California lawmakers consider tax package targeting state health insurance program

California health insurance

Lawmakers aim to support Medi-Cal program with ambitious tax package

Lawmakers in California may opt to take action on a tax package that aims to prevent a gap of $1.1 billion in the state’s health insurance program. The California Senate and Assembly are considering three pieces of legislation during a special legislative session, which was called last year in order to adjust taxes on insurance plans. The federal government has announced that it will discontinue support for the state’s Medi-Cal program if lawmakers are not able to effectively address tax issues associated with the program itself.

Tax package could have an impact on the insurance sector

Lawmakers are concerned that certain taxes may force insurers to pass additional costs on to consumers. This would make coverage much more expensive, potentially making inaccessible to consumers. Together, insurers are expected to pay approximately $100 million less in taxes, but each insurer is being affected differently by taxes depending on their corporate structure and client base. The tax package being considered by state lawmakers will include incentives designed to sway the support of certain legislators whose votes will be pivotal in gathering a majority vote, which is needed to ensure that the package is approved.

Initiative may be a benefit for the disabled and their caregivers

California health insuranceNotably, the tax package is being considered a lifeline for those with disabilities and those providing them with care. The tax packing comes with some $300 million in funding that will support those with developmental disabilities. This will also increase the wages and benefits for care givers by approximately 7.5%. Lawmakers note that Medi-Cal is one of the few health care programs that have not received increases in financing following funding cuts made in previous years due to the economic recession in the United States.

Governor works to create a tax package beneficial to insurers and state residents

Governor Jerry Brown called for a special legislative session last year in order to work on health care financing. The government spent several months negotiating a tax package that would win support from both Democrats and Republicans. Thus far, the tax package has gathered significant support, which may be good luck for health insurance companies participating in the Medi-Cal program.

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