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November 8, 2016 — California General Election
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— Private Hospital Fees for Medi-CalState Fees on Hospitals. Federal Medi-Cal Matching Funds.Initiative Constitutional Amendment and Statute

November 8, 2016California General Election

State of California
Prop. 52 — Private Hospital Fees for Medi-Cal Initiative Constitutional Amendment and Statute - Majority Approval Required

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Election Results

Passed

9,427,714 votes yes (70.1%)

4,026,710 votes no (29.9%)

  • 100% of precincts reporting (24,847/24,847).

This proposition is both an Initiative Constitutional Amendment and Statute. It extends indefinitely an existing statute that imposes fees on hospitals to fund Medi-Cal health care services, care for uninsured patients, and children’s health coverage.

Proposition 52 Contributions Data

Note on Methodology
Information provided by The League of Women Voters of California Education Fund

The way it is now

The Medi-Cal program provides health care benefits to more than 13 million low-income Californians. Last year, the program cost $95 billion. Private hospitals are required to pay a fee that helps cover the cost of Medi-Cal. This money is matched by the federal government which gives the state additional funds to help pay for Medi-Cal health care services. The hospital fee is approved by state lawmakers and is set to expire in 2018.

What if it passes?

Make the fee private hospitals pay toward Medi-Cal permanent. Because Prop 52 is a constitutional amendment, it would make changing the hospital fee more difficult in the future. Changes to the fee would require voter approval or support of 2/3 of the Legislature.

Budget effect

The effect of this measure is uncertain and would depend on what state lawmakers do before the current fee expires in 2018. If they decide to extend the current fee on private hospitals, there would be little to no change to the state budget. If they do not extend the fee, then the Prop 52 funds from hospitals would save the state budget about $1 billion each year. This savings is because the state could use less of its General Fund money to pay for Medi-Cal.  

People FOR say

  • This guarantees funding for Medi-Cal which helps low-income children and families.
  • Prop 52 makes sure that state lawmakers cannot use this money for any other purpose.  

People AGAINST say

  • Prop 52 would give more than $3 billion to hospitals without a guarantee that it will help patients.
  • Instead of helping low-income Californians, Prop 52 would give more money to hospital corporations.

 

 

Information provided by The League of Women Voters of California Education Fund

The Question

Should (a) a fee charged on private hospitals to facilitate Medi-Cal funding be made permanent; (b) the Legislature’s ability to change it be limited; and (c) the State Constitution be amended to exclude this revenue from California’s education funding calculations? 

The Situation

The Medi-Cal program provides basic health care benefits to eligible low-income Californians (currently 13 million people). Generally, the state and federal governments share the costs of the program equally, but for some costs the federal government pays more than the state.

Since 2009, the state has charged most private hospitals a fee (currently $4.6 billion) which funds the state’s share of increased Medi-Cal benefits and generates state General Fund savings. Between state and federal funds, hospitals realize a $3.5 billion net benefit in payment for services rendered.

Since it began, the Legislature has extended the fee four times, and could potentially extend it again beyond its current ending date of January 1, 2018. Any extension of the fee by the Legislature or by Prop. 52 must also be approved by the federal government.

 

The Proposal

Prop. 52 would make the fee permanent. The Legislature could end the fee by a two-thirds vote in each house, an increase from the current majority requirement. Changes to the fee generally would require future voter approval in a statewide election. However, the Legislature—with a two-thirds vote—could make certain specific changes without voter approval, such as to obtain federal approval of the fee.

The State Constitution requires an annual minimum funding level for K-12 education and community colleges, based on state General Fund revenue. As under current practice, Prop. 52 would exclude the fee from these calculations (requiring an amendment to the State Constitution).

 

Fiscal effect

The fiscal effect of this measure is uncertain primarily because it is not known whether the Legislature would have again extended the fee.

  • If the fee would have been extended, Prop. 52 would likely have minor fiscal effect on the state and local governments.
  • Without Legislative extension of the fee, Prop. 52 would have a major fiscal effect on state and local governments.  The fiscal effects under this scenario would likely be similar to the Medi-Cal revenue and state benefit experienced through the fee in past years. These impacts, however, could be affected by new federal requirements impacting the fee, which are not known at this time.

 

 

Supporters say

  • This proposition ensures that the state will continue to receive more than $3 billion a year in federal matching funds for Medi-Cal that would otherwise not be available.                                
  • Prop. 52 prohibits the Legislature from using the fee revenue for any other purpose. 

