Months of discussions recently culminated with the Legislature passing and the governor signing a California Chamber of Commerce-supported special session health plan funding proposal. SBX2 2 (E. Hernandez; D-West Covina) preserves critical funding for the state’s Medi-Cal program without undermining the affordability of commercial health care purchased by employers, families, and individuals. In a news release announcing the signing of SBX2 2 and accompanying bills, Gov. Edmund G. Brown Jr. said the legislation will result in a net tax cut, maintain more than $1 billion in critical federal funds, reduce debt by more than $400 million and direct about $300 million in new funding to help persons with developmental disabilities.

Policymakers were left with a difficult task in 2014 when the federal Centers for Medicare and Medicaid Services indicated that California’s existing managed care organization (MCO) tax, which generates approximately $1 billion a year for the state’s Medi-Cal program, did not comply with the federal rules governing provider taxes and could not be renewed in 2016.

The governor called a special legislative session and the administration worked closely with legislators and other stakeholders on a solution.

In its support letter on SBX2 2, the CalChamber noted that any replacement proposal would have to raise enough revenue to offset the expiring tax and prevent a reduction in Medi-Cal provider reimbursements, but also would need to apply broadly to most, if not all, health care plans without creating unreasonable disparities between them that might generate pressure in the commercial health insurance marketplace to increase costs for California purchasers.

CalChamber believes SBX2 2 sufficiently meets these important goals.

In its February 23 support letter, CalChamber noted that SBX2 2 presents a comprehensive solution that is a win-win for California.

SBX2 2 passed the Assembly 61-16 on Feb. 29.