Brown Vetoes Medi-Cal Bills, Citing Expected $1.1B Budget Deficit

Citing the state Legislature’s failure to rework the expiring managed care organization tax and the resulting budget deficit, Gov. Jerry Brown (D) on Saturday vetoed several bills, six of which were related to Medi-Cal, KQED’s “The California Report” reports.
Medi-Cal is California’s Medicaid program (Myers, “The California Report,” KQED, 10/10).


The current MCO tax expires in June 2016. In July, federal officials said they would not reauthorize the formula California uses.
With the current tax, only MCOs participating in Medi-Cal are taxed. California gets $1.1 billion in federal matching dollars on that money and then the MCOs are reimbursed through the Medi-Cal services they provide. Federal officials said if California wants to continue taxing MCOs, the state must tax all of them.
The California Legislature adjourned for the year without passing a bill to restructure the tax, leaving a $1.1 billion hole in the Medi-Cal budget — a deficit that was the central reason the governor in June convened the special session on health care (Gorn, California Healthline, 9/14).

Vetoed Bills

The six rejected bills related to Medi-Cal included:

Among other things, the bills would have added new health benefits for low-income residents, such as:

  • Home visitation programs for pregnant women and new parents;
  • A new reimbursement system for rural health clinics; and
  • A tobacco cessation program.

Brown also vetoed several proposed new tax credits.
According to “The California Report,” Democrats and activists took particular issue with Brown’s veto of an affordable housing tax credit.

Brown’s Veto Messages

In a veto message for the tax credits, Brown said, “Without the extension of the managed care organization tax that I called for in special session, next year’s budget faces the prospect of over $1 billion in cuts” (“The California Report,” KQED, 10/10).
In a separate veto message for the Medi-Cal bills, Brown said, “Taken together, these bills would require new spending at a time when there is considerable uncertainty in the funding of this program. Until the fiscal outlook for Medi-Cal is stabilized, I cannot support any of these measures” (Nichols, “KXJZ News,” Capital Public Radio, 10/10).