Opponents say

  • Prop. 52 gives $3 billion a year in federal health care benefits to hospitals with no oversight or accountability, and no guarantee it will be spent on health care.                                 
  • Prop. 52 rigs the system in favor of corporations and hurts low-income people. 

Summary

  • Extends indefinitely an existing statute that imposes fees on hospitals to obtain federal matching funds. 
  • Uses fees to fund Medi-Cal health care services, care for uninsured patients, and children’s health coverage. 
  • Requires voter approval to change use of fees or funds. 
  • Permits other amendments or repeal by Legislature with a two-thirds vote. 
  • Declares fee proceeds do not count as revenue toward state spending limit or Proposition 98 funding requirement.

SUMMARY OF LEGISLATIVE ANALYST’S ESTIMATE OF NET STATE AND LOCAL GOVERNMENT FISCAL IMPACT: 

  • The fiscal effect of this measure is uncertain primarily because it is not known whether the Legislature would have extended the hospital fee absent the measure. 
  • If the Legislature would have extended the hospital fee absent this measure, the measure would likely have relatively little fiscal effect on the state and local governments. 
  • If the Legislature would not have extended the hospital fee absent the measure, the measure could result in state General Fund savings of around $1 billion annually and increased funding for public hospitals in the low hundreds of millions of dollars annually
— Attorney General of California

Background

Overview of Medi-Cal and Hospitals

Medi-Cal Provides Health Care Benefits to Low-Income Californians. The Medi-Cal program provides health care benefits to low-income Californians who meet certain eligibility requirements. These health care benefits include services such as primary care visits, emergency room visits, surgery, and prescription drugs. Currently, Medi-Cal provides health care benefits to over 13 million Californians. Total spending on Medi-Cal in 2015-16 was roughly $95 billion, of which about $23 billion was from the state’s General Fund (its main operating account).

Cost of Medi-Cal Is Shared Between the State and the Federal Government. For most costs of the Medi-Cal program, the state and the federal government each pay half of the costs. In some instances, the federal government pays a greater share of the costs than the state. In order to receive federal funding for Medi-Cal, the state must follow various federal laws and requirements.

Public and Private Hospitals Provide Care to People Enrolled in Medi-Cal. There are about 450 private and public general acute care hospitals (“hospitals”) licensed in California that provide services such as emergency services, surgery, and outpatient care to Californians, including those enrolled in Medi-Cal. About four-fifths of the hospitals are private and about one-fifth of the hospitals are public. Public hospitals are owned and operated by public entities such as counties or the University of California. Private hospitals are owned and operated by private entities, which can be nonprofit or for-profit.

Hospital Quality Assurance Fee

In recent years, the state has imposed a special charge on most private hospitals. This charge is called the Hospital Quality Assurance Fee (“hospital fee”). It has been collected since 2009. The charging of the hospital fee by the state is set to end on January 1, 2018. Figure 1 depicts the collection and use of hospital fee revenue in 2015-16. The fee revenue is used for two purposes: (1) to fund the state share of increased Medi-Cal payments for hospitals and grants for public hospitals ($3.7 billion in 2015-16) and (2) to generate state General Fund savings ($850 million in 2015-16). The hospital fee revenue used for increased Medi-Cal payments was matched with $4.4 billion in federal Medi-Cal funding, resulting in $8.1 billion in total Medi-Cal payments and grants to hospitals in 2015-16.

Figure 1

Hospital Fee Results in a Net Benefit to Hospital Industry.

 As shown in Figure 1, the hospital industry received in 2015-16 a net benefit of $3.5 billion as a result of the fee because the hospitals received $8.1 billion in payments and paid $4.6 billion in fees. Public hospitals in particular received a benefit of $235 million in 2015-16, comprised of grants and increased Medi-Cal payments. (While the hospital industry as a whole received a net benefit, a small number of private hospitals paid more in fee revenue than they received in Medi-Cal payments.)

Money From Hospital Fee Results in State Savings. 

As shown in Figure 1, fee revenue is used to generate state General Fund savings. These savings occur because hospital fee revenue is used to pay for children’s health care services in Medi-Cal that would otherwise be paid using state General Fund money. (The state General Fund is supported primarily through taxes such as income and sales taxes.) The amount of fee revenue used to generate state General Fund savings is based on a formula in state law. In 2015-16, the state General Fund savings was about $850 million.

Legislature Has Extended Hospital Fee Several Times in the Past. 

Since the fee began in 2009, the Legislature has extended it four times from the date that the fee was to end under law in place at the time. Consistent with this past practice, the Legislature could potentially enact a new law to extend the current hospital fee beyond January 1, 2018 (the date when the current fee ends).

