec401b21b/thumbnail_2482000.jpg","articleUrl","/articles/6538001/California/Administrations-Proposition-35-spending-plan-leans-toward-base-rate-support-and-timelimited-supplements-stakeholders-say-plan-diverts-voter-intent","mediaUrl","https://secure.pipeline.soar.com/6538001-ad561cab31af15d52d59626588569761/orig.mp4?Expires=1775043782&Signature=nsaYXIx0tBDbOskbgeoHu6OAOtxA4zGflCvoTYpaArJVeY0e4-JtWOMEYYQMkBBfkiDqxpsGkyIEGHElQx-JzdN-JPRYys-JarImD4C5znCIrg43dxsvB-FoF5r3-wLl5HarBTlVyIaKChR7b2KwtbpeGgLgt-SnoV3lkwGMJ~zMZxgHcKRE~14JbQfHahmVhekh3LCTpGvr55z1p~yc5IpjICvBqzb~yMZgk6QwVyc8LPq5TnlqZsD5Zh9j0A8OuKjBD2oSpHG-qOHbSyp7b1F4vLxLjo8mimCC7DmK8JfFToG4DPBNyeSYm2gb9QvPSfnQXeEbbu-VMZZjCFqJ6w__&Key-Pair-Id=KUT5TJCACFTXG","author","California State Assembly","date","2025-05-19T00:00:00Z","article","The subcommittee reviewed the administration’s proposed spending plan for Proposition 35 revenue, the managed‑care organization (MCO) tax voters approved in 2024. Proposition 35 made the MCO tax permanent and established domains for how the revenue can be spent. The administration released a two‑year plan for calendar years 2025 and 2026 as part of the May revision.

What the plan proposes

The administration’s plan totals about $2.27 billion per year in augmentations and includes a mix of uses across the domains required by the proposition. The Department of Health Care Services described the largest elements as:
- Maintaining certain base rates for primary and general care, maternity care and non‑specialty mental health services at a floor (the plan references maintaining certain rates at no less than 87.5% of Medicare for some services) and using MCO tax revenue to support increased program costs tied to expanded benefits and workforce investments.
- $1.6 billion across 2025 and 2026 proposed to support increases in managed‑care base rates relative to calendar year 2024 for primary care, specialty care, emergency medical transportation and outpatient hospital procedures, described as responding to higher per‑service costs, utilization and acuity.
- Targeted supplemental payments to professional services (primary, specialty and emergency physicians) and to hospitals; investments in behavioral health data and throughput, flexible housing subsidy pools, graduate medical education, midwifery education and other workforce items.

Administration and LAO perspectives

DHCS said it structured the plan to stay within Proposition 35’s domains and to address documented increases in managed‑care purchasing costs and workforce needs. The Legislative Analyst’s Office (LAO) noted the plan is technically feasible under the short‑term provisions in Proposition 35 but highlighted a key trade‑off: using MCO tax revenue to cover increases in base managed‑care costs functions as a budget solution and reduces general‑fund pressure now, but it also can be seen as diverting funds voters were told would support provider rate increases and workforce investments.

Stakeholder reaction

A broad Coalition of hospitals, provider groups, family‑planning advocates and district hospitals urged the legislature to reject the administration’s proposed redirection of much of the Prop 35 pool to cover baseline managed‑care cost growth. Stakeholders noted the plan’s timing — a two‑year plan that ends when the law requires a different allocation framework in 2027 — and said much of the announced spending that appears to be for provider increases looks more like backfill of costs the general fund otherwise would have borne.

Committee questions and next steps

Members asked DHCS about how the plan will be implemented to ensure uniform dollar increases reach providers and how the department will communicate with managed‑care plans and providers. DHCS said it intends a mix of targeted supplemental and uniform dollar increases (the latter resembling the prior Prop 56 approach) in 2026 and that some targeted components already are reflected in 2025 rate certifications.

