SACRAMENTO, CA – Following the release of Governor Newsom’s revised 2024-2025 budget, Local Health Plans of California CEO Linnea Koopmans released the following statement: 

“LHPC’s longstanding support for the MCO Tax stems from the promise of improving access and quality care for our 9.5 million Medi-Cal members. However, redirecting these funds to the general fund, along with other proposed cuts, halts crucial progress toward these goals and stymies efforts to address health disparities. We are committed to working with the administration and legislative leadership to get the MCO Tax back on track so we can safeguard health care for the marginalized and vulnerable of California.” 

Key May Revision Proposals Impacting Medi-Cal:

• Managed Care Organization (MCO) Tax — Reducing $6.7 billion over multiple years from the Medi-Cal provider rate increases planned for January 1, 2025, as well as Graduate Medical Education and Medi-Cal labor workforce. The May Revision proposes an amendment to the MCO Tax to include health plan Medicare revenue in the total revenue limit calculation, which increases the allowable size of the tax resulting in an additional net state benefit of $689.9 million in 2024-25, $950 million in 2025-26, and $1.3 billion in 2026-27. Overall, the May Revision includes an additional $9.7 billion in MCO Tax funds over multiple years to support the Medi-Cal program.  
   
• Equity and Practice Transformation Payments to Providers — Eliminating $280 million one-time over multiple years for grants to Medi-Cal providers for quality, health equity, and primary care infrastructure. The May Revision maintains $70 million General Fund included in the 2022 Budget Act. 
   
• In-Home Supportive Services for Undocumented Individuals — Reducing $94.7 million ongoing by eliminating the In-Home Supportive Services (IHSS) undocumented expansion coverage for all ages.  
   
• Healthcare Workforce Reduction — Eliminating $300.9 million in 2023‑24, $302.7 million in 2024-25, $216 million in 2025‑26, $19 million in 2026-27, and $16 million in 2027‑28 for various healthcare workforce initiatives including community health workers, nursing, social work, Song-Brown residencies, Health Professions Career Opportunity Program, and California Medicine Scholars Program. The May Revision also eliminates $189.4 million Mental Health Services Fund for programs proposed to be delayed to 2025-26 at Governor’s Budget. 

Source: May Revision Budget Summary 

About LHPC

Local Health Plans of California (LHPC) is a statewide trade association that represents all 17 of the community-based, not-for-profit health plans that provide access to critical and comprehensive healthcare services for low-income populations enrolled in California’s Medicaid program, “Medi-Cal,” in 51 out of 58 counties in the state. With 9.5 million enrollees, our plans serve approximately 70 percent of all Medi-Cal managed care beneficiaries. Our member plans cover more lives than 49 other states’ entire Medicaid programs. More here.

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