Any Extension of Hospital Fee Must Be Approved by Federal Government. If the fee is extended beyond January 1, 2018 by the Legislature or by voters, the extension must also be approved by the federal government to receive federal funding. Federal government approval is required because the state uses hospital fee revenue to fund the state share of Medi-Cal payment increases to hospitals, and the federal government also pays for part of these payment increases.

— Legislative Analyst's Office

Impartial analysis / Proposal

Makes Hospital Fee Permanent. While the hospital fee would otherwise end under current state law on January 1, 2018, Proposition 52 extends the current fee permanently. As with any extension of the hospital fee, the extension under this measure requires federal approval.

Makes It Harder for the State to End Hospital Fee.Under the measure, the state could end the hospital fee if two-thirds of each house of the Legislature votes to do so. Under current law, the fee can be ended with a majority vote in each house.

Makes It Harder to Change the Hospital Fee. Under the measure, changes to the hospital fee generally would require future voter approval in a statewide election. Under current law, changes to the fee can be made by the Legislature. For example, the Legislature can change the formula used to generate state General Fund savings. The measure does allow the Legislature—with a two-thirds vote of each house—to make certain specific changes, such as those necessary to obtain federal approval of the hospital fee.

Excludes Money From Hospital Fee in Annual Calculation of School Funding. The State Constitution requires certain formulas to be used to calculate an annual minimum funding level for K-12 education and California Community Colleges. These formulas take into account the amount of state General Fund revenue. As under current practice, the measure excludes money raised by the hospital fee in these calculations. The measure provides for this exclusion in an amendment to the State Constitution.

— Legislative Analyst's Office

Financial effect

The fiscal effect of this measure is uncertain primarily because it is not known whether the Legislature would have extended the hospital fee absent the measure. To date, the Legislature has extended the fee four times. Therefore, given past practice, it is possible the Legislature would have extended the hospital fee beyond January 1, 2018 in any case. There are also recent changes to federal law that may require changes to the structure of the hospital fee and these could affect the fiscal impact of the hospital fee. Below, we describe the fiscal effect of this measure under two main scenarios:

  • If Legislature Would Have Extended Hospital Fee Absent the Measure. In this case, the measure would likely have relatively little fiscal effect on the state and local governments (for the period over which the Legislature extended the fee). This is because the state would already be generating General Fund savings and providing funding to public hospitals. We note, however, that absent this measure the Legislature could change the structure of the hospital fee such that the General Fund savings and public hospital benefit could be different from what it has been.
  • If Legislature Would Not Have Extended Hospital Fee Absent the Measure. In this case, the measure would have a major fiscal effect on the state and local governments. The fiscal effects under this scenario would likely be similar to those experienced recently (as adjusted for growth over time): (1) annual General Fund savings of about $1 billion and (2) annual funding to the state and local public hospitals in the low hundreds of millions of dollars. The state and local governments also would realize some increased revenues as a result of the added federal funds brought into the state by the fee. These impacts, however, could be affected by new federal requirements that may require changes to the hospital fee. At this time, it is unclear what changes to the hospital fee would be necessary to comply with federal requirements. Any such changes could increase, decrease, or not change at all the impacts on the state and local governments.
— Legislative Analyst's Office

YES vote means

An existing charge imposed on most private hospitals that is scheduled to end on January 1, 2018 under current law would be extended permanently. It would be harder for the Legislature to make changes to it. Revenue raised would be used to create state savings, increase payments for hospital services to low-income Californians, and provide grants to public hospitals.

NO vote means

An existing charge imposed on most private hospitals would end on January 1, 2018 unless additional action by the Legislature extended it.

Arguments FOR

YOUR YES VOTE ON PROPOSITION 52 WILL KEEP A GOOD IDEA WORKING—ONE THAT’S DOING A LOT OF GOOD FOR A LOT OF GOOD PEOPLE WHO NEED THE HELP.

WHAT DOES PROPOSITION 52 DO?

It does two things.

First, it extends the current Medi-Cal hospital fee program that generates more than $3 billion a year in federal matching funds that would not be available otherwise. This money helps provide Medi-Cal health care services to over 13 million Californians, including: 

  • 6.7 million children; 
  • 1.6 million seniors with chronic diseases; 
  • 4.5 million low-income working families whose wages can’t sustain them; and 
  • persons with disabilities. 

Second, Proposition 52 strictly prohibits the Legislature from using these funds for any other purpose without a vote of the people. That’s it.

