As California reached a new deal in the form of a tax on health care plans in what has been described as a once-in-a-generation investment into a system that serves nearly 16 million Californians, the LACMA board of directors wanted to specifically thank L.A. Care Health Plan CEO John Baackes for his vision and leadership as he started the LA Safety Net Coalition in 2022 to delve into solutions specifically to help fund Medi-Cal while expanding access to care for the working poor.
That vision has morphed into a statewide coalition. The last three times California levied this tax on health plans, it used the money to balance the budget during economic downturns. Now, for the first time, much of the revenue will be spent to improve the state’s publicly subsidized healthcare system — and in a year when the state faces a $32 billion budget deficit.
After federal funds are factored in, the state will be able to spend north of $35 billion, according to Jennifer Kent, a former administration official who helped the coalition propose a structure for the tax. It would be the largest-ever investment in Medi-Cal. For the coming year, the deal hews closely to what Governor Gavin Newsom proposed in May. Some of the money will be used to balance the budget, with $3.5 billion going into the general fund. Three specialties will get a boost to their reimbursement rates: Primary care, OBGYN, and some mental health care services will start being paid 87.5% of what the federal government pays them through Medicare.
$75 million will be used to create new residency slots for medical school graduates, focusing on underserved areas, likely in the Central Valley, parts of Los Angeles, and the Imperial Valley.
“Who thought a year ago when a cross-section of hospitals, doctors, medical groups, FQHCs, and health plans here in Los Angeles met with the goal of increasing Medi-Cal payments to providers where we would be today? Our Los Angeles Safety Net Coalition evolved into the California Safety Net Coalition bringing the same ecosystem together for the first time to advance a common mission to increase the abysmal reimbursement providers receive for caring for one-third of the state population depending on Medi-Cal for their access to health care.
While we thought our only path forward was a statewide ballot initiative in 2024, Governor Newsom amended his January budget message to include money for the first increase in Medi-Cal funding in decades with his budget revision that was adopted in June. The state incorporated a financial model developed by the consultants we engaged for the LASNC a year ago that will provide the necessary financial resources.
For me and I hope others this was a valuable lesson in the value of coalitions acting as a system of care as opposed to each segment trying to go it alone. Let’s learn from this achievement to make further improvements in financing as well as addressing burnout and building a pipeline for more providers to be in the Medi-Cal network, “ John Baackes, CEO, L.A. Care Health Plan.
“As a member of the L.A. Care Technical Advisory Committee and as a member of the LACMA board, I want to recognize the efforts of CEO John Baackes and the L.A. Care Board of Governors for their historic launch of what is now a statewide coalition,” said LACMA board member Dr. Hector Flores. “This achievement will improve the stability of nearly 20,000 private practices serving Medi-Cal patients in our state and will enhance access to specialty and hospital services for safety net clinics. Kudos also to the California Medical Association and its CEO, Dustin Corcoran, for leading the work of this unique coalition to serve all Californians,” Flores said.