The committee requested more detail on the stakeholder advisory committee process and on safeguards to ensure uniform dollar increases reach safety‑net providers in low‑provider areas. Several members expressed concern that redirecting Prop 35 funds to cover base managed‑care growth may not deliver the expanded provider capacity voters expected and asked for more transparency and enforcement safeguards in the implementation plan.

Ending

The administration and LAO advised the legislature that the short‑term structure of Proposition 35 offers some flexibility in 2025–26 but that the law’s rules change in 2027. Members and stakeholders asked for additional detail on code lists, provider types and encounter codes for uniform dollar payments, and on contingency planning if federal rules change the MCO tax’s viability.","mediaType","Video","parentTitle","Assembly Budget Subcommittee No. 1 on Health (1)","oneSentenceSummary","DHCS presented a two‑year expenditure plan for Proposition 35 MCO tax revenue that mixes uniform supplemental payments, workforce and data investments, and support for managed‑care base rate growth; providers and hospital associations say the plan redirects funds voters expected would boost direct provider payments.","taxTitle","California State Assembly, House, Legislative, California","taxId",17099,"location","California","headline","","shortSummary",{"_33":77,"_35":36,"_37":38,"_39":78,"_41":79,"_43":80,"_45":81,"_47":82,"_49":83,"_51":84,"_53":85,"_55":56,"_57":58,"_59":86,"_61":62,"_63":64,"_65":87,"_67":68,"_69":70,"_71":72,"_73":74,"_75":74},6538007,"May revision would eliminate most Prop 56 supplemental payments for family planning and women’s health; LAO warns of lost federal match",88,2355000,2443000,"/Search/View?dp=1&key=3408361-767bfbd3cf56ef96e128b48ec401b21b&start=2355&end=2443","https://assets.pipeline.soar.com/3408361-767bfbd3cf56ef96e128b48ec401b21b/thumbnail_2355000.jpg","/articles/6538007/California/May-revision-would-eliminate-most-Prop-56-supplemental-payments-for-family-planning-and-womens-health-LAO-warns-of-lost-federal-match","https://secure.pipeline.soar.com/6538007-261798f8604bdc0d80f8999483dc97ab/orig.mp4?Expires=1775043782&Signature=eJrJaeK7uI1w7Bg84aaT~mKxkdYIdC-dyVk473m9RPrx9M0N7V13AcK41eNNMuQtYEHF9cfaa1C~-1M733vkFF8orwmNGe6UekSlpdpQ8z0zZK3CKzEzztYTwnjbJ3BRU~2hV1qRAQH4PJMPwUsyYViJETqRtikPtUUaMp9cT6RS1~Q8rc8zVHtzwgO0qVoP4ngQwiFNSJuOkbVfhVxkQ4K9BHvqQvZtR058awiVnY6CcPAxQ78~04GZ4d2kWk2SCZrhXVQfwIXNpxwQkvQxH1f~ZLcUu8qtFLnVCcs5hZ7r0tKLltMHeePBOzMPYO5Sk0Ls7qFkPGuKC4h4u2xMxQ__&Key-Pair-Id=KUT5TJCACFTXG","The Assembly's health budget subcommittee reviewed the governor’s proposal to change how Proposition 56 revenue is used. Proposition 56 revenue (a tobacco tax measure) historically funded supplemental payments to providers for dental, family planning and other health services. The administration proposes stopping supplemental payments for dental and family planning and redirecting Prop 56 funds to support base physician rate increases and general‑fund savings.

Why it matters

Proposition 56 revenues have declined over time as tobacco use decreased; the administration told the committee that continuing to use state general fund to backfill Prop 56 supplemental payments is not sustainable. The Legislative Analyst’s Office (LAO) warned eliminating family planning supplemental payments would cause the state to forego a higher federal match — family planning services draw a roughly 90% federal match for covered services — and estimated that cutting about $151 million general fund in family planning supplementals would reduce federal funds by roughly $300 million in 2025–26, meaning total fund reductions of roughly $470 million.