WHO IS BEHIND THIS INITIATIVE AND WHY IS IT ON THE BALLOT?

The Medi-Cal hospital fee program was initially enacted as a bi-partisan program by the Legislature in 2009. It has been renewed three times, but each time there have been attempts to divert the money to some other use. It has been placed on the ballot by California’s over 400 local community hospitals in order to ensure that California continues to receive its fair share of federal matching funds for Medi-Cal in order to serve our most vulnerable citizens and to prevent the diversion of the funds for any other purpose.

WHO IS SUPPORTING PROPOSITION 52?

This Initiative has generated the unprecedented support of virtually all major health care, business, labor, and community organizations throughout the state. It is unlikely that a consensus coalition like this has ever been achieved before. For example, the California Teachers Association, California Building Trades Council, California Professional Firefighters and the Teamsters Union and over 30 local unions have joined with the California Chamber of Commerce, the California Business Roundtable, as well as advocacy organizations for children, seniors and the disabled. Additionally, it has been endorsed by both the state Democratic and Republican parties. In today’s very contentious political environment, this alone is an amazing development.

HOW DOES PROPOSITION 52 IMPACT CALIFORNIA TAXPAYERS? This measure GENERATES OVER $3 BILLION IN AVAILABLE FEDERAL FUNDS WITH NO STATE COST TO CALIFORNIA TAXPAYERS.

By extending the current state Medi-Cal hospital fee the state will continue to receive more than $3 billion a year in available federal matching funds for Medi-Cal. Without it, the shortfall will cause some community safety net hospitals to close.

Please VOTE YES ON PROPOSITION 52 TO KEEP A GOOD IDEA WORKING—THAT’S DOING A LOT OF GOOD FOR A LOT OF GOOD PEOPLE.

C. DUANE DAUNER, President
California Hospital Association

THERESA ULLRICH, MSN, NP-C President
California Association of Nurse Practitioners

DEBORAH HOWARD, Executive Director
California Senior Advocates League

— Secretary of State Voter Info Guide

Arguments AGAINST

“Our health care dollars should be treating patients, not funding lavish perks for millionaire CEOs. Prop. 52 takes resources from patients and communities and siphons it into the pockets of rich special interests, with no oversight, no accountability, and no guarantee it is even spent on health care. That’s wrong and makes nurses’ and doctors’ jobs harder.”—Virginia Anders-Ellmore, Nurse Practitioner

  • Prop. 52 gives hospital CEOs a check worth more than $3 billion—with no strings attached, no oversight, and no requirement the money is spent on health care.
  • Prop. 52 gives more than $3,000,000,000 to the same CEOs already being paid millions and using our tax dollars for perks like luxury car leases and golf fees, with zero accountability. 
  • Prop. 52 is great for hospital CEOs and their lobbyists, but bad for patients, low-income women and children, seniors, and veterans.

The wealthy hospital CEOs and their lobbyists are spending millions—including our tax dollars—to trick you into believing Prop. 52 helps Medi-Cal patients. It doesn’t. It hurts the people who need it most and only helps hospital lobbyists and their overpaid CEOs. This is what it really does: 

  • Prop. 52 frees hospital CEOs and lobbyists from any oversight or accountability for how they spend the $3,000,000,000 of taxpayer dollars they receive to treat low-income residents. 
  • Forces the state to give billions in federal low-income health care benefits to hospitals with no oversight, no accountability, and no guarantee it will be spent on health care at all, let alone health care for low-income women, children, and seniors. 
  • These same CEOs and lobbyists have spent millions intended for low-income health care on overpriced CEO salaries, luxury boxes at sporting events, country club memberships, payments to Wall Street investors, and other perks.

Here is what advocates for low-income patients say: “This initiative takes money from needy Californians and gives it to rich millionaires instead, with no oversight and no requirement it be spent on health care for poor people, or even health care at all. Our healthcare system is already broken—and this no-strings attached money grab by rich CEOs will only make it worse.”—Michelle Ross, Healthcare Worker

“I’m already struggling to make ends meet and can’t afford to take my children to the doctor. Now they want to take what little I have and give it to the special interests and corporations who run for-profit hospitals, no questions asked.”—Jovita Salcedo, Medi-Cal Patient

The corporate-funded California Hospital Association wrote Prop. 52 in order to permanently guarantee more than $3,000,000,000 of our federal and state health care dollars go to them no matter what, with no oversight and no guarantee it be spent on health care.

