In 2013, California regulators fined the insurer $4 million for failing to reduce wait times, giving patients inaccurate information, and improperly tracking appointment data. And in 2023, KP agreed to pay $50 million, the largest penalty ever levied by the state’s Department of Managed Health Care, for failing to provide timely care, maintain a sufficient number of mental health providers, and oversee its providers effectively.

Now, Kaiser Permanente is back in the hot seat as mental health workers in Southern California wage a strike that’s in its fourth month. KP therapists and union representatives accuse the HMO giant of saddling workers with excessive caseloads and often forcing patients to wait twice as long as the state allows for follow-up appointments. They say that the staff is burned out and that this work environment makes it hard to recruit clinicians, exacerbating the staffing problem.

KP rebuffs these claims, saying the union is parading out old problems, seeking to create “an inaccurate and outdated perception” of KP’s care. They say the union’s pay demands are “in direct contrast to our commitment to providing quality, affordable care.”

Kaiser Permanente — the largest commercial health plan in California, with about 9 million members — is far from alone in struggling to provide adequate mental health care. A pandemic-induced shortage of health care workers has created obstacles for all health plans in recent years, on top of a preexisting scarcity. Moreover, many therapists decline to contract with insurers. And lingering bias in the health care system against mental health services — and patients — may also be at play.

Federal and state laws require health plans to provide mental health care on par with medical care. But many people who have sought therapy can vouch that those measures, known as mental health parity laws, do not seem to be followed consistently. You can spend hours or even days calling every therapist allegedly in your insurance company’s network and come away empty-handed.

Secret-shopper surveys of 4,300 randomly selected outpatient providers listed as accepting new patients showed that “an alarming proportion” of them were unresponsive or unreachable, according to a federal government report issued last month. And while that was true for medical providers, it was consistently worse for mental health and substance abuse care, according to the report.

In California, state regulators have been conducting behavioral health care investigations of the insurance companies they regulate to help identify the extent and causes of delays in care.

So far, the DMHC has investigated nine health plans (not including KP) and found dozens of violations related to appointment availability, timely access, quality of care, and patient appeals, department spokesperson Rachel Arrezola says. The agency also has identified numerous “barriers” that do not necessarily break the law but may make it more difficult for patients to get care, she says.

Mark Peterson, a professor at UCLA’s Luskin School of Public Affairs, notes that the open-ended nature of therapy can conflict with health plans’ focus on their bottom lines. “It may be once a week, it may be more than once a week and go on for years,” Peterson says.

For insurers, he says, the question is, “How do you put an appropriate limit on that?”

And the unwillingness of many therapists to accept insurance companies’ payment rates, or to abide by their restrictions, often leads them to decline participation in health plan networks and charge higher rates. That, Peterson says, makes therapy financially inaccessible for a lot of people seeking it.

Even if you have some coverage for therapy outside your health plan network, your insurer will pay only a percentage of the rate that it recognizes as legitimate. “If your therapist is charging $300 an hour, and your insurance company only recognizes $150 an hour, and they only pay 50% of what they recognize, now you’ve got a quarter coverage of your therapy,” Peterson says.

Since Kaiser Permanente is a closed system and patients don’t get reimbursed for care outside the network, access problems for its patients can be “highly pronounced,” Peterson adds.

In California, KP has accounted for over $54 million of the $55.7 million in mental-health-related fines the DMHC has levied on insurers in the past two decades. That includes the $50 million fine imposed in 2023, which was part of a settlement in which KP agreed to fix deficiencies the department found and to invest an additional $150 million in projects intended to enhance access to mental health care, not just for KP members, around California.

Officials at the National Union of Healthcare Workers, which represents some 2,400 KP mental health workers in the ongoing Southern California contract talks, say the HMO could easily invest enough to become a paragon of high-quality mental health care if it wanted to.

Greg Tegenkamp, the lead union negotiator, says KP could “lead the way to do the right thing.”

Kaiser Permanente says it already is doing the right thing, even as it acknowledges past shortcomings. In a recent statement, it said it has invested over $1 billion in new treatment spaces and more mental health providers since 2020.

“We’ve grown our workforce and increased our network of skilled therapists so that any Kaiser Permanente member who needs an appointment is able to get timely, high-quality, clinically appropriate care,” the company says.

In addition to higher wages and lower patient loads, workers want more time to complete follow-up tasks outside sessions and the reinstatement of a pension that was eliminated for those hired in Southern California after 2014.

Kaiser Permanente says that it already pays its mental health workers in Southern California about 18% above the market rate and that the current proposal would raise pay even more. KP recently raised its proposed wage increase by a modest amount, according to union officials.

KP refutes reports from workers about long wait times for patients seeking mental health appointments. It says the average wait time is 48 hours for urgent appointments and six business days for nonurgent ones, “which is better than the state’s requirement” of no more than 10 days.

But workers say KP patients still face long delays for follow-up appointments.

“It’s really hard for our patients to get regular, frequent appointments,” says Kassaundra Gutierrez-Thompson, a KP therapist in Southern California who is on strike. Gutierrez-Thompson says she’s seen it from both sides, since she is also a patient who sees a KP psychiatrist for depression and recently faced a big rescheduling delay after one of her appointments was canceled without notice.

As a provider, Gutierrez-Thompson says, she and her colleagues are expected to see patients “back-to-back-to-back.” She says some of her colleagues developed urinary tract infections when they couldn’t get to the bathroom. One even started wearing adult diapers, she says.

“The working conditions are like a factory,” Gutierrez-Thompson says. “We do such human work, but they would love for us to be robots with no needs and just see patients all day.”

This article was produced by KFF Health News, which publishes California Healthline, an editorially independent service of the California Health Care Foundation. 

KFF Health News is a national newsroom that produces in-depth journalism about health issues and is one of the core operating programs at KFF—an independent source of health policy research, polling, and journalism. Learn more about KFF.

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At least one medical clinic burned down. Senior patients were evacuated by ambulance from nursing facilities as embers swirled around them and their providers. Medical offices have closed, and routine appointments have been canceled. Some providers have lost homes or had to evacuate their neighborhoods, keeping them from work in many cases and making it a challenge for some health care centers to maintain sufficient staffing.

Amid the maelstrom, doctors, nurses, and other caregivers did their jobs.

On Tuesday night, Ravi Salgia, an oncologist at City of Hope National Medical Center in Duarte, saw the house above his Eaton Canyon home go up in flames. As debris and sparks fell, he, his wife, and their older daughter estimated they had no more than seven minutes to get out. In the middle of the night, Salgia got a call that the hospital had become an emergency command center and was at risk of evacuation, meaning he needed to help evaluate patients and make discharge preparations.

Salgia arrived at the hospital at 2:30 a.m. Wednesday. He was joined by colleagues, many of whom had also evacuated their homes.

“We all felt very strongly that we needed to take care of our patients — no matter what’s happening to us physically and emotionally, what’s happening to our houses — that we need to make sure that the people we serve were taken care of,” Salgia said in an interview.

He doesn’t know if his house is still standing.