Administration rationale and details

The Department of Finance and DHCS representatives said Prop 56 receipts have fallen (DOF noted a decline from roughly $1.5 billion to about $800 million in recent years) and that the state has been using general fund to support supplemental payments historically covered by Prop 56. The May revision proposal would:
- Eliminate supplemental payments for dental services, family planning and women’s health that were funded through Prop 56 and instead use available Prop 56 funds for base physician rate increases and other uses in the administration’s Prop 35 plan.
- The administration estimated general‑fund savings of roughly $156 million from the change; LAO estimated the combined total‑fund reduction (state + federal) would be larger because the reduction eliminates federal match dollars currently drawn.

LAO and member concerns

LAO staff urged the legislature to weigh maximizing federal dollars when considering budget solutions and to request programmatic impact assessments. Committee members and reproductive‑health advocates warned that a reduction in state funding for family planning and women’s health would undercut clinics that rely on the supplemental payments and could force clinic closures. Several members said cutting Prop 56‑funded supplemental payments to reproductive and family planning providers would undermine the state’s efforts to protect reproductive access.

Selected figures and testimony

- LAO: Prop 56 revenues have fallen significantly from prior years; supplemental payments previously funded by Prop 56 have been partially backfilled with state general fund.
- DOF: The administration estimated the proposed change will free roughly $156 million general fund in the budget year but will eliminate approximately $310 million in federal matching funds and other total funds associated with family planning funding in 2025–26 (combined total reduction ~ $466–470 million).

Ending

The LAO recommended the legislature be strategic about maximizing federal dollars and assessing access impacts before approving sweeping changes to Prop 56 spending. Reproductive‑health providers, hospitals and hospital associations urged the subcommittee to preserve family planning supplemental payments, warning programmatic and access impacts could be significant.","The governor’s May revision would eliminate supplemental payments funded through Proposition 56 for family planning, women’s health and dental and redirect those Prop 56 dollars, the administration says, to physician base rate increases and budget relief.",{"_33":89,"_35":36,"_37":38,"_39":90,"_41":91,"_43":92,"_45":93,"_47":94,"_49":95,"_51":96,"_53":97,"_55":56,"_57":58,"_59":98,"_61":62,"_63":64,"_65":99,"_67":68,"_69":70,"_71":72,"_73":74,"_75":74},6538012,"May revision would reinstate Medi‑Cal asset limits and scale back long‑term supports; seniors and caregivers raise alarm",444,1360000,1804000,"/Search/View?dp=1&key=3408361-767bfbd3cf56ef96e128b48ec401b21b&start=1360&end=1804","https://assets.pipeline.soar.com/3408361-767bfbd3cf56ef96e128b48ec401b21b/thumbnail_1360000.jpg","/articles/6538012/California/May-revision-would-reinstate-MediCal-asset-limits-and-scale-back-longterm-supports-seniors-and-caregivers-raise-alarm","https://secure.pipeline.soar.com/6538012-65b898768aef93b991b8df42b9b4d689/orig.mp4?Expires=1775043782&Signature=oKpFEsq9AhgQ57VfkbCa2BGUl5KR-BZn6RiQjxz1D6CIgiTWA4R72Sj6IFZoaftzwcGDWdSipNL8-~H-XJWb4SN2Iha7C~TATUD~hTgikcClhKsel0xLJMkpHgt0Lr-mjQlydtKdGmdS1aP82qhCpS8b3q2Si-9b1e-7xXuxOhslt5lJdTEKDtVmnwt0kFW9XKv8oOQXvjqRYyQb~4LAm4i6BO-C9rCj~cS2sYmUdfOyS4vay080kzJP9ymXxaJ9Gg0XaNs3ezNPkXuCyZo5q8H4EgfoaMUv0CZsFE4HijY0EkyaGYV4BWE1SeX3Q6mbXDsOhlGuukSZARiwfWIkSg__&Key-Pair-Id=KUT5TJCACFTXG","The California Assembly Budget Subcommittee No. 1 on Health received testimony May 20 on the administration’s proposal to reinstate Medi‑Cal asset limits for eligibility, roll back some long‑term services and suspend workforce and quality incentive payments to skilled nursing facilities.

