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California Proposition 34, Require Certain Participants in Medi-Cal Rx Program to Spend 98% of Revenues on Patient Care Initiative (2024)
California Proposition 34 | |
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Election date November 5, 2024 | |
Topic Business regulation and Elections and campaigns | |
Status![]() | |
Type State statute | Origin Citizens |
California Proposition 34, the Require Certain Participants in Medi-Cal Rx Program to Spend 98% of Revenues on Patient Care Initiative, was on the ballot in California as an initiated state statute on November 5, 2024.[1][2] The ballot measure was approved.
A "yes" vote supported:
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A "no" vote opposed this initiative to penalize health care providers who spend revenues from the federal discount prescription drug program on purposes other than direct patient care. |
Election results
California Proposition 34 |
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Result | Votes | Percentage | ||
7,378,686 | 50.89% | |||
No | 7,121,317 | 49.11% |
Overview
What did Proposition 34 do?
- See also: Measure design
Proposition 34 established a new category of entities called "prescription drug price manipulators." Entities classified as "prescription drug price manipulators" were required to meet the following annual requirements to maintain their tax-exempt status and licensure as health insurance plans, pharmacies, and clinics:[1]
- spend at least 98% of revenues from federal discount prescription drug program on direct patient care and
- not engage in unprofessional conduct or conduct contrary to public health, welfare, or safety.
Proposition 34 also permanently authorized the state to implement the Medi-Cal Rx program.[1] Gov. Gavin Newsom (D) first established the program in January 2019 via executive order.
Who did the new spending requirement apply to?
The spending requirement applied to prescription drug price manipulators. Under the initiative, an entity is a prescription drug price manipulator if the entity meets all of the following:[1][3]
- participates in the federal 340B drug price discount program;
- owns or has owned at least one license to operate as a health insurance plan, pharmacy, or clinic in the state or contracts with Med-Cal as a primary care case management organization or with Medicare as a special needs plan;
- has spent more than $100 million on purposes not related to direct patient care in a 10-year period of its existence; and
- owns, operates, or previously owned and operated one or more multifamily dwellings that have received a combined total of at least 500 state or local high violations.
The Legislative Analyst's Office said, "few entities would meet the measure’s tests to qualify as a prescription drug price manipulator, but the exact number is not known."[3]
Who supported and opposed Proposition 34?
- See also: Support and Opposition
Yes on 34, Protect Patients Now, which is sponsored by the California Apartment Association, led the campaign in support of Proposition 34. The campaign reported $44.5 million. The campaign said, "The Protect Patients Now Act will force the worst abusers of the drug discount program, like Weinstein’s [AIDS Healthcare Foundation], back to the program’s original mission to provide healthcare to low-income patients. This measure focuses only on the program’s worst offenders, putting in place new accountability measures to ensure they are appropriately using taxpayer dollars. The Act requires the program’s worst offenders like AHF and any others like it to spend 98% of their taxpayer-generated revenues on direct patient care. It also prevents them from overcharging government agencies for prescription drugs. So long as these worst offenders meet these requirements, they can continue their health care operations."[4]
Proposition 34 was opposed by the AIDS Healthcare Foundation and Housing is a Human Right. Opponents received $15.8 million. Susie Shannon, policy director of Housing is a Human Right, said, "The anti-renter California Apartment Association is peddling a deceptive, unconstitutional ballot measure cleverly disguised as a patient protection bill but is, in fact, designed to hurt both patients and low-income renters. It’s a wolf in sheep’s clothing. Don’t be fooled: The Patient Protection Act targets one organization, AHF, the largest HIV/ AIDS organization in the world, and the leading organization working to expand rent control for the most vulnerable in our society – low-income seniors, veterans, single parents and patients with HIV/AIDS. CAA, which does not represent patients, has shown they are willing to deceive voters in their quest for unbridled profits for the billionaire landlord class they represent, while patients and low-income renters suffer."[5]
Measure design
- See also: Text of measure
Medi-Cal Rx program: Permanently authorized
Classifying prescription drug price manipulators: Criteria and requirements
- participates in the federal 340B drug price discount program;
- owns or has owned at least one license to operate as a health insurance plan, pharmacy, or clinic in the state or contracts with Med-Cal as a primary care case management organization or with Medicare as a special needs plan;
- has spent more than $100 million on purposes not related to direct patient care in a 10-year period of its existence; and
- owns, operates, or previously owned and operated one or more multifamily dwellings that have received a combined total of at least 500 state or local high violations.
