Calif. Lawmakers Begin To Move Tax Restructure

California lawmakers are moving to prevent a billion-dollar budget hole. After more than a year of discussion, a conference committee of state Senate and Assemblymembers passed a revised tax on health care organizations Monday.

The federal government has told the state it has misapplied the tax on managed care organizations, or MCOs, and could lose federal funds for Medi-Cal, if it does not restructure it. That will require a two-thirds majority in the Legislature.

To clear the way for Republican support, the revised tax does not increase the cost to insurance companies. A companion bill allocated $300 million of the extra money the tax will generate toward developmental disability services—a priority for Republicans.

Both bills move to the full Assembly and Senate—a final vote could come as soon as Thursday.