The California Legislature passed the 2023-24 health budget trailer bill this week, which renews the state’s Managed Care Organization (MCO) Tax and provides the largest Medi-Cal rate increase in California history, ensuring that millions of Californians have greater access to affordable, high-quality, life-saving health care.

“The state budget approved by the legislature today represents a historic investment in California’s health care system that will help us achieve justice and equity for the more than 14 million Californians who rely on Medi-Cal for their health care,” said California Medical Association (CMA) President Donaldo Hernandez, M.D. “Physicians across California applaud the legislature for  their bipartisan support for legislation to reinstate the MCO Tax and use the funding to help fulfill Medi-Cal’s promise of access to care.”

CMA and other members of the Coalition to Protect Access to Care have been working together over the past few months to seize a generational opportunity to make critical and meaningful investments in the Medi-Cal system and shore up our healthcare delivery system.

The coalition’s goal has been to ensure that Medi-Cal enrollees have the same access to care as those with commercial insurance and that providers can afford to treat a patient population that reflects their communities – without worrying about the financial solvency of their practice. The MCO Tax will raise a total of $19.4 billion, with much of it being spent on the state’s healthcare infrastructure.

Starting in 2024, Medi-Cal provider rates will be increased to at least 87.5% of Medicare for primary care, maternity care, and non-specialty mental health services. Starting in 2025, the MCO Tax will also provide a new infusion of $6 billion for the Medi-Cal program and the healthcare workforce. Specifically, there will be an annual appropriation of $1.38 billion in primary care rate increases, $1.15 billion in specialty care rate increases, $700 million to increase emergency department access (including $200 million for emergency department physicians), at least $500 million for family planning and reproductive health care, and $600 million for behavioral health facilities, including increasing inpatient psychiatric beds.

“The state budget makes important investments in primary and specialty care and ensures our hospitals’ emergency departments remain open in times of crisis. It will also help train hundreds of additional physicians each year so that California is better prepared to meet our growing healthcare needs,” said Dr. Hernandez. “We thank the Governor and the legislature for their commitment to putting patients first in this state budget, so we are better able to fulfill California’s commitment to health care access and equity.” 

For more information, see our MCO Tax Fact Sheet and FAQ.