In Pacific Palisades, St. John’s Physician Partners, a primary care and pediatric clinic affiliated with Providence Health & Services, burned down, said Patricia Aidem, a spokesperson for the large Catholic hospital chain based in Renton, Washington.

Not far from the eastern edge of the Palisades Fire, Providence St. John’s Health Center in Santa Monica, one of the group’s major LA-area hospitals, was so close to evacuating that it called other hospitals in the area to find space for patients who would be displaced, Aidem said. USC Verdugo Hills Hospital, in Glendale, also faced potential evacuation, along with other hospitals in the region.

“All hospitals in close proximity to the fires remain on high alert and are prepared to evacuate if conditions worsen,” the Hospital Association of Southern California said in a statement. “The fires are creating significant operational hurdles,” the association added.

The association also said emergency services have been strained by high call volumes, while road closures have impeded the transport of patients, supplies, and health care workers. Some health facilities have been hit by power outages, the association said, while “many staff members are directly impacted by evacuations and fire-related disruptions, further complicating operations.”

The California Department of Managed Health Care on Thursday ordered health plans to ensure enrollees affected by wildfires have access to all needed medical services, including prescription drug refills.

Aidem said some doctors and other health workers at Providence St. John’s in Santa Monica and Providence Holy Cross Medical Center in the San Fernando Valley have lost homes or been evacuated, making them miss work and creating challenges to ensure adequate staffing.

Hospitals across the county said their emergency rooms had treated patients for burns, smoke inhalation, and eye irritation.

Over 700 people — and possibly far more — have been evacuated from nursing homes and other care facilities, according to the California Department of Public Health.

On Wednesday, West Valley Health Center, operated by Los Angeles County’s Department of Health Services, closed due to a power outage, the department said. And UCLA Health said the closure of some of its clinics in Pasadena and on L.A.’s Westside was due partly to “utility shutoffs.”

Children’s Hospital Los Angeles said two of its specialty care clinics, in Encino and Santa Monica, were closed Thursday “due to the impacts from the wind storm, power outages and wild fires.”

Providence also has shut several clinics this week.

The two biggest blazes, the Palisades Fire in the parched coastal hills of western L.A. County and the Eaton Fire on the Eastside, have together torched more than 50 square miles, burned thousands of structures, reduced beloved cultural landmarks to ashes, killed at least 10 people, and severely injured many more.

The monster winds that fueled the explosion of the fires on Tuesday and Wednesday have begun to quiet down, though significant gusts are still expected to complicate the task of firefighters for the next several days.

Routine medical care will likely be disrupted for thousands in the days ahead.

Kaiser Permanente, the giant HMO and medical provider, said it closed multiple medical sites Thursday due to the fires, including a pharmacy and laboratory and an eye clinic.

Huntington Hospital in Pasadena, close to the Eaton Fire, said some of its outpatient offices were affected by evacuation notices and heavy smoke.

Dignity Health, another large health system, said some of its hospitals were operating on generator power due to high winds, and some, including Glendale Memorial Hospital, had canceled elective surgeries. Other hospitals, including USC Verdugo Hills and Providence St. John’s, temporarily halted nonemergency surgeries due to the impact of the wildfires.

Christine Kirmsse, a registered nurse, evacuated her Santa Monica home on Wednesday night and is staying at a hotel an hour away. But she said she feels strongly that she needs to come into work.

“There’s obviously so much help that’s needed,” Kirmsse said. “And it’s important to me because I have the skills to be able to help. In times like this, this is when community is the most powerful.”

KFF Health News’ Chaseedaw Giles and Tarena Lofton contributed to this report.

This article was produced by KFF Health News, which publishes California Healthline, an editorially independent service of the California Health Care Foundation. 

KFF Health News is a national newsroom that produces in-depth journalism about health issues and is one of the core operating programs at KFF—an independent source of health policy research, polling, and journalism. Learn more about KFF.

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Al menos una clínica médica se ha incendiado por completo. Pacientes mayores han sido evacuados de hogares de vida asistida en ambulancias, mientras las brasas volaban alrededor de ellos y de sus proveedores. Consultorios médicos han cerrado y se han cancelado citas de rutina.

Algunos proveedores han perdido sus hogares o han tenido que ser evacuados, lo que en muchos casos les impide trabajar y dificulta que algunos centros de salud tengan el personal suficiente para atender.

Pero en medio del caos, médicos, enfermeros y otros cuidadores no dejaron de hacer su trabajo.

El martes 7 de enero por la noche, Ravi Salgia, oncólogo del City of Hope Duarte Cancer Center, vio cómo la casa situada más arriba de la suya, en Eaton Canyon, se incendiaba. Mientras caían escombros y chispas, él, su esposa y su hija mayor calcularon que solo tenían unos siete minutos para salir.

En plena noche, Salgia recibió una llamada informándole que el hospital se había convertido en un centro de comando de emergencias y que corría el riesgo de tener que evacuar, lo que significaba que debía ayudar a evaluar a los pacientes y preparar las altas.

Salgia llegó al hospital a las 2:30 am del miércoles. Lo acompañaron sus colegas, muchos de los cuales también habían sido evacuados de sus hogares.

“Todos sentimos con fuerza que necesitábamos cuidar a nuestros pacientes, sin importar lo que nos estuviera pasando física y emocionalmente, o lo que les estuviera pasando a nuestras casas. Necesitábamos asegurarnos de que las personas a las que servimos recibieran atención”, dijo Salgia en una entrevista.

Al cierre de este artículo, todavia no sabia si su casa seguía en pie.

En Pacific Palisades, se quemó por completo la St. John’s Physician Partners, una clínica de atención primaria y pediátrica afiliada a Providence Health & Services, según informó Patricia Aidem, vocera de la gran cadena de hospitales católicos con sede en Renton, Washington.

No lejos del extremo este del incendio de Palisades, Providence St. John’s Health Center en Santa Mónica, uno de los principales hospitales del grupo en el área de Los Ángeles, estuvo tan cerca de evacuar que llamó a otros hospitales de la zona para encontrar espacio para pacientes que iban a ser desplazados, dijo Aidem. El hospital USC Verdugo Hills, en Glendale, también enfrentó una posible evacuación, junto con otros centros de salud de la región.

“Todos los hospitales ubicados cerca de los incendios siguen en alerta máxima y están preparados para evacuar si las condiciones empeoran”, dijo la Hospital Association of Southern California en un comunicado.

“Los incendios están creando obstáculos operativos significativos”, agregó la entidad.

También informó que los servicios de emergencia se han visto afectados por un alto volumen de llamadas, mientras que los cierres de carreteras han dificultado el traslado de pacientes, suministros y trabajadores de salud.

Algunas instalaciones de salud se han quedado sin luz, a la vez que “muchos miembros del personal están directamente afectados por las evacuaciones y las interrupciones relacionadas con los incendios, lo que complica aún más las operaciones”.

El jueves, el Departamento de Atención Médica Administrada de California ordenó a los planes de salud que garantizaran el acceso de sus miembros afectados por los incendios a todos los servicios médicos necesarios, incluido el surtido de medicamentos recetados.

