California Medi-Cal Hospital Reimbursement Initiative (2016)

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Medi-Cal Hospital Reimbursement
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Constitution:California Constitution
Referred by:Citizens
Status:On the ballot

A California Medi-Cal Hospital Reimbursement Initiative is on the November 8, 2016 ballot in California as a combined initiated constitutional amendment and state statute.

The federal government's Medicaid program helps pay for health care services provided to low-income patients. In California, this program is called Medi-Cal. For a state to receive federal Medicaid funds, the state has to contribute a matching amount of its own money. In 2009, a new program was created such that California hospitals were required to pay a fee to help California obtain the available federal Medicaid funds. This program has resulted in California hospitals receiving roughly $2 billion a year in additional federal money to Medi-Cal.[1] However, California has diverted some of the Medicaid matching funds to the state's general fund.[2]

If the initiative is approved by the state's voters, it will add language to the California Constitution to require voter approval of changes to the hospital fee program to ensure that California uses these funds for the intended purpose of supporting hospital care to Medi-Cal patients and to help pay for healthcare for low-income children. The California Legislature would be permitted to amend the hospital fee program via a two-thirds vote, but only when the proposed changes "amend or add provisions that further the purposes of the Act."[1]

Text of measure

Ballot title:

State Fees on Hospitals. Federal Medi-Cal Matching Funds. Initiative Statutory and Constitutional Amendment.

Official summary:

"Increases required vote to two-thirds for the Legislature to amend a certain existing law that imposes fees on hospitals (for purpose of obtaining federal Medi-Cal matching funds) and that directs those fees and federal matching funds to hospital-provided Medi-Cal health care services, to uncompensated care provided by hospitals to uninsured patients, and to children's health coverage. Eliminates law's ending date. Declares that law's fee proceeds shall not be considered revenues for purposes of applying state spending limit or determining required education funding."

Fiscal impact statement:

(Note: The fiscal impact statement for a California ballot initiative authorized for circulation is jointly prepared by the state's Legislative Analyst and its Director of Finance.)

"State savings from increased revenues that offset state costs for children's health coverage of around $500 million beginning in 2016-17 (half-year savings) to over $1 billion annually by 2019-20, likely growing between 5 percent to 10 percent annually thereafter. Increased revenues to support state and local public hospitals of around $90 million beginning in 2016-17 (half-year) to $250 million annually by 2019-20, likely growing between 5 percent to 10 percent annually thereafter."

Constitutional changes

See also: California Medi-Cal Hospital Reimbursement Initiative (2016), Full Text of Constitutional Changes

The measure would add a Section 3.5 to Article XVI of the California Constitution. To view the changes that the proposition would make, read the full text of constitutional changes here.


The initiative was developed by the California Hospital Association.[3]


  • California Hospital Association[4]


The California Hospital Association announced the initiative on July 25, 2013, and gave the following reasons for doing developing the initiative. The following is an excerpt from the association's press release:

The initiative, called the Medi-Cal Funding and Accountability Act of 2014, will prohibit the Legislature and the Administration from imposing a provider fee (tax) on hospitals unless the monies and matching federal funds are used to pay for hospital care provided to Medi-Cal patients, which include the elderly, the disabled and children. Since 2009, California hospitals have agreed to pay the state nearly $3 billion annually, with the monies then used by the state to draw down matching federal funds for the Medi-Cal program. As part of the agreement, hospitals have supported the state taking a small portion of the fee money to pay for health care for children. Since the inception of the program, however, the state has diverted some of the hospital fee money to the state’s General Fund for other purposes.

“For more than two decades, California has not appropriated the monies necessary to draw down the full amount of available federal matching funds for Medi-Cal payments to hospitals,” said CHA President/CEO C. Duane Dauner. “As a result, California has left billions of dollars in available federal funds on the table in Washington D.C. and significantly underpaid hospitals that provide life- saving care to Medi-Cal patients.

“California hospitals stepped into this void in 2009 by agreeing to front the state’s share of the monies necessary to garner the matching federal dollars,” Dauner added, “but the effectiveness of this effort is being undermined by the state’s continual redirection of increasing amounts of the hospital fee money into the General Fund.”

