The California Medical Association and the California Association of Health Plans are challenging the state’s restructured managed care organization tax, according to an Oct. 1 California Supreme Court filing.
The legal action is directed at California’s Department of Health Care Services, Department of Finance and state controller. In 2024, California voters approved a measure to permanently solidify a tax on MCOs to back Medi-Cal. However, the petitioners said a state law that emerged in the wake of HR 1’s Medicaid changes, SB 125, amends the tax.
The law sets the monthly per-member tax at $8.85, according to the filing. The petitioners said voters capped it at $2.50 for private enrollees under the 2024 proposition. Another concern from the filing: whether the funds can be allocated beyond Medi-Cal, such as to the General Fund.
“[The new law] instead permits the State to use revenues the voters dedicated to specified Medi-Cal purposes, including increased payments to providers, for purposes unrelated to Medi-Cal,” the filing said.
The filing described the legislature’s move as an “unconstitutional gambit to amend a voter-approved ballot proposition governing California’s tax on managed care organizations.” The associations called on the court to order that the respondents move away from the new law’s implementation and submit an MCO tax that complies with both federal law and the previous voter-backed proposition.
Becker’s contacted the respondents for comment and will update this story if more information becomes available.
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