Aidem dijo que algunos médicos y otros trabajadores de salud de Providence St. John’s en Santa Mónica y Providence Holy Cross Medical Center en el Valle de San Fernando han perdido sus casas o han sido evacuados: por todo esto tener suficiente personal se ha vuelto un desafío.

Hospitales en todo el condado informaron que sus salas de emergencia habían atendido pacientes con quemaduras, problemas por inhalación de humo e irritación en los ojos.

Más de 700 personas —y posiblemente muchas más— han sido evacuadas de hogares de adultos mayores y de otras instalaciones de atención, según el Departamento de Salud Pública de California.

El miércoles, el West Valley Health Center, operado por el Departamento de Servicios de Salud del condado de Los Ángeles, cerró a causa de un corte de luz, dijo el departamento. Y UCLA Health informó que el cierre de algunas de sus clínicas en Pasadena y en el lado oeste de Los Ángeles se debió en parte a “cortes de servicios públicos”.

El Hospital Infantil de Los Ángeles informó que dos de sus clínicas de atención especializada, en Encino y Santa Mónica, estuvieron cerradas el jueves “a causa de los impactos de la tormenta de viento, los cortes de luz y los incendios”.

Providence también cerró varias clínicas esta semana.

Los dos incendios más grandes, el de Palisades en las áridas colinas costeras del oeste del condado de Los Ángeles y el de Eaton en el lado este, han quemado juntos más de 50 millas cuadradas, destruido miles de estructuras, reducido a cenizas importantes sitios culturales, matado al menos a 10 personas y herido gravemente a muchas más.

Los vientos descomunales que alimentaron la explosión de los incendios el martes y miércoles han comenzado a menguar, aunque se esperan ráfagas significativas que seguirán complicando la tarea de los bomberos.

Por todo esto, es probable que miles de personas no puedan recibir atención de rutina en los próximos días.

Kaiser Permanente, el gigante proveedor de atención médica, dijo que el jueves tuvo que cerrar múltiples sitios médicos por los incendios, incluidas una farmacia, un laboratorio y una clínica oftalmológica.

El Hospital Huntington en Pasadena, cerca del incendio de Eaton, informó que algunas de sus oficinas ambulatorias se vieron afectadas por avisos de evacuación y por el denso humo.

Dignity Health, otro gran sistema de salud, informó que algunos de sus hospitales estaban operando con generadores debido a los fuertes vientos, y algunos, como el Glendale Memorial Hospital, habían cancelado cirugías electivas.

Otros hospitales, como USC Verdugo Hills y Providence St. John’s, suspendieron temporalmente las cirugías no urgentes a causa del impacto de los incendios forestales.

La enfermera Christine Kirmsse evacuó su hogar en Santa Mónica el miércoles por la noche y está en un hotel a una hora de distancia. Pero dijo que siente la necesidad de ir a trabajar.

“Obviamente se necesita mucha ayuda”, dijo Kirmsse. “Y es importante para mí porque tengo la capacidad para poder ayudar. En momentos como este, es cuando la comunidad es más poderosa”.

Chaseedaw Giles y Tarena Lofton de KFF Health News colaboraron con este artículo.

Esta historia fue producida por Kaiser Health News, que publica California Healthline, un servicio editorialmente independiente de la California Health Care Foundation.

KFF Health News is a national newsroom that produces in-depth journalism about health issues and is one of the core operating programs at KFF—an independent source of health policy research, polling, and journalism. Learn more about KFF.

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As California wildfires stretch into the colder months and hurricane survivors sort through the ruins left by floodwaters, let’s talk about an underreported victim of climate change: the emotional well-being of young people.

A nascent but growing body of research shows that a large proportion of adolescents and young adults, in the United States and abroad, feel anxious and worried about the impact of an unstable climate in their lives today and in the future.

Abby Rafeek, 14, is disquieted by the ravages of climate change, both near her home and far away. “It’s definitely affecting my life, because it’s causing stress thinking about the future and how, if we’re not addressing the problem now as a society, our planet is going to get worse,” says Abby, a high school student who lives in Gardena, California, a city of 58,000 about 15 miles south of downtown Los Angeles.

She says wildfires are a particular worry for her. “That’s closer to where I live, so it’s a bigger problem for me personally, and it also causes a lot of damage to the surrounding areas,” she says. “And also, the air gets messed up.”

In April, Abby took a survey on climate change for kids ages 12-17 during a visit to the emergency room at Children’s Hospital of Orange County.

Rammy Assaf, a pediatric emergency physician at the hospital, adapted the survey from one developed five years ago for adults. He administered his version last year to over 800 kids ages 12-17 and their caregivers. He says initial results show climate change is a serious cause of concern for the emotional security and well-being of young people.

Assaf has followed up with the kids to ask more open-ended questions, including whether they believe climate change will be solved in their lifetimes; how they feel when they read about extreme climate events; what they think about the future of the planet; and with whom they are able to discuss their concerns.

“When asked about their outlook for the future, the first words they will use are helpless, powerless, hopeless,” Assaf says. “These are very strong emotions.”

Assaf says he would like to see questions about climate change included in mental health screenings at pediatricians’ offices and in other settings where children get medical care. The American Academy of Pediatrics recommends that counseling on climate change be incorporated into the clinical practice of pediatricians and into medical school curriculums, but not with specific regard to mental health screening.

Assaf says anxiety about climate change intersects with the broader mental health crisis among youth, which has been marked by a rise in depression, loneliness, and suicide over the past decade, though there are recent signs it may be improving slightly.

A 2022 Harris Poll of 1,500 U.S. teenagers found that 89% of them regularly think about the environment, “with the majority feeling more worried than hopeful.” In addition, 69% said they feared they and their families would be affected by climate change in the near future. And 82% said they expected to have to make key life decisions — including where to live and whether to have children — based on the state of the environment.

And the impact is clearly not limited to the U.S. A 2021 survey of 10,000 16- to 25-year-olds across 10 countries found “59% were very or extremely worried and 84% were at least moderately worried” about climate change.

Susan Clayton, chair of the psychology department at the College of Wooster in Ohio, says climate change anxiety may be more pronounced among younger people than adults. “Older adults didn’t grow up being as aware of climate change or thinking about it very much, so there’s still a barrier to get over to accept it’s a real thing,” says Clayton, who co-created the adult climate change survey that Assaf adapted for younger people.

By contrast, “adolescents grew up with it as a real thing,” Clayton says. “Knowing you have the bulk of your life ahead of you gives you a very different view of what your life will be like.” She adds that younger people in particular feel betrayed by their government, which they don’t think is taking the problem seriously enough, and “this feeling of betrayal is associated with greater anxiety about the climate.”

Abby believes climate change is not being addressed with sufficient resolve. “I think if we figure out how to live on Mars and explore the deep sea, we could definitely figure out how to live here in a healthy environment,” she says.

If you are a parent whose children show signs of climate anxiety, you can help.

