Insurance Industry Backs Brown's Tax On California Health Plans

Support is growing for Gov. Jerry Brown’s proposal to restructure California’s tax on health insurance plans. A key interest group is backing the tax – and some Republicans are hinting that they might too.

The federal government says California must overhaul its managed care organization (MCO) tax to avoid losing $1 billion for Medi-Cal, the state’s health care program for the poor.

The California Association of Health Plans has been locked in talks with the Brown administration for more than a year. They want to make sure insurance companies don’t lose money so they don’t have to raise consumers’ health care premiums.

At last, a deal appears near. New legislative language was formally introduced on Monday. And on Wednesday, lawmakers held their first committee hearings to showcase the proposal's support – starting with the insurance industry.

“This strikes – we think – a supportable balance between funding our Medi-Cal program and protecting affordability,” says CAHP President and CEO Charles Bacchi.

Although Brown’s proposed tax deal does call for a broad tax increase on California health plans, Bacchi says, it won't lead to higher health care premiums.

“It is coupled with two very specific tax cuts. And taken together as a package, it allows us to be supportive and we think it’s a balanced approach.”

The deal will require bipartisan support to reach the required two-thirds supermajority in the Legislature.

Republican Assemblyman Brian Maienschein hinted that’s possible – “It seems like we’re on our way to hopefully providing a solution,” he said at one of Wednesday's committee hearings – but many Republicans are waiting for buy-in from business and tax groups as well.

A vote likely won’t come until next week at the earliest.