Under the initiative, if an entity is classified as a prescription drug price manipulator, the entity would have to meet the following requirements annually to maintain its tax-exempt status and licensure as health insurance plans, pharmacies, and clinics:[1]
- spend at least 98% of revenues from federal discount prescription drug program on direct patient care and
- not engage in unprofessional conduct or conduct contrary to public health, welfare, or safety.
Prescription drug price manipulators were prohibited from entering into a pharmacy sales agreement, an agreement where a pharmacy charges more than the discounted price for a prescription drug obtained by the entity participating in the federal 340B drug discount program.[1]
The initiative also required prescription drug price manipulators to spend at least 98% or more of their revenue earned from their national participation in the 304B program on direct patient care to be eligible for state and local government grants and contracts.[1]
Prescription drug price manipulators reporting requirements: Required reports
Penalties for violations: Loss of tax-exempt status and licensure
Text of measure
Ballot title
The ballot title is as follows:[6]
“ | Restricts spending by health care providers meeting specified criteria. Initiative statute.[7] | ” |
Petition summary
The summary provided for inclusion on signature petition sheets is as follows:[6]
“ | Requires certain health care providers to spend 98% of revenues from federal discount prescription drug program on direct patient care. Applies only to health care providers that: spent over $100,000,000 in any ten-year period on anything other than direct patient care; and operated multifamily housing with over 500 high-severity health and safety violations. Penalizes noncompliance by revoking health care licenses and tax-exempt status. Permanently authorizes state to negotiate Medi-Cal drug prices on statewide basis.[7] | ” |
Fiscal impact
The fiscal impact statement is as follows:[6]
“ | Increased costs to state government, potentially up to the millions of dollars annually, to review entities’ compliance with the measure and enforce the measure’s provisions. These costs would be paid for by fees created under the measure. Uncertain fiscal impacts to state and local government health programs, depending on how the affected entities respond to the measure’s requirements.[7] | ” |
Full text
The full text of the ballot measure is below:[1]
Readability score
- See also: Ballot measure readability scores, 2024
Using the Flesch-Kincaid Grade Level (FKGL) and Flesch Reading Ease (FRE) formulas, Ballotpedia scored the readability of the ballot title and summary for this measure. Readability scores are designed to indicate the reading difficulty of text. The Flesch-Kincaid formulas account for the number of words, syllables, and sentences in a text; they do not account for the difficulty of the ideas in the text. The attorney general wrote the ballot language for this measure.
The FKGL for the ballot title is grade level 13, and the FRE is 9. The word count for the ballot title is 11.
The FKGL for the ballot summary is grade level 14, and the FRE is 25. The word count for the ballot summary is 75.
Support
Protect Patients Now, which is sponsored by the California Apartment Association, led the campaign in support of the initiative. A full list of endorsements is available here.[4]
Supporters
Officials
- State Asm. Evan Low (D)
- Lt. Gov. Eleni Kounalakis (D)
Political Parties
Organizations
- ALS Association
- California Apartment Association
- California Association of Realtors
- California Chamber of Commerce
- Howard Jarvis Taxpayers Association
- San Francisco Women's Cancer Network
Arguments
Opposition
Stop the Revenge Initiative – No on 34 led the campaign opposing Proposition 34.[8]
Opponents
Former Officials
- Los Angeles Mayor Antonio Villaraigosa (D)
Unions
Organizations
- AIDS Healthcare Foundation
- Consumer Watchdog
- Dolores Huerta Foundation
- Housing is a Human Right
- National Organization for Women
Arguments
Campaign finance
Yes on 34, Protect Patients Now registered as a political action committee (PAC) to support of the initiative. Stop the Revenge Initiative - No on 34 registered in opposition to the initiative.[9]
Cash Contributions | In-Kind Contributions | Total Contributions | Cash Expenditures | Total Expenditures | |
---|---|---|---|---|---|
Support | $44,759,427.00 | $38,614.75 | $44,798,041.75 | $44,725,384.54 | $44,763,999.29 |
Oppose | $16,281,340.00 | $230,976.56 | $16,512,316.56 | $16,241,266.55 | $16,472,243.11 |
Total | $61,040,767.00 | $269,591.31 | $61,310,358.31 | $60,966,651.09 | $61,236,242.40 |
Support
The following table includes contribution and expenditure totals for the committee in support of the initiative.[9]