Louise Chawla, professor emerita in the environmental design program at the University of Colorado-Boulder, says the most important thing is to listen in an open-ended way. “Let there be space for kids to express their emotions. Just listen to them and let them know it’s safe to express these emotions,” says Chawla, who co-founded the nonprofit Growing Up Boulder, which works with the city’s schools to encourage kids to engage civically, including to help shape their local environment.

Chawla and others recommend family activities that reinforce a commitment to the environment. They can be as simple as walking or biking and participating in cleanup or recycling efforts. Also, encourage your children to join activities and advocacy efforts sponsored by environmental, civic, or religious organizations.

Working with others can help alleviate stress and feelings of powerlessness by reassuring kids they are not alone and that they can be proactive.

Worries about climate change should be seen as a learning opportunity that might even lead some kids to their life’s path, says Vickie Mays, professor of psychology and health policy at UCLA, who teaches a class on climate change and mental health — one of eight similar courses offered recently at UC campuses.

“We should get out of this habit of ‘everything’s a mental health problem,’” Mays says, “and understand that often a challenge, a stress, a worry can be turned into advocacy, activism, or a reach for new knowledge to change the situation.”

This article was produced by KFF Health News, which publishes California Healthline, an editorially independent service of the California Health Care Foundation. 

KFF Health News is a national newsroom that produces in-depth journalism about health issues and is one of the core operating programs at KFF—an independent source of health policy research, polling, and journalism. Learn more about KFF.

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California, like other states, depends heavily on federal dollars to provide care for its poorest residents. Analyses at the time showed the GOP’s proposals would cut Medicaid funds flowing from Washington by tens of billions of dollars, perhaps even more, forcing state officials to rethink the scope of Medi-Cal.

But the GOP efforts ended in failure — iconically crystallized by Arizona Republican Sen. John McCain, sick with terminal brain cancer, issuing his decisive early-morning thumbs-down.

More than seven years later, here we go again.

With Donald Trump preparing to reenter the White House, bolstered once more by Republican majorities in both houses of Congress, expectations are high that the GOP will quickly resurrect its long-desired goal of cutting Medicaid.

Republicans want to finance large tax cuts, and the GOP platform under Trump pledges not to touch Social Security or Medicare. To be sure, that’s not set in stone. But for now, as my KFF colleagues have noted, Medicaid looks an awful lot like low-hanging fruit. (KFF is a health information nonprofit that includes KFF Health News.)

Health officials in California and across the nation are on edge about the possibility of large-scale Medicaid cuts being enacted as soon as next year. Such cuts would have an outsize impact in the Golden State, whose 14.7 million Medi-Cal enrollees exceed the entire populations of all but three other U.S. states. Medi-Cal provides health coverage for over 40% of the state’s children and pays for nearly 40% of births. It is a crucial source of funding for safety net hospitals and community clinics.

And over 60% of its $161 billion budget this year comes by way of Washington.

The potential for big federal cuts to Medicaid may have been a factor in Democratic Gov. Gavin Newsom’s decision to call a special session of the state legislature this week.

California could seek to offset a sharp drop in federal dollars with higher taxes or cuts to other state programs. But both those options could be politically untenable. That’s why many health experts think leaders in Sacramento would almost certainly have to consider shrinking Medi-Cal.

That could mean cutting any number of optional benefits, such as dental services, optometry, and physical therapy. It might also mean rolling back some of the ambitious expansion Medi-Cal has undertaken in recent years. That could include some aspects of California Advancing and Innovating Medi-Cal, a $12 billion program of services that address patients’ social and economic needs in addition to their medical ones.

Some observers fear federal cuts could affect the approximately 1.5 million immigrants living in the U.S. without authorization who are enrolled in Medi-Cal at an annual cost of over $6 billion, nearly all of it funded by the state. But others say a more likely route would be to reduce payments across the board to the managed care plans that cover 94% of Medi-Cal enrollees, rather than target any specific groups of people.

“Medicaid is on the chopping block, and I don’t think that’s speculation,” says Gerald Kominski, a senior fellow at the UCLA Center for Health Policy Research. “It is widely viewed by potential members of Trump’s administration as a program that is too broad and needs to be brought under control.”

Whether they can succeed this time remains to be seen. But more on that later.

People who have followed previous GOP efforts to downsize Medicaid say a variety of previously attempted methods might be back on the table this time. They could include outright caps on federal Medicaid dollars; elimination of the core Affordable Care Act policy under which the feds pay 90% of the cost of expanding coverage to a wider swath of low-income adults; a work requirement, which could depress enrollment; and rule changes intended to make it harder for states to draw federal Medicaid dollars through the use of taxes on health care insurers known as MCOs.

The first Trump administration proposed but later dropped changes to the rules governing such taxes. If similar changes were adopted this time around, they could cause financial headaches in California, which has frequently used MCO taxes to offset Medi-Cal spending from state coffers.

Proposition 35, recently passed by California voters, could also be at risk. The initiative calls for the MCO tax to become a permanent fixture in 2027, pending federal approval, with the goal of financing billions of dollars in new Medi-Cal spending, primarily to increase funding for doctors and other providers. A federal rule change could upend those intentions.

Termination of the federal government’s 90% coverage of the ACA Medicaid expansion would put a gaping hole in the Medi-Cal budget. Medi-Cal spent over $34 billion in fiscal year 2023 covering the roughly 5 million people who enrolled as a result of the expansion, and nearly $31 billion of that amount was paid by the federal government.

If the feds’ share dropped back to its regular Medi-Cal rate of 50%, California would have to pony up nearly $14 billion more to keep the expansion enrollees covered — and that’s just for a year.

A more ambitious GOP push, including both spending caps and a rollback of federal support for the Medicaid expansion, could really send California officials scrambling.

In 2017, the state’s Department of Health Care Services issued an analysis showing that a legislative proposal filed by a group of Republican U.S. senators to cap Medicaid spending and end enhanced funding for the ACA expansion, along with some other cuts, would result in nearly $139 billion of lost federal funding to California from 2020 to 2027.

“There are almost limitless changes state leaders could make to Medi-Cal if they are forced to do that,” says David Kane, a senior attorney at the Western Center on Law & Poverty. “And we fear that burden will almost certainly hurt poor people and immigrants the most.”

But big Medicaid cuts are not a foregone conclusion. After all, when Trump was in the White House in 2017, Republicans also had House and Senate majorities and still did not achieve their goal. The political stars could be aligning differently this time, but the GOP has only a razor-thin majority in the House.

A decade into the ACA’s Medicaid expansion, some 21 million people across the country have coverage through it, embedding the program more deeply in the nation’s health care landscape. According to a 2023 study from Georgetown University, Medicaid and the related Children’s Health Insurance Program cover a higher proportion of the population in rural counties than in urban ones. And as we know, rural America leans strongly Republican.

Will GOP members of Congress, faced with a vote on cutting Medicaid, buck their own constituents?

Edwin Park, one of the authors of that Georgetown study, thinks there’s a chance big cuts can be averted. “Large numbers of Americans are either on Medicaid, have family members on Medicaid, or know somebody on Medicaid,” says Park, a research professor at Georgetown’s McCourt School of Public Policy. “Hopefully its popularity and its importance will win the day.”

