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Prop 52: Fees on Hospitals for Medi-Cal

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Updated 1:30 pm Nov. 9, 2016


Prop 52 has passed by a margin of 69.6% yes to 30.4 % no. The fee that hospitals pay for Medi-Cal becomes permanent and funds can only be reallocated if voters approve it.

What is Prop 52 about?

Prop 52 is basically a tug-of-war over who controls health care dollars. The dollars we’re talking about come from California hospitals. In 2009 they started paying fees so California could get matching funds from the federal government. These matching funds bring in a whopping $3 billion a year for Medi-Cal patients. (Medi-Cal is the program that helps about 13 million uninsured and low-income Californians with health care costs.)

What would Prop 52 do?

Right now the state legislature can re-allocate some of those hospital fees to the state’s general fund. Prop 52 would:

  • Extend the hospital fee program indefinitely. It's scheduled to end on Jan 1, 2018 unless the legislature extends it.
  • Require that voters approve any re-allocation of hospital fees first. Right now this power resides with the state legislature.
  • Require a 2/3’s vote of the legislature to make any other changes to the hospital fee program, including ending it.

How did this “tug-of-war” develop?

It started when the federal government began offering states matching funds for Medi-Cal. In order to qualify for the maximum in matching funds, hospitals in California agreed to pay fees to qualify for the full amount.  So California now gets a hefty $3 billion a year. 

But then the state legislature diverted some of the hospital fee dollars into the general fund. Hospitals said ‘Wait a minute. That money is supposed to be used for Medi-Cal only.’  The result? Hospitals launched Prop 52.

Who supports Prop 52 and what are their arguments for it?

The main proponent of Prop 52 is the California Hospital Association and medical centers. Other supporters include chambers of commerce, labor unions, and community clinics that offer health care to the uninsured.

They say:

  • Prop 52 would “keep a good idea” going by extending indefinitely the hospital fee program and assuring that federal Medi-Cal dollars keep coming to California,
  • The funds help more than 13 million California including seniors, children and low-income working families.
  • The program brings in $3 billion in federal funds with no cost to California taxpayers.
  • If we didn’t bring in that money, Californians would have their medical premiums increased to subsidize Medi-Cal.
  • Prop 52 prevents federal health care dollars from being diverted to other uses unless 2/3’s of the legislature ok’s it.

Who opposes Prop 52 and what are their arguments against it?

Opponents include two major labor unions: the Service Employees International Union and United HealthCare Workers West.

They say:

  • Prop 52 lacks accountability and oversight. There’s no guarantee the money would be spent on healthcare.
  • Prop 52 is a “money grab”, taking money away from patients to pay for lavish perks for millionaire hospital executives and lobbyists.
  • The California Hospital Association is a corporate-funded organization. They wrote Prop 52 to be sure they have permanent control over $3 billion in health care dollars.
  • Prop 52 hurts low-income women, children and seniors in need of health care services.

What kind of money is behind Prop 52?

A huge amount of money is being raised to try to get Prop 52 passed. Nearly $60 million dollars so far. About 18% of that came through the California Health Foundation and Trust which is a non-profit affiliated with the California Hospital Association.

What does my “yes” or “no” vote mean?

A “YES” vote means the hospital fee program becomes permanent, and the fees could only be reallocated if voters approve it first.

A “NO” vote means the hospital fee program would end on Jan. 1, 2018 unless the legislature extends it, and the legislature alone can divert the funds.

Click here for a cheat sheet on all the California ballot propositions.

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