Committees in support of Proposition 34 | |||||
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Committee | Cash Contributions | In-Kind Contributions | Total Contributions | Cash Expenditures | Total Expenditures |
Yes on 34, Protect Patients Now | $44,759,427.00 | $38,614.75 | $44,798,041.75 | $44,725,384.54 | $44,763,999.29 |
Total | $44,759,427.00 | $38,614.75 | $44,798,041.75 | $44,725,384.54 | $44,763,999.29 |
Donors
The following table shows the top donors to the committee registered in support of the initiative.[9]
Donor | Cash Contributions | In-Kind Contributions | Total Contributions |
---|---|---|---|
California Apartment Association | $44,475,000.00 | $38,614.75 | $44,513,614.75 |
California Association of Realtors Issues Mobilization PAC | $250,000.00 | $0.00 | $250,000.00 |
St. Anton Communities | $20,000.00 | $0.00 | $20,000.00 |
Glen Raft | $2,500.00 | $0.00 | $2,500.00 |
Smith-Brennan Properties, LLC | $2,000.00 | $0.00 | $2,000.00 |
Steve Talbert | $2,000.00 | $0.00 | $2,000.00 |
Opposition
The following table includes contribution and expenditure totals for the committee in opposition to the ballot measure.[9]
Committees in opposition to Proposition 34 | |||||
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Committee | Cash Contributions | In-Kind Contributions | Total Contributions | Cash Expenditures | Total Expenditures |
Stop the Revenge Initiative - No on 34 | $16,281,340.00 | $230,976.56 | $16,512,316.56 | $16,241,266.55 | $16,472,243.11 |
Total | $16,281,340.00 | $230,976.56 | $16,512,316.56 | $16,241,266.55 | $16,472,243.11 |
Donors
The following table shows the top donors to the committee registered in opposition to the ballot measure.[9]
Donor | Cash Contributions | In-Kind Contributions | Total Contributions |
---|---|---|---|
AIDS Healthcare Foundation | $16,270,000.00 | $8,770.83 | $16,278,770.83 |
Youth Power PAC | $4,466.41 | $0.00 | $4,466.41 |
PICO California Action Fund | $294.00 | $0.00 | $294.00 |
Methodology
To read Ballotpedia's methodology for covering ballot measure campaign finance information, click here.
Media editorials
- See also: 2024 ballot measure media endorsements
Support
The following media editorial boards published an editorial supporting the ballot measure:
You can share campaign information or arguments, along with source links for this information, at editor@ballotpedia.org.
Opposition
The following media editorial boards published an editorial opposing the ballot measure:
Polls
- See also: 2024 ballot measure polls
- Are you aware of a poll on this ballot measure that should be included below? You can share ballot measure polls, along with source links, with us at editor@ballotpedia.org.
California Proposition 34, Require Certain Participants in Medi-Cal Rx Program to Spend 98% of Revenues on Patient Care Initiative (2024) | ||||||
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Public Policy Institute of California | 10/07/2024 - 10/15/2024 | 1,137 LV | ± 3.1% | 47.0% | 49.0% | 4.0% |
Question: "Proposition 34 is called “Restricts Spending of Prescription Drug Revenues by Certain Health Care Providers.” Initiative Statute. Requires certain providers to spend 98% of revenues from federal discount prescription drug program on direct patient care. Authorizes statewide negotiation of Medi-Cal drug prices. The fiscal impact is increased state costs, likely in the millions of dollars annually, to enforce new rules on certain health care entities. Affected entities would pay fees to cover these costs. Supporters include The ALS Association; California Chronic Care Coalition; Latino Heritage Los Angeles. Opponents include the National Org. for Women; Consumer Watchdog; Coalition for Economic Survival; AIDS Healthcare Foundation; Dolores Huerta. If the election were held today, would you vote yes or no?" | ||||||
Public Policy Institute of California | 8/29/2024 - 09/11/2024 | 1,071 LV | ± 3.7% | 53.0% | 43.0% | 4.0% |
Question: "Proposition 34 is called “Restricts Spending of Prescription Drug Revenues by Certain Health Care Providers”. Initiative Statute. Requires certain providers to spend 98% of revenues from federal discount prescription drug program on direct patient care. Authorizes statewide negotiation of Medi-Cal drug prices. The fiscal impact is increased state costs, likely in the millions of dollars annually, to enforce new rules on certain health care entities. Affected entities would pay fees to cover these costs. Supporters include The ALS Association; California Chronic Care Coalition; Latino Heritage Los Angeles. Opponents include the National Org. for Women; Consumer Watchdog; Coalition for Economic Survival; AIDS Healthcare Foundation; Dolores Huerta. If the election were held today, would you vote yes or no?" | ||||||
Note: LV is likely voters, RV is registered voters, and EV is eligible voters.