This article was produced by KFF Health News, which publishes California Healthline, an editorially independent service of the California Health Care Foundation. 

KFF Health News is a national newsroom that produces in-depth journalism about health issues and is one of the core operating programs at KFF—an independent source of health policy research, polling, and journalism. Learn more about KFF.

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The Yes on Prop 35 campaign has raised over $48 million as of Sept. 9, according to campaign filings with the secretary of state. The measure would use money from a tax on managed-care health plans mainly to hike the pay of physicians, hospitals, community clinics, and other providers in Medi-Cal, the state’s version of Medicaid.

For many months, there was no organized opposition. But shortly after Labor Day, a small group of community advocates, including the League of Women Voters of California, California Pan-Ethnic Health Network, and The Children’s Partnership, announced they were united against it.

“We do not have the deep pockets that the proponents of the initiative do,” said Kiran Savage-Sangwan, executive director of the California Pan-Ethnic Health Network. No fundraising has been recorded from opposition groups thus far.

Gov. Gavin Newsom hasn’t taken a public stance, but he has warned that the proposal to lock in how proceeds from the managed-care tax are used would hamstring his administration’s ability to address the state’s yawning budget gap.

The people represented by some of the opposition groups include Medi-Cal patients who are among the state’s most vulnerable — children, seniors, people with disabilities, and the chronically ill — as well as some workers who provide ancillary care to them.

The opponents say that if Proposition 35 passes, the patients, workers, and programs they care about could lose millions of dollars included for them in this year’s state budget. That’s because the ballot measure would supersede the budget, and it leaves them out of the health tax proceeds.

The budget currently provides tens of millions of dollars a year to raise the pay of community health workers, nonemergency medical transport drivers, and private-duty nurses, among other personnel. It also funds the cost of a new program, scheduled to start Jan. 1, that allows children through age 4 to stay on Medi-Cal without requiring their families to prove eligibility every year. Child health advocates say that will help avoid potentially harmful gaps in coverage.

Mayra Alvarez, president of The Children’s Partnership, estimates the program would bring coverage stability to about 1.2 million California kids. But funding for it will be at risk if Proposition 35 passes, she warns.

It’s not that the money for that program, or the pay increases for ancillary health care workers, would necessarily go away forever. But advocates would have to fight for it in subsequent budget rounds.

Dustin Corcoran, CEO of the California Medical Association, told me that in addition to the Medi-Cal pay hikes, and some funding for medical education and extra residency slots, the initiative would provide $2 billion a year in 2025 and 2026 to the state’s general fund, “which the legislature can appropriate as they see fit, which vastly exceeds the cost of the programs you mentioned.” CMA and Planned Parenthood Affiliates of California are leading the charge on Proposition 35.

Corcoran’s comments suggest that the groups worried about losing funding if Proposition 35 passes should be able to get it restored in future budgets. Given the current fiscal crisis, however, not everyone is buying it.

“We’re short tens of billions of dollars,” says Ramon Castellblanch, vice president of the California Alliance for Retired Americans, which opposes the measure. “For these people to say, ‘Wait, the general fund is going to cover it’ — is that called gaslighting?”

Proposition 35 proponents say that children, seniors, and disabled or chronically ill people also use doctors, hospitals, and community clinics, for which the measure does provide extra money.

They argue the initiative will go a long way toward addressing Medi-Cal’s historically low pay rates, enticing more providers to participate in the program and enabling those who already do to take more Medi-Cal patients.

“This will be the most significant investment in the Medi-Cal system since the Affordable Care Act,” Corcoran says. “I think it holds great promise for improved access to care, improved quality of care, shorter wait times for all Californians in our ERs, and elimination of health care deserts that are popping up in too many parts of our state.”

Another concern raised by Proposition 35 skeptics is that a long-threatened change in federal rules governing how states collect managed-care taxes to fund Medicaid could torpedo the plans of California — and some of the other 18 states with such a tax.

Proposition 35 sets specific dollar amounts through 2026, which are based on the managed-care tax approved by the federal government last year. But the tax, which California has had in some form since 2009, must be renewed and federally approved every three years. That means that the tax requires another federal approval starting in 2027, the year the ballot measure would make funding permanent.

California’s managed-care tax comes from a levy imposed on health plans, based on monthly numbers of both Medi-Cal and commercial insurance enrollees. The money raised is matched by the federal government, doubling the spending power.

Federal rules require that the health plans be reimbursed for the tax they pay on their Medi-Cal membership. Since the Medi-Cal rate is around 100 times as much as the rate on commercial membership, 99% of the revenue from the tax is on the Medi-Cal side, thus holding many of the health plans almost entirely harmless and minimizing any impact on premiums.

But the federal government has been warning California for years, most recently in a letter it sent in late 2023 accompanying its approval of the managed-care tax, that it will require more balance between the commercial and Medi-Cal levies. Were it to change the rules in that direction, it could cause a major headache in California for a couple of reasons.

First, as proponents of Proposition 35 readily acknowledge, there is no political appetite for an increase in the amount of tax raised on commercial health plan memberships. That’s because it would likely lead to a rebellion by health plans or a jump in premiums that would anger employers, privately insured individuals, and plenty of other people. In that case, the only way to comply would be to lower the tax rate on Medi-Cal enrollment, which would significantly reduce revenue.

Second, though the ballot measure contains flexibility for small changes, it requires a three-fourths majority vote in the legislature for any major changes. That would be a tall order.

“Say the federal administration comes back and says, ‘You can’t do this anymore,’ which seems likely,” says Savage-Sangwan, who is also a spokesperson for the opposing coalition. “We’re going to be stuck with a whole lot less money.”

So far, however, the feds have not followed through on repeated warnings, and Proposition 35 proponents seem to be betting the threat of changes will prove nothing more than bluster.

We’ll see.

This article was produced by KFF Health News, which publishes California Healthline, an editorially independent service of the California Health Care Foundation. 

KFF Health News is a national newsroom that produces in-depth journalism about health issues and is one of the core operating programs at KFF—an independent source of health policy research, polling, and journalism. Learn more about KFF.

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Baackes, 78, who will retire after the end of the year, helped transform L.A. Care into a major market player following its expansion under the Affordable Care Act. He implemented a new administrative structure and promoted a new internal culture. The insurer generated $11.3 billion in revenue last year, with membership close to 2.6 million people — nearly 900,000 more than when Baackes took the reins in March 2015.

“I recognized when I got here that L.A. Care was a big frog in a big pond,” he said in an interview with KFF Health News on the 10th floor of L.A. Care’s downtown headquarters. But the organization still had a small-plan mentality, he said, until he convinced his staff “that we had an opportunity to really be leaders.”

Baackes moved to Los Angeles from Philadelphia, where he had headed the Medicare Advantage business of AmeriHealth Caritas VIP Care. He started at L.A. Care 15 months after the implementation of the ACA, which expanded Medicaid eligibility and created insurance exchanges where uninsured people could buy federally subsidized coverage.