Lede and context

DHCS told the committee it proposes returning to the asset limits that were in place prior to recent eliminations: $2,000 for a single household and $3,000 for a couple. The administration estimated roughly $94 million in general‑fund savings in the budget year from reinstating the test. Committee members and advocates warned the change would force households to spend down assets, risk loss of In‑Home Supportive Services (IHSS) benefits, and increase homelessness and institutionalization risk.

Why it matters

The asset limit change targets senior and disability eligibility for Medi‑Cal and IHSS. Lawmakers and dozens of advocates said the policy would reduce access to home‑ and community‑based services that many stakeholders argue are less costly and better for beneficiaries than institutional care.

Proposals and fiscal outline

DHCS described the asset test reinstatement as one of several cost‑containment options. In addition to the asset test restoration, the department proposed:
- Repeal of the skilled nursing facility workforce and quality incentive program (WQIP) — established in 2022 — saving about $130 million general fund in the May revision; the administration also proposed suspending a law (SB 1511/2024) that requires alternative power for skilled nursing facilities during outages until funds are appropriated to pay for compliance.
- Changes to Program of All‑Inclusive Care for the Elderly (PACE) capitation approach, moving rates toward the midpoint of actuarial ranges to save approximately $13 million general fund in 2025–26 and $30 million ongoing.
- A proposal to allow utilization‑management controls for outpatient hospice services; DHCS estimated $25 million general‑fund savings in the budget year and higher ongoing savings.

Questions and stakeholder concerns

Several members recounted constituent stories: caregivers who risk losing IHSS if asset tests count an extra vehicle; parents who fear losing home‑care providers for their disabled children. Committee members and LAO analysts said the administration’s financial estimates had been lower than actual experience when the asset test was previously restored and that eliminating the asset test earlier led to significantly higher enrollment than projected.

The LAO told members that the initial estimate of senior caseload growth tied to asset‑test elimination (around 40,000 newly eligible) proved much lower in practice — the Legislature and LAO now see larger caseload growth — and emphasized the need for implementation planning and analysis of downstream impacts, including homelessness and higher institutional costs.

Providers and advocates testified in person and via organizations including AARP California, United Domestic Workers (AFSCME), the California Association of Public Authorities for IHSS, Alzheimer’s Association, disability and aging coalitions, and county health representatives. They urged rejection of asset‑test reinstatement and budget actions that would cut IHSS or force institutionalization.

Implementation and next steps

DHCS said some implementation detail remains to be worked out and that there might be exemptions or other procedural elements; the department committed to providing additional modeling and to work with the legislature. The LAO recommended exploring less blunt alternatives that target resources more narrowly and urged lawmakers to consider federal rules and the long‑term costs of shifting people out of home‑based care.

