Healthcare Tax

California
Jonathan Cooper, Associated Press
February 8, 2016 – 6:26 PM

SACRAMENTO, Calif. —

The California Legislature on Monday unveiled a bill imposing a new tax on health insurance plans that would prevent a massive $1.1 billion hole in the state budget.

The tax is designed to allow California to continue receiving matching funds from the federal government to pay for health insurance for the poor. It would replace a tax that applied only to Medi-Cal managed care organizations, which the federal government said it would not renew.

Democratic Gov. Jerry Brown called a special session last year to deal with health care financing but failed to find a solution. His administration has worked for months to broker a compromise with insurance companies, which warned that higher costs could get passed on to consumers.

A spokesman for Brown, Evan Westrup, said the bill “reflects the administration’s proposal.”

Insurers would get a reduction in other taxes to offset the cost of the new assessment. The effects on each company would likely be different, depending on their mix of Medi-Cal clients, their corporate structure and other factors.

The California Association of Health plans did not immediately take a position on the bill, spokeswoman Nicole Kasabian Evans said.

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