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[MM Curator Summary]: CA might be spending a chunk of the health insurance tax on, well, healthcare.
Months of negotiations among the state’s top health care players have ended in a plan to pump billions into Medicaid and struggling hospitals.
The complex agreement, reported by POLITICO for the first time, resolves a sticking point in budget talks that lawmakers and Gov. Gavin Newsom have been working to resolve by June 30. | Justin Sullivan/Getty Images
SACRAMENTO, Calif. — Major players in California’s health care field have reached a deal on how they want the state to spend $19 billion in proceeds of a renewed tax on insurance plans plus the federal funds that go with it — a development that followed months of private negotiations between bitter industry rivals, state lawmakers and the governor’s office.
The complex agreement, reported here for the first time, resolves a sticking point in budget talks that lawmakers and Gov. Gavin Newsom have been working to resolve by June 30. It would impose a tax on health care plans in what those involved described as a once-in-a-generation investment into a system that serves nearly 16 million Californians. It’s a massive victory for the health care industry that came about through an alliance of powerful interests that are often avowed enemies in the statehouse.
The last three times California levied this tax on health plans, it used the money to balance the budget during economic downturns. Now, for the first time, much of the revenue will be spent to improve the state’s publicly subsidized health care system — and in a year when the state faces a $32 billion budget deficit.