L.A. Care’s Medi-Cal rolls swelled, and it offered a new health plan sold on the state’s ACA exchange, Covered California, as well as one for medically vulnerable seniors who are eligible both for Medi-Cal and Medicare.

But Baackes saw that L.A. Care didn’t have the right structure to manage the bigger organization it had become. So, he hired directors to oversee each of the health plans and revamped the chain of command.

The changes required a long period of reorientation, Baackes recalled. Then, “one of the officers came up to me one day and said, ‘Well, before I had to talk to everybody, but now I know who to talk to.’ I thought, ‘OK, phew, now we’re making progress.’”

Baackes has sometimes butted heads with state regulators, including when L.A. Care was fined $55 million in 2022 for “deep-rooted, systemic failures that threaten the health and safety of its members.” Baackes thought the fine was not justified. L.A. Care contested it and still has not paid it.

Baackes, who will retain his position as chair of Charles R. Drew University of Medicine and Science, a medical school that trains health professionals to work in underserved areas, expounded on the shortcomings and successes of the U.S. health system and Medi-Cal, which covers well over a third of California’s population.

Like many of his colleagues, he believes Medi-Cal’s principal flaw is low payments to providers, which is exacerbated by a shortage of labor in health care. That discourages doctors and other providers from taking Medi-Cal patients, limiting their choices and extending their wait times for care. He supports Proposition 35, a measure on the ballot this November that would secure a permanent revenue stream to increase Medi-Cal payments.

L.A. Care tackled the labor shortage by creating a $205 million fund to pay for medical school scholarships, help clinics hire doctors, and offer educational debt relief to doctors who work in safety-net settings. Jennifer Kent, former director of the California Department of Health Care Services, which oversees the Medi-Cal program, said she was impressed when Baackes used money from a rate settlement with her agency to help fund those initiatives.

“John very clearly has an appreciation and a passion for the program and what it represents in terms of the power to change people’s lives,” Kent said.

This interview with Baackes has been edited for length and clarity:

Q: Voters will decide, with their vote on Proposition 35, whether money from an industry tax will be locked into Medi-Cal permanently, curbing Gov. Gavin Newsom’s plan to tap the revenue for the state’s budget shortfall. Where do you stand on this?

I understand they’ve got a budget deficit, and they’ve got to do something about it. But we have to have security of the funding, and if it’s going to be decided in every budget, there’s going to be politics and other priorities. This is the same way education runs. They went to a ballot initiative to lock in their portion of the budget, and I think the health of over one-third of the population is as important as education.

Q: Medi-Cal has embarked on an ambitious expansion, including full coverage for all immigrants, a push to increase the amount of primary care provided, the elimination of an asset test, and continuous coverage for children up to age 5, among other things. Does the provider shortage in Medi-Cal dampen the prospects of these efforts?

Absolutely. If we are giving people expansion in access, then we have to have the resources for them to take advantage of it — unless we’re going to say, “Yeah, you have access, but figure it out on your own.” If we look at Los Angeles County, we’ve got plenty of doctors bumping into each other in places like Beverly Hills and Santa Monica. But if you go to South L.A., the Antelope Valley, it’s a different story.

Q: What do you think of the Office of Health Care Affordability’s goal of limiting annual health care spending increases to 3.5% at first, and ultimately to 3%?

Well-intended, but I do not see how it can be effective without causing a lot of damage along the way. You can restrict the amount of money that can be spent, but it doesn’t fix the underlying drivers of why it costs so much.

Q: So it could ultimately reduce care for patients?

Yeah. I think so. Because if doctors and nurses demand higher salaries and can command them because there aren’t enough people, then having an administrative hammer that you can’t spend more isn’t going to work.

Q: A lot of people would say the whole U.S. health care system, not just Medicaid, is failing patients. Access to care, and the cost of it, is difficult for a lot of people. How do we fix the system?

We need to simplify the regulatory environment. Regardless of whether it’s commercial insurance, Medicare, or Medicaid, the regulations are piling up and they cost money. The second thing: I think particularly the safety-net providers might have to say there can be no for-profit or private equity investors in that area. I’m not against capitalism. I just think if you’re going to make that money on a system that’s underfunded in the first place, something is being lost.

Q: What are your thoughts about the California Advancing and Innovating Medi-Cal program (CalAIM), especially the community supports such as meals designed for specific medical conditions, home modifications, and help finding housing?

CalAIM is a wonderful program in the sense that it begins to recognize that social determinants do influence your health. So we’re finally saying, “OK, we’ll put some money toward paying for those.” But the trade-off is that they want to reduce the medical costs by making these investments. The problem is we are trying to save dollars that are already deeply discounted. Of the 14 community supports they have, the one that is in my mind a slam dunk is the medically tailored meals.

Q: How has your thinking about health care evolved?

What I’ve learned and experienced is that health care is part of social justice, and we have to think of it that way. Any other way of thinking of it is going to create winners and losers.

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The legislation, sponsored by Attorney General Rob Bonta, would require private equity groups and hedge funds to notify his office of planned purchases of many types of health care businesses and obtain its consent. It also reinforces state laws that bar nonphysicians from directly employing doctors or directing their activities, which is a primary reason for the doctor association’s support.

Private equity firms raise money from institutional investors such as pension funds and typically acquire companies they believe can be run more profitably. Then they look to boost earnings and sell the assets for multiples of what they paid for them.

That can be good for future retirees and sometimes for mismanaged companies that need a capital infusion and a new direction. But critics say the profit-first approach isn’t good for health care. Private equity deals in the sector are coming under increased scrutiny around the country amid mounting evidence that they often lead to higher prices, lower-quality care, and reduced access to core health services.

Opponents of the bill, led by the state’s hospital association, the California Chamber of Commerce, and a national private equity advocacy group, say it would discourage much-needed investment. The hospital industry has already persuaded lawmakers to exempt sales of for-profit hospitals from the proposed law.

“We preferred not to make that amendment,” Bonta said in an interview. “But we still have a strong bill that provides very important protections.”

The legislation would still apply to a broad swath of medical businesses, including clinics, physician groups, nursing homes, testing labs, and outpatient facilities, among others. Nonprofit hospital deals are already subject to the attorney general’s review.

A final vote on the bill could come this month if a state Senate committee moves it forward.

Nationally, private equity investors have spent $1 trillion on health care acquisitions in the past decade, according to a report by The Commonwealth Fund. Physician practices have been especially attractive to them, with transactions growing sixfold in a decade and often leading to significant price increases. Other types of outpatient services, as well as clinics, have also been targets.

In California, the value of private equity health care deals grew more than twentyfold from 2005 to 2021, from less than $1 billion to $20 billion, according to the California Health Care Foundation. Private equity firms are tracking the pending legislation closely but so far haven’t slowed investment in California, according to a new report from the research firm PitchBook.

Multiple studies, as well as a series of reports by KFF Health News, have documented some of the difficulties created by private equity in health care.

Research published last December in the Journal of the American Medical Association showed a larger likelihood of adverse events such as patient infections and falls at private equity hospitals compared with others. Analysts say more research is needed on how patient care is being affected but that the impact on cost is clear.

