Proposition 52

Proposition 52 – Continuing Hospital Fee; Requiring Supermajority

Proposition 52 continues an existing fee charged to hospitals (a tax) that is used to obtain matching federal dollars to support Medicaid; the fee expires in 2016 and would need to be re-authorized either by this initiative or by new legislative action[1]. In 2016, the legislature diverted 900K of the hospital fee to the State’s general fund; this proposition would prohibit such diversion absent voter approval (so it’s effectively precluded). It also requires a supermajority for any legislative change to the measure.

This proposition has a nearly endless list of supporters including a large number of legislators, the Republican Party, Democratic party, Peace and Freedom Party and just about anyone else you can think of[2]. The only opposition we have been able to locate comes from a small number of labor unions who contend that the measure leads to inflated hospital administrators – strictly speaking, that’s just not true[3].

We do have some hesitation in recommending this measure. By now you likely know we don’t like supermajorities and we don’t like forcing full public votes to change legislation. We actually think that the legislature’s ability to move monies around in times of need is an important element of a representative democracy. Still, here we think there are some important elements to this initiative that make those parts we struggle with a bit more palatable. First the hospitals that pay this tax have done so quite willingly, many support this initiative, and none oppose it. We can see a “fairness” rationale to “locking-in” the funds paid by the hospitals to ensure those funds are used for the stated objective. Additionally, because this tax is expiring we are concerned that failure to pass this tax by popular vote will lead to the traditional political fights we have seen when the legislature has tried to pass tax increases in the past. Because the funds generated by this tax are essential to obtaining needed matching federal funds to support the State’s Medicaid system we think it’s a reasonable proposal.

Recommendation: Moderate YES 

[1]https://ballotpedia.org/California_Proposition_52,_Voter_Approval_to_Divert_Hospital_Fee_Revenue_Dedicated_to_Medi-Cal_(2016)

[2]https://ballotpedia.org/California_Proposition_52,_Voter_Approval_to_Divert_Hospital_Fee_Revenue_Dedicated_to_Medi-Cal_(2016)

[3] https://votecircle.com/propositions/CA/proposition-52/state-fees-on-hospitals-federal-medi-cal-matching-funds-initiative-statutory-and-constitutional-amendment/oppose

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