Gov. Jerry Brown’s tax plan on health insurance plans has the support of California’s insurance industry. The tax plan will allow the state to avoid losing over $1 billion for its Medi-Cal program.
The California Association of Health Plans has been deliberating with the governor’s office regarding the tax plan for more than a year. The Association wanted to make clear that insurance companies will not lose money once the tax plan comes into effect and resort to raising insurance premiums as a result.
On Feb. 8, new legislation was proposed for the managed care organization (MCO) tax plan. Later that week on Feb. 10 during the first committee hearings, lawmakers revealed that the plan has the backing of the insurance industry.
“This strikes – we think – a supportable balance between funding our Medi-Cal program and protecting affordability,” said Charles Bacchi, president and CEO of CAHP.
Bacchi pointed out that while the tax deal entails a broad tax increase on health plans, they will not ultimately lead to higher premiums.
“It is coupled with two very specific tax cuts. And taken together as a package, it allows us to be supportive and we think it’s a balanced approach,” Bacchi added.
To be approved, the deal will need bipartisan support to reach the needed two-thirds majority in Legislature.
A vote for the plan would likely be held next week, at the earliest.