“We can be almost certain that after a private equity acquisition, we’re going to be paying more for the same thing or for something that’s gotten worse,” said Kristof Stremikis, director of Market Analysis and Insight at the California Health Care Foundation.

Most private equity deals in health care are below the $119.5 million threshold that triggers a requirement to notify federal regulators, so they often slide under the government radar. The Federal Trade Commission is stepping up scrutiny, and last year it sued a private equity-backed anesthesia group for anticompetitive practices in Texas.

Lawmakers in several other states, including Connecticut, Minnesota, and Massachusetts, have proposed legislation that would subject private equity deals to greater transparency.

Not all private equity firms are bad operators, said Assembly member Jim Wood, a Democrat from Healdsburg, but review is essential: “If you are a good entity, you shouldn’t fear this.”

The bill would require the attorney general to examine proposed transactions to determine their impact on the quality and accessibility of care, as well as on regional competition and prices.

Critics note that private equity deals are often financed with debt that is then owed by the acquired company. In many cases, private equity groups sell off real estate to generate immediate returns for investors and the new owners of the property then charge the acquired company rent.

That was a factor in the financial collapse of Steward Health Care, a multistate hospital system that was owned by the private equity firm Cerberus Capital Management from 2010 to 2020, according to a report by the Private Equity Stakeholder Project, a nonprofit that supports the California bill. Steward filed for Chapter 11 bankruptcy in May. “Almost all of the most distressed US healthcare companies are owned by private equity firms,” according to another study by the group.

Opponents of the legislation argue it would dampen much-needed investment in an industry with soaring operating costs. “Our concern is that it will cut off funding that can improve health care,” said Ned Wigglesworth, a spokesperson for Californians to Protect Community Health Care, a coalition of groups fighting the legislation. The prospect of having to submit to a lengthy review by the attorney general, he said, would create “a chilling effect on private funders.”

Proponents of private equity investment point to what they say are notable successes in California health care.

Children’s Choice Dental Care, for example, said in a letter to state senators that it logs over 227,000 dental visits annually, mostly with children on Medi-Cal, the health insurance program for low-income Californians. “We have been able to expand to 25 locations, because we have been able to access capital from a private equity firm,” the group wrote.

Ivy Fertility, with clinics in California and eight other states, said in a letter to state senators that private investment has expanded its ability to provide fertility treatments at a time when demand for them is increasing.

Researchers note that private equity investors are hardly alone when it comes to health care profiteering, which extends even to nonprofits. Sutter Health, a major nonprofit hospital chain, for example, settled for $575 million in a lawsuit brought by then-Attorney General Xavier Becerra, for unfair contracting and pricing.

“It’s helpful to look at ownership classes like private equity, but at the end of the day we should look at behavior, and anyone can do the things that private equity firms do,” said Christopher Cai, a physician and health policy researcher at Harvard Medical School. He added, though, that private equity investors are “more likely to engage in financially risky or purely profit-driven behavior.”

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The Democratic vice president could influence the Federal Trade Commission and instruct the departments of Justice and Health and Human Services to prioritize enforcement of antitrust laws and channel resources accordingly. Already, the Biden administration has taken an aggressive stance against mergers and acquisitions. In his first year in office, President Joe Biden issued an executive order intended to intensify antitrust enforcement across multiple industries, including health care.

Under Biden, the FTC and DOJ have fought more mergers than they have in decades, often targeting health care deals.

“What Harris could do is set the tone that she is going to continue this laser focus on competition and health care prices,” said Katie Gudiksen, a senior health policy researcher at University of California College of the Law, San Francisco.

The Harris campaign didn’t respond to a request for comment.

For decades, the health industry has undergone consolidation despite government efforts to maintain competition. When health systems expand, adding hospitals and doctor practices to their portfolios, they often gain a large enough share of regional health care resources to command higher prices from insurers. That results in higher premiums and other health care costs for consumers and employers, according to numerous studies.

Health insurers have also consolidated in recent decades, leaving only a handful controlling most markets.

Health care analysts say it’s possible for Harris to slow the momentum of consolidation by blocking future mergers that could lead to higher prices and lower-quality care. But many of them agree the consolidation that has already taken place is an inescapable feature of the U.S. health care landscape.

“It’s hard to unscramble the eggs,” said Bob Town, an economics professor at the University of Texas.

There were nearly 1,600 hospital mergers in the U.S. from 1998 to 2017 and 428 hospital and health system mergers from 2018 to 2023, according to a KFF study. The percentage of community hospitals that belong to a larger health system rose from 53 in 2005 to 68 in 2022. And in another sign of market concentration, as of January, well over three-quarters of the nation’s physicians were employed by hospitals or corporations, according to a report produced by Avalere Health.

Despite former President Donald Trump’s hostility to regulation as a candidate, his administration was active on antitrust efforts — though it did allow one of the largest health care mergers in U.S. history, between drugstore chain CVS Health and the insurer Aetna. Overall, Trump’s Justice Department was more aggressive on mergers than past Republican administrations.

Harris, as California’s attorney general from 2011 to 2017, jump-started health care investigations and enforcement.

“She pushed back against anticompetitive pricing,” said Rob Bonta, California’s current attorney general, who is a Democrat.

One of Harris’ most impactful decisions was a 2012 investigation into whether consolidation among hospitals and physician practices gave health systems the clout to demand higher prices. That probe bore fruit six years later after Harris’ successor, Xavier Becerra, filed a landmark lawsuit against Sutter Health, the giant Northern California hospital operator, for anticompetitive behavior. Sutter settled with the state for $575 million.

In 2014, Harris was among 16 state attorneys general who joined the FTC in a lawsuit to dismantle a merger between one of Idaho’s largest hospital chains and its biggest physician group. In 2016, Harris joined the U.S. Department of Justice and 11 other states in a successful lawsuit to block a proposed $48.3 billion merger between two of the nation’s largest health insurers, Cigna and Anthem.

Attempts to give the state attorney general the power to nix or impose conditions on a wide range of health care mergers have been fiercely, and successfully, opposed by California’s hospital industry. Most recently, the hospital industry persuaded state lawmakers to exempt for-profit hospitals from pending legislation that would subject private equity-backed health care transactions to review by the attorney general.

A spokesperson for the California Hospital Association declined to comment.

As attorney general of California, Harris’ work was eased by the state’s deep-blue political hue. Were she to be elected president, she could face a less hospitable political environment, especially if Republicans control one or both houses of Congress. In addition, she could face opposition from powerful health care lobbyists.

Though it often gets a bad rap, consolidation in health care also confers benefits. Many doctors choose to join large organizations because it relieves them of the administrative headaches and financial burdens of running their own practices. And being absorbed into a large health system can be a lifeline for financially troubled hospitals.

Still, a major reason health systems choose to expand through acquisition is to accumulate market clout so they can match consolidation among insurers and bargain with them for higher payments. It’s an understandable reaction to the financial pressures hospitals are under, said James Robinson, a professor of health economics at the University of California-Berkeley.