Background
California Medi-Cal Rx Program
On January 7, 2019, Governor Gavin Newsom (D) signed an executive order requiring the California Department of Health Care Services (DHCS) to transition Medi-Cal pharmacy services from managed care to fee-for-service. Managed care means the state pays a fee to a managed care plan for each enrollee, and the plan pays providers for the Medi-Cal services needed by the beneficiary included in the plan's contract. Fee-for-service means the state pays providers directly for the Medi-Cal services needed by the beneficiary. DHCS had to request federal approval to transition from managed care to fee-for-service. The full transition took effect on January 1, 2022.[10][11]
340B Drug Price Discount Program
The 340B Drug Pricing Program was created in 1992. The program requires drug manufacturers to provide drugs at discounted prices in order to participate in Medicaid. Organizations that provide discounted-priced drugs include community health centers, children’s hospitals, hemophilia treatment centers, critical access hospitals (CAHs), sole community hospitals (SCHs), rural referral centers (RRCs), and public and nonprofit disproportionate share hospitals (DSH).[12][13]
Under Medi-Cal Rx, California organizations participating in the 340B drug price discount must provide Medi-Cal patients with drugs at their discounted price. Those organizations do not earn revenue from providing discounted drugs to Medi-Cal patients.[3]
AIDS Healthcare Foundation
- See also: AIDS Healthcare Foundation
The AIDS Healthcare Foundation (AHF) is a 501(c)(3) organization based in Los Angeles, California, that aims to provide education, research, healthcare, and services related to HIV/AIDS. As of 2024, the president of the AIDS Healthcare Foundation was Michael Weinstein.[14][15]
AHF qualified an initiative for the November 2024 ballot that would allow cities and counties to limit rent on any housing and prohibit the state from limiting "the right of any city, county, or city and county to maintain, enact or expand residential rent control." The AIDS Healthcare Foundation sponsored two similar initiatives in 2018 and 2020 that were defeated. AIDS Healthcare Foundation contributed $63.1 million in support of both initiatives.
Ballot measure activity
The following table details the AIDS Healthcare Foundation's ballot measure stances available on Ballotpedia:
Ballot measure support and opposition for the AIDS Healthcare Foundation | |||
---|---|---|---|
Ballot measure | Year | Position | Status |
California Rent Control Initiative | 2020 | Supported | ![]() |
California Proposition 10: Local Rent Control | 2018 | Supported | ![]() |
Los Angeles Measure S: Laws Governing the General Plan and Development | 2017 | Supported | ![]() |
Ohio Issue 2: Drug Price Standards | 2017 | Supported | ![]() |
California Proposition 60: Condoms in Pornographic Films | 2016 | Supported | ![]() |
California Proposition 61: Drug Price Standards | 2016 | Supported | ![]() |
San Francisco Measure D: Prescription Drug Purchasing | 2013 | Supported | ![]() |
Los Angeles County Measure B: Condoms in Pornographic Films | 2012 | Supported | ![]() |
Path to the ballot
The state process
In California, the number of signatures required for an initiated state statute is equal to 5 percent of the votes cast in the preceding gubernatorial election. Petitions are allowed to circulate for 180 days from the date the attorney general prepares the petition language. Signatures need to be certified at least 131 days before the general election. As the verification process can take multiple months, the secretary of state provides suggested deadlines for ballot initiatives.
The requirements to get initiated state statutes certified for the 2024 ballot:
- Signatures: 546,651 were required.
- Deadline: The deadline for signature verification was 131 days before the general election, which was around June 27, 2024. However, the process of verifying signatures can take multiple months and proponents are recommended to file signatures at least two months before the verification deadline.
Signatures are first filed with local election officials, who determine the total number of signatures submitted. If the total number is equal to at least 100 percent of the required signatures, then local election officials perform a random check of signatures submitted in their counties. If the random sample estimates that more than 110 percent of the required number of signatures are valid, the initiative is eligible for the ballot. If the random sample estimates that between 95 and 110 percent of the required number of signatures are valid, a full check of signatures is done to determine the total number of valid signatures. If less than 95 percent are estimated to be valid, the initiative does not make the ballot.