Currently, private hospitals in California pay $3 billion a year to the state under the hospital fee program. The state is diverting $620 million of the hospital fee money (prior to qualifying for federal matching funds) into the General Fund in the 2013-2014 budget year. This “rake-off” of the hospital fee money is being used to offset budget deficits rather than being used by hospitals to provide care to patients. The remaining dollars (after the rake-off) are then used to draw down federal Medicaid matching funds. The combined hospital and federal monies are redistributed to private hospitals in the form of supplemental Medi-Cal payments. This program does not cover all of the losses hospitals incur from the Medi-Cal program, since half of the money is put up by the hospitals themselves. Nevertheless, the fee program does allow the state to bring in additional federal funds.

California’s Medi-Cal program ranks last in the nation when it comes to funding health care for Medicaid patients. In 2012, Medi-Cal underpaid California hospitals by more than $5 billion. Medi- Cal payment shortfalls result in significant financial losses for hospitals, and force hospitals to shift these unpaid costs to private payers. The supplemental payments resulting from the hospital fee program help cover a portion of those losses.

According to Dauner, the only way to ensure that the fees contributed by hospitals are used for their intended purpose is through a voter-approved ballot initiative which prohibits the state from diverting the money for non-health care purposes.

“Unfortunately, it is too tempting for lawmakers on both sides of the aisle to dip into these funds as part of the budget process,” Dauner said. “These monies are intended to help cover the costs of caring for the state’s Medi-Cal patients and it’s only appropriate that safeguards are put in place to assure that’s how the funds are used.”[5]

—California Hospital Association[3]

Path to the ballot

See also: Signature requirements for ballot measures in California
  • Thomas W. Hiltachk submitted a letter requesting a title and summary on October 9, 2013.
  • A title and summary were issued by the Attorney General of California's office on December 2, 2013.
  • 807,615 valid signatures were required for qualification purposes.
  • The 150-day circulation deadline for #13-0016 was May 1, 2014.
  • The Secretary of State’s suggested signature filing deadline for the November 4, 2014, ballot was April 18, 2014.
  • 1,223,888 signatures were filed with election officials on April 21, 2014.[2] This was three days after the suggested deadline.
  • On August 1, 2014, the initiative qualified for the 2016 ballot. 807,984 or 66.42 percent of the signatures were deemed valid. That's only 369 more signatures than were required to get the issue on the ballot.[6]

Cost of signature collection:

The cost of collecting the signatures to qualify the initiative for the ballot came to $2,192,812. That's about $2.72 per required signature.

The signature vendor were Arno Political Consultants and The Monaco Group.

See also: California ballot initiative petition signature costs

State profile

California's population in 2014 was 38,802,500.

California's population in 2014 was 38,802,500 according to the United States Census Bureau. This estimate represented a 4.2 percent increase from the bureau's 2010 estimate. The state's population per square mile was 239.1 in 2010, exceeding the national average of 87.4.

California experienced a 2 percent increase in total employment from 2011 to 2012 based on census data, falling below the 2.2 percent increase at the national level during the same period.[7]


California exceeded the national average for residents who attained at least bachelor's degrees based on census data from 2009 to 2013. The United States Census Bureau found that 30.7 percent of California residents aged 25 years and older attained bachelor's degrees compared to 28.8 percent at the national level.

The median household income in California was $61,094 between 2009 and 2013 compared to a $53,046 national median income. Census information showed a 16.8 percent poverty rate in California during the study period compared to a 14.5 percent national poverty rate.[7]

Racial Demographics, 2013[7]
Race Hawaii (%) United States (%)
White 73.5 77.7
Black or African American 6.6 13.2
Native Hawaiian and Other Pacific Islander 0.5 0.2
American Indian and Alaska Native 1.7 1.2
Asian 14.1 5.3
Two or More Races 3.7 2.4
Hispanic or Latino 38.4 17.1

Presidential Voting Pattern, 2000-2012[8][9]
Year Democratic vote in Hawaii (%) Republican vote in Hawaii (%) Democratic vote in U.S. (%) Republican vote in U.S. (%)
2012 60.2 37.1 51.1 47.2
2008 61.1 37.0 52.9 45.7
2004 54.4 44.4 48.3 50.7
2000 53.5 41.7 48.4 47.9

Note: Each column will add up to 100 percent after removing the "Hispanic or Latino" percentage, although rounding by the Census Bureau may make the total one- or two-tenths off. Read more about race and ethnicity in the Census here.[10]

See also

External links

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Additional reading