For years, the state has conducted something of a shell game to help finance Medi-Cal, its health insurance system for the poor that now covers nearly a third of Californians.
California imposed a special tax on “managed care organizations” that handle Medi-Cal recipients and used it to qualify for additional federal funds. The insurers got back all of their tax money and then some, and the state general fund gained additional money for other uses.
Finally, however, the feds told California and other states to stop playing the game and decreed that any tax aimed at drawing down additional federal medical care funds had to be broader than just those benefiting from the exchange.
That decree creates, Gov. Jerry Brown’s administration says, a potential $1.1 billion hole for the 2016-17 budget and beyond, and he has proposed to replace the “MCO tax,” as it’s dubbed, with a new levy.
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