Ending

Committee members signaled broad concern and requested the administration provide more granular analysis of the asset‑test changes, the projected numbers subject to disenrollment, and the consequences for IHSS providers and recipients before the legislature commits to adopting the change.","DHCS proposes reinstating an asset test (single $2,000 / couple $3,000), eliminating some long‑term care supports and suspending skilled‑nursing incentives; advocates and providers warned the move would push seniors and people with disabilities into worse outcomes and greater cost elsewhere.",{"_33":101,"_35":36,"_37":38,"_39":102,"_41":103,"_43":104,"_45":105,"_47":106,"_49":107,"_51":108,"_53":109,"_55":56,"_57":58,"_59":110,"_61":62,"_63":64,"_65":111,"_67":68,"_69":70,"_71":72,"_73":74,"_75":74},6538017,"May revision would limit full‑scope Medi‑Cal for some adults, impose premiums and narrow benefits",1555,0,1555000,"/Search/View?dp=1&key=3408361-767bfbd3cf56ef96e128b48ec401b21b&start=0&end=1555","https://assets.pipeline.soar.com/3408361-767bfbd3cf56ef96e128b48ec401b21b/thumbnail_0.jpg","/articles/6538017/California/May-revision-would-limit-fullscope-MediCal-for-some-adults-impose-premiums-and-narrow-benefits","https://secure.pipeline.soar.com/6538017-0c905d3c8964343f841c81743eb72a03/orig.mp4?Expires=1775043782&Signature=dMarxlYhhb27QiuxRu9G8uRK-IJ3l5SWw7lT~z1O99aBGlq8UbX6E0V5SF2L9-mGYqFcVy5~ig8d9gVImCWnjLDgPkNu3j~r5jebp6SewAT5wcSKGAmO1~LfscgvY1ZEaFpqiNjmJlHaVX7vEroI7cbvWYoxSKcQV0TQCVpC1zYaO3i1JZy9sTeCvLhi0~aLFoOunAAuB32xJlHo6KHzk7-47836TrVDHiD3lMHuBQxUXfGCxHGwl2fxX6uduWQgRPFAob~ZYAlT9j85hGxh6VgDdY1mlkOVY1Ky2qg9PYPJg6JoXXz8a4V61azVL668wQr4ar6xddtdEuwpiK0lTQ__&Key-Pair-Id=KUT5TJCACFTXG","The California Assembly Budget Subcommittee No. 1 on Health heard testimony and public comment May 20 on the governor's May revision proposals that would restrict full‑scope Medi‑Cal coverage for adults the administration describes as having “unsatisfactory immigration status.” The administration told the committee the proposals are intended to help close an estimated $12 billion general‑fund shortfall.

In an opening statement, Chair Dawn Addis said the subcommittee would focus on fiscal stewardship and “do this with empathy and a commitment to every single Californian,” while warning that the May revision “appears to be balanced on the backs of the poor, the elderly, immigrants, women, and frontline health care workers.”

Why it matters: The administration’s package would directly change who can enroll in and keep full‑scope Medi‑Cal, add a premium for a class of adults, and reduce or eliminate optional benefits. The Legislative Analyst’s Office (LAO) and Department of Finance told members they understand the state faces unusual federal and revenue uncertainty; multiple advocates and health providers said the changes would reduce access, trigger loss of federal matching dollars and threaten clinic viability.

Administration overview and key proposals

Michelle Baass, director of the California Department of Health Care Services (DHCS), summarized the department’s role and the size of the program: Medi‑Cal covers nearly 15 million Californians and DHCS’s May revision request includes about $200.6 billion total funds and $45.2 billion general fund in 2025–26. Baass said the administration is proposing several options aimed at reducing general‑fund expenditures and controlling long‑term growth.

Proposals the administration described include:
- A freeze on new enrollment in the Medi‑Cal expansion (full‑scope state‑only coverage) for new applicants age 19 and older without satisfactory immigration status, effective no sooner than Jan. 1, 2026; DHCS estimated the freeze would keep 32,000 people from enrolling in the budget year and accumulate to 672,000 fewer enrollees by the end of budget year plus 3 if implemented as proposed.
- A $100 monthly premium for adults age 19 and older without satisfactory immigration status (no sooner than Jan. 1, 2027). The administration included $30 million in the budget year to procure a vendor and estimated net general‑fund savings of roughly $1.1 billion when the policy ramps up as proposed.
- Elimination of optional benefits for that population including dental (effective July 1) and long‑term care (effective Jan. 1) for adults age 19 and older without satisfactory immigration status.
- Elimination of certain PPS “wrap” payments to federally qualified health centers (FQHCs) and rural health clinics for that population, and reduced prospective payments argued to align payment with other provider payment mechanisms.
- A rebate aggregator and other pharmacy measures intended to secure supplemental rebates and restrain pharmacy spending, including removal of some optional drug classes (over‑the‑counter antigen tests, vitamins, first/second generation antihistamines), a proposal to remove GLP‑1 medications for weight loss from the Medi‑Cal fee‑for‑service pharmacy benefit, step therapy protocols, prior authorization for certain continuations, and other utilization‑management changes.

