California lawmakers reach deal on largest-ever Medicaid investment

California lawmakers and healthcare stakeholders have reached a major deal that represents the largest-ever investment in Medi-Cal, the state's Medicaid program, Politico reported June 24.

With federal funds factored in, the $35 billion agreement will be partly funded by a renewed managed care tax on health plans based on how many members they cover. Some of the spending will begin this year, but most will start in 2025.

Under the deal, $3.5 billion will go toward the state's general fund and $75 million will go toward creating medical school residency openings in underserved regions. Primary care, OBGYN and some mental health care providers will also see their reimbursement rates increased to 87.5 percent of Medicare rates.

In addition, the deal includes funding to help ease workforce shortages and to incentivize more specialists to accept Medi-Cal, along with funds for struggling hospitals. The state will also spend $300 million on behavioral health beds.

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