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Rare Budget Investment Will Support Care for Medi-Cal Patients

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Earlier this week, the state Legislature and governor reached a budget agreement that — starting in 2025 — will bring an estimated $1.7 billion annually for California hospitals and even more for primary and specialty care physicians treating people covered by Medi-Cal. 

This is a historic investment in Medi-Cal that comes despite a projected $30 billion state budget deficit and represents a significant, multi-year commitment to protecting access to health care for vulnerable Californians. Funding for these investments came at the request of a coalition of health care plans and providers, including CHA, to reinstate a tax on managed care organizations and use those funds in part to improve Medi-Cal funding for providers. The remainder of the tax will be used to offset the state deficit. 

Your voice over the past six months, in sharing concerns about a statewide health care system that is rapidly deteriorating due to COVID-related financial losses, unprecedented inflation, and other challenges, was critical to carrying this investment across the finish line. 

At a high level, in 2024, hospitals will receive the following to support care for Medi-Cal patients: 

  • $150 million (bringing the total to $300 million) for the new distressed hospital loan fund 
  • $75 million for graduate medical education 
  • $50 million for seismic relief for certain small/rural hospitals 

In 2025 and annually thereafter, the estimated totals — including matching federal funds — are: 

  • $640 million to support emergency department access 
  • $610 million for outpatient services 
  • $380 million to support public hospitals 
  • $75 million for graduate medical education 

Resources from the tax, totaling an estimated $6.6 billion annually — including matching federal funds — for health care providers beginning in 2025, extend beyond hospital care and include: 

  • $1.7 billion for primary care, including maternity care and mental health services 
  • $1.4 billion for specialty care 
  • $750 million for behavioral health throughput, some of which will support patients in crisis in emergency departments 

CHA will continue to be vigilant — should the budget outlook worsen — against any efforts to divert these funds from critical services for people covered by Medi-Cal. For now, however, the pieces are in place to deliver much-needed, long-term support for emergency care, outpatient services, behavioral health services, specialty care, and more.