California May Raise Taxes To Pay For Medicaid Expenses

Due to the state’s Medicaid program’s inability to accommodate the increasing number of enrollees, several rural hospitals in California are facing a crisis and Medicaid enrollees are finding it challenging to locate doctors who are ready to serve them.

Democratic state legislators and Governor Gavin Newsom have opted to boost taxes in order to pay physicians more.

Companies that offer Medicaid services through contracts with the state are known as managed care organizations. They have been subject to special taxes in California since 2005. The state foots the bill for the majority of the fees, which are subsequently used to increase Medicaid funding from the federal government. This tax is expected to bring in an additional $1.5 billion when the Legislature votes to raise it again this year.

Newsom is recommending a rate increase to bring optometrist fees in line with Medicare, the federal health insurance program for individuals 65 and up. As a result, the approximately 8,000 certified optometrists in California may significantly increase their Medicaid patient payments from $47 to $130 for each exam. While healthcare professionals are pleased with the increases, they remain concerned about the state of California’s budget, which has been experiencing steadily increasing deficits.

Newsom is already planning to revise the tax boost he approved last year, which allocated an additional $11 billion over five years to enhance provider payments. This year, despite the deficit, Newsom plans to provide $8 billion over four years to pay providers. The amount providers get would remain unchanged but have a shorter expiration date.

Every three years, the federal government is required to approve the managed care organization tax that California has implemented. Recent signals from the Biden administration indicate a desire to limit state revenue collections; this might eventually lead to a reduction in California’s sales tax, limiting the state’s capacity to maintain higher physician payment rates.