Questions from the committee and LAO analysis

Jason Constanturos of the LAO advised the committee that the subcommittee should evaluate three things: (1) the revised Medi‑Cal spending estimate (general‑fund spending was about $2.5 billion higher in the budget year relative to the governor’s January budget, net of proposed solutions); (2) the design of the budget solutions (many are ongoing and focus on undocumented populations and pharmacy); and (3) the uncertain federal policy landscape. The LAO recommended that if the legislature rejects or changes one solution, it should identify an equivalent amount of savings elsewhere.

Members pressed DHCS for modeling or alternatives to the freeze and flat $100 premium. DHCS said it had not modeled income‑targeted alternatives or other premium levels beyond what was proposed and acknowledged it had not simulated alternative asset‑test thresholds or different approaches to dental benefit changes. DHS staff told members the premium proposal assumed both some revenue collection and disenrollments and that administration scoring expected a net $1.1 billion of general‑fund savings when the premium takes effect and collection mechanisms are operational.

Public comment and stakeholder reaction

More than 70 organizations and many individual residents testified, almost uniformly urging rejection of cuts that target undocumented Californians or that would reinstate the Medi‑Cal asset test (covered below). Speakers included representatives of FQHCs, Planned Parenthood affiliates, hospitals, the California Primary Care Association, labor unions, aging organizations, and numerous advocacy groups. Typical comments called the proposals “cruel and discriminatory,” warned clinics would close, and emphasized that rolling back benefits will reduce access and increase more costly emergency care.

Selected on‑record points that committee members and witnesses raised:
- The LAO noted that many of the May revision solutions are ongoing and “ramp up” over time, which changes fiscal effects in later years.
- DHCS said pharmacy is a major cost‑driver and that securing state supplemental rebates (the “rebate aggregator”) and tighter utilization controls could meaningfully reduce growth.
- DHCS acknowledged the premium approach requires new vendor infrastructure and collections systems, which the budget included money to procure.

What the proposals would not do (as presented)

The administration repeatedly described these items as proposals to be negotiated with the legislature and stakeholders. Several committee members asked DHCS to model alternatives (e.g., income thresholds instead of a hard freeze or premium), but DHCS said it had not produced those alternative costings for the committee at the hearing.

Ending

Committee members and many witnesses urged the administration to return with more granular modeling of both fiscal impacts and programmatic consequences before the legislature finalizes decisions. The LAO recommended the legislature pursue alternatives and weigh federal match implications; advocates said removing benefits would leave gaps that will increase emergency care, close clinics and worsen health outcomes. DHCS and the Department of Finance said the May revision reflects difficult trade‑offs in light of a large general‑fund shortfall and continuing federal uncertainty.","The governor's May revision proposes freezing new enrollment and imposing $100 monthly premiums for adults without \"satisfactory immigration status,\" eliminates certain optional benefits and targets pharmacy spending; lawmakers, LAO and dozens of advocates pressed the administration for more modeling and warned of access consequences.","actionData","errors"]

Article not found

Administration’s Proposition 35 spending plan leans toward base rate support and time‑limited supplements; stakeholders say plan diverts voter intent

May revision would eliminate most Prop 56 supplemental payments for family planning and women’s health; LAO warns of lost federal match

May revision would reinstate Medi‑Cal asset limits and scale back long‑term supports; seniors and caregivers raise alarm

May revision would limit full‑scope Medi‑Cal for some adults, impose premiums and narrow benefits