Robinson noted that hospitals are required to treat anyone who shows up at the emergency room, including uninsured people. Many hospitals have a large number of patients on Medicaid, which pays poorly. And in California, they face a series of regulatory requirements, including seismic retrofitting and nurse staffing minimums, that are expensive. “How are they going to pay for that?” Robinson said.

At the federal level, any effort to blunt anticompetitive mergers would depend in part on how aggressive the FTC is in pursuing the most egregious cases. FTC Chair Lina Khan has made the FTC more proactive in this regard.

Last year, the FTC and DOJ jointly issued new merger guidelines, which suggested the federal government would scrutinize deals more closely and take a broader view of which ones violate antitrust laws. In September, the FTC filed a lawsuit against an anesthesiology group and its private equity backer, alleging they had engaged in anticompetitive practices in Texas to drive up prices.

In January, the agency sued to stop a $320 million hospital acquisition in North Carolina.

Still, many transactions don’t come to the attention of the FTC because their value is below its $119.5 million reporting threshold. And even if it heard about more deals, “it is very underresourced and needing to be very selective in which mergers they challenge,” said Paul Ginsburg, a professor of the practice of health policy at the University of Southern California’s Sol Price School of Public Policy.

Khan’s term ends in September 2024, and Harris, if elected, could try to reappoint her, though her ability to do so may depend on which party controls the Senate.

Harris could also promote regulations that discourage monopolistic behaviors such as all-or-nothing contracting, in which large health systems refuse to do business with insurance companies unless they agree to include all their facilities in their networks, whether needed or not. That behavior was one of the core allegations in the Sutter case.

She could also seek policies at the Department of Health and Human Services, which runs Medicare and Medicaid, that encourage competition.

Bonta, California’s current attorney general, said that, while there are bad mergers, there are also good ones. “We approve them all the time,” he said. “And we approve them with conditions that address cost and that address access and that address quality.”

He expects Harris to bring similar concerns to the presidency if she wins.

This article was produced by KFF Health News, which publishes California Healthline, an editorially independent service of the California Health Care Foundation. 

KFF Health News is a national newsroom that produces in-depth journalism about health issues and is one of the core operating programs at KFF—an independent source of health policy research, polling, and journalism. Learn more about KFF.

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An initiative, supported by virtually every sector of the state’s health care industry as well as the local Republican and Democratic parties, would lock in the money for Medi-Cal, California’s version of the Medicaid health insurance program for low-income residents. The funds would be used primarily to increase payment rates for health care professionals who serve Medi-Cal patients.

Newsom, a Democrat, initially supported using the money for that purpose. But after California’s fiscal situation darkened, he reversed course in May, proposing to divert most of it to reduce the state’s $45 billion budget deficit.

The money is from a tax on managed-care health plans that’s been around for two decades but has historically been used to offset existing state spending rather than support new investments in Medi-Cal.

“The importance of this ballot initiative is finally being serious about investing in the viability of the Medi-Cal system,” said Adam Dougherty, chief of emergency medicine at Sutter Medical Center in Sacramento. “The MCO tax literally touches every aspect of the Medi-Cal system, and it can’t be at the mercy of year-to-year budget crises.”

Michael Genest, a former finance director under Republican Gov. Arnold Schwarzenegger, noted that several ballot initiatives approved by voters in the past continue to narrow the state’s fiscal choices, including one that limits property tax increases and another that guarantees a large share of the state budget to schools.

“We do ballot-box budgeting in the state of California. We’ve done it forever. And everything we’ve done in that regard has turned out to be very hard on fiscal stability,” Genest said.

It’s possible that the Coalition to Protect Access to Care, made up of doctors, hospitals, health plans, and other medical providers, could settle their differences with state leaders before a June 27 deadline to withdraw the initiative.

Newsom’s desire to claw back most of the promised money puts him at odds with proponents of the initiative, many of whom have long counted themselves among his allies. Elana Ross, a spokesperson for Newsom, declined to comment on the status of the initiative.

In May, Newsom proposed using about $6.7 billion previously earmarked for Medi-Cal pay hikes and some other health care priorities, mostly in 2025 and 2026, to offset existing state spending. His proposal would retain Medi-Cal payment increases totaling around $300 million a year for some primary care, mental health, and maternity services.

The legislature passed a new budget on June 13 largely following the governor’s wishes by canceling the planned Medi-Cal increases in 2025. But Newsom hasn’t signed off.

“What was approved represents a two-house agreement between the Senate and the Assembly — not an agreement with the governor,” said H.D. Palmer, spokesperson for the state’s Department of Finance. “We’ll respectfully decline to speculate on what the contours of a final agreement would look like.”

Revenue from the managed-care tax allows the state to draw matching federal dollars, more than doubling the amount available. Federal and state money would also be used to reimburse the health plans for nearly all the taxes they paid, theoretically having no effect on insurance premiums.

California is among 19 states that have such an “MCO tax” in place to help fund their Medicaid programs. Using the tax revenue to pay Medi-Cal providers more is “a generational opportunity to fundamentally fix access to care for Medi-Cal recipients,” said Dustin Corcoran, CEO of the California Medical Association and a spokesperson for the ballot initiative.

Corcoran said internal polling shows the initiative has public support by “very healthy margins,” though he declined to share specific numbers.

If the initiative does end up on the November ballot and is approved, it would override any compromise Newsom strikes with lawmakers. It would restore the previously planned Medi-Cal investments for 2025 and 2026. And it would make the increased funding, and more of it, permanent starting in 2027, though that would require federal approval.

Proponents of the initiative say it is fundamentally a question of health equity. Medi-Cal covers medical and mental health services for nearly 15 million Californians, well over a third of the state, many of them among the poorest and most vulnerable residents. The program has a budget of about $157 billion, including recent expansions to cover all immigrants regardless of legal status and a $12 billion experiment to offer socioeconomic supports not traditionally covered by health insurance.

But access to care is notoriously spotty for many Medi-Cal patients, in part because low payment rates discourage providers from seeing them. The shortage is particularly acute in specialty care.

“Our patients wait months for access to specialists or travel great distances to see them,” said Joel Ramirez, chief medical officer of Camarena Health, a chain of over 20 community clinics based in Madera. “Higher rates would allow for more providers.”

Ramirez said 60% to 70% of Camarena’s patients are on Medi-Cal, many of them farmworkers. “It’s a tall ask for them to find time off work and get the transportation to travel an hour for an appointment,” he said. “Whatever condition that patient has that needs the attention of a specialist is being either untreated or incompletely treated.”

Dougherty, Sutter Medical Center’s ER chief, said that over half of his patients are on Medi-Cal and the ER is always at full capacity, with the waiting rooms jammed and an insufficient number of beds. The initiative, he said, “allows us to hire more staff, add more beds, create more infrastructure for the volume we’re seeing.”

This article was produced by KFF Health News, which publishes California Healthline, an editorially independent service of the California Health Care Foundation. 

KFF Health News is a national newsroom that produces in-depth journalism about health issues and is one of the core operating programs at KFF—an independent source of health policy research, polling, and journalism. Learn more about KFF.

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