Details about this initiative
- The initiative was filed on August 30, 2023, by Thomas Bannon.[2]
- The initiative was cleared for signature gathering on November 3, 2023.[2]
- On November 28, 2023, the AIDS Healthcare Foundation announced that it had filed a lawsuit against the initiative arguing that it is unconstitutional because it "illegally applies to one—and only one—organization in all of California: AIDS Healthcare Foundation." The petition was denied by the Third District court of Appeal on November 30, 2023.[16][17]
- On December 13, 2023, the secretary of state reported that proponents had collected 25% of the required number of signatures.[2]
- On April 10, 2024, the secretary of state reported that the campaign had submitted 868,689 raw signatures for verification.[18]
- On May 21, the secretary of state reported that the campaign had met the signature requirement and had qualified for the ballot.[19]
Sponsors of the measure hired The Monaco Group, PCI Consultants and Inc. to collect signatures for the petition to qualify this measure for the ballot. A total of $7,663,137.00 was spent to collect the 546,651 valid signatures required to put this measure before voters, resulting in a total cost per required signature (CPRS) of $14.02.
How to cast a vote
- See also: Voting in California
See below to learn more about current voter registration rules, identification requirements, and poll times in California.
See also
External links
Footnotes
- ↑ 1.00 1.01 1.02 1.03 1.04 1.05 1.06 1.07 1.08 1.09 1.10 1.11 California Attorney General's Office, "Full text," accessed August 31, 2023
- ↑ 2.0 2.1 2.2 2.3 California Secretary of State's Office, "List of petitions," accessed May 12, 2023
- ↑ 3.0 3.1 3.2 3.3 3.4 3.5 Legislative Analyst's Office, "Medi-Cal Rx program," October 19, 2023
- ↑ 4.0 4.1 Protect Patients Now, "Home," accessed January 22, 2024
- ↑ AIDS Health, "AHF Files to Halt California Apartment Association Bogus Ballot Initiative," November 29, 2023
- ↑ 6.0 6.1 6.2 California Secretary of State, "Initiatives and Referenda Cleared for Circulation," accessed October 20, 2021
- ↑ 7.0 7.1 7.2 7.3 Note: This text is quoted verbatim from the original source. Any inconsistencies are attributable to the original source.
- ↑ Stop the Revenge Initiative – No on 34, "Homepage," accessed November 2, 2024
- ↑ 9.0 9.1 9.2 9.3 9.4 Cal-Access, "Proposition 34," accessed January 22, 2024
- ↑ MACPAC, "Provider payment and delivery systems," accessed January 22, 2024
- ↑ DHCS, "Medi-Cal Rx," accessed January 22, 2024
- ↑ Health Resources and Services Administration, "Sec. 340B Public Health Service Act," accessed January 26, 2024
- ↑ American Hospital Association, "Fact Sheet: The 340B Drug Pricing Program," accessed January 26, 2024
- ↑ AIDS Healthcare Foundation, "Leadership," accessed August 21, 2019
- ↑ AIDS Healthcare Foundation, "About," accessed August 21, 2019
- ↑ AHF, "AHF Files to Halt California Apartment Association Bogus Ballot Initiative," November 29, 2023
- ↑ California Third District Court of Appeal, AIDS Healthcare Foundation v. Weber, decided on November 30, 2023
- ↑ California Secretary of State, "Random Sample," accessed April 11, 2024
- ↑ California Secretary of State, "Signature verification," accessed May 22, 2024
- ↑ California Secretary of State, "Section 3: Polling Place Hours," accessed August 12, 2024
- ↑ California Secretary of State, "Voter Registration," accessed August 13, 2024
- ↑ 22.0 22.1 California Secretary of State, "Registering to Vote," accessed August 13, 2024
- ↑ California Secretary of State, "Same Day Voter Registration (Conditional Voter Registration)," accessed August 13, 2024
- ↑ SF.gov, "Non-citizen voting rights in local Board of Education elections," accessed November 14, 2024
- ↑ Under federal law, the national mail voter registration application (a version of which is in use in all states with voter registration systems) requires applicants to indicate that they are U.S. citizens in order to complete an application to vote in state or federal elections, but does not require voters to provide documentary proof of citizenship. According to the U.S. Department of Justice, the application "may require only the minimum amount of information necessary to prevent duplicate voter registrations and permit State officials both to determine the eligibility of the applicant to vote and to administer the voting process."
- ↑ California Secretary of State, "What to Bring to Your Polling Place," accessed August 12, 2024
- ↑ BARCLAYS OFFICIAL CALIFORNIA CODE OF REGULATIONS, "Section 20107," accessed August 12, 2024
- ↑ Democracy Docket, "California Governor Signs Law to Ban Local Voter ID Requirements," September 30, 2024
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