It rigs the system in favor of corporations and millionaires and hurts low-income women, children, and seniors. It eliminates oversight of how this $3,000,000,000 in our tax money is spent and asks us to trust the CEOs and lobbyists instead. We need more oversight of CEOs, not less.

VOTE NO ON PROP. 52

www.No0n52.com

VIRGINIA ANDERS-ELLMORE, Nurse Practitioner

MICHELLE ROSS, Healthcare Worker

JOVITA SALCEDO, Medi-Cal Beneficiary

— Secretary of State Voter Info Guide

Replies to Arguments FOR

PROP. 52 DOESN’T HELP ANYONE BUT HOSPITAL CEOs AND LOBBYISTS.

PROP. 52 IS A BAIT-AND-SWITCH: The money it claims to provide for children and seniors? They already get that money. California law already provides the more than $3,000,000,000 in funding for healthcare services. Prop. 52 won’t change that.

What Prop. 52 really does is change our Constitution to permanently remove any accountability, oversight, or guarantee that the $3,000,000,000 be spent on healthcare by these CEOs and their lobbyists.

Why are they spending tens of millions on Prop. 52? Because they keep getting caught misusing our money: 

  • Hospital corporations profiting from Prop. 52 have been fined hundreds of millions of dollars for fraudulent, unnecessary, or excessive Medi-Cal or Medicare billing. 
  • Other hospital CEOs took those tax dollars meant for the poor and elderly and spent them on luxury car leases, country club memberships, and multi-million dollar salaries for executives. 
  • Hospital CEOs sponsoring Prop. 52 make as much as $153,000 EVERY WEEK.

All Prop. 52 does is remove any accountability or oversight on the very CEOs who have committed fraud and wasted precious tax dollars on luxury perks for themselves.

Don’t get fooled by this complicated, unnecessary change to our Constitution. It is a special interest trick designed to eliminate oversight of greedy hospital CEOs and their lobbyists—at the expense of taxpayers and vulnerable Californians.

VOTE NO ON PROP. 52

www.No0n52.com

VIRGINIA ANDERS-ELLMORE, Nurse Practitioner

MICHELLE ROSS, Healthcare Worker

JOVITA SALCEDO, Medi-Cal Beneficiary

— Secretary of State Voter Info Guide

Replies to Arguments AGAINST

What Proposition 52 IS . . . and what it’s NOT.

Prop. 52 is about providing access to Medi-Cal health care services for children, seniors and low-income families.

It simply EXTENDS the CURRENT state Medi-Cal hospital fee that generates over $3 billion a year in federal matching funds that pay for that care.

Proposition 52 IS NOT ABOUT COMPENSATION OR SALARIES.

Who is FOR Proposition 52 . . . who is AGAINST?

Go to www.YesProp52.org for the entire list of nearly 1,000 supporters, but here is a representative sample: California Hospital Association; California Teachers Association; California Chamber of Commerce; California Building Trades Council; California State Association of Counties; California Labor Federation; the California Business Roundtable; California Professional Firefighters; as well as advocacy organizations for children, seniors and the disabled.

There is ONLY ONE SMALL ORGANIZATION FUNDING OPPOSITION TO 52. Its representative testified to lawmakers that the LEGISLATURE SHOULD HAVE THE POWER TO DIVERT HEALTH CARE DOLLARS to other purposes.

We vigorously disagree.

Proposition 52, PROHIBITS THE LEGISLATURE FROM DIVERTING these funds to any other purposes WITHOUT a VOTE OF THE PEOPLE.

Medi-Cal has been caring for Californians for over 50 years. Today over thirteen million are touched, cared-for, healed and made healthier because of Medi-Cal and it’s made stronger by a good idea that’s working. That good idea is Proposition 52.

Please vote YES on 52.

ANN-LOUISE KUHNS, President
California Children’s Hospital Association

GARY PASSMORE, Vice President
Congress of California Seniors

DR. SHANNON UDOVIC-CONSTANT, Trustee
California Medical Association

— Secretary of State Voter Info Guide

Yes on Prop. 52

Total money raised: $13,100,401
Bar graph showing total amount relative to total amount for this entire campaign.

No on Prop. 52

Total money raised: $12,121,363
Bar graph showing total amount relative to total amount for this entire campaign.

Below are the top 10 contributors that gave money to committees supporting or opposing the ballot measures.

Yes on Prop. 52

1
Dignity Health
$8,478,390
2
California Health Foundation & Trust
$2,000,000
3
California Hospital Association
$1,301,403
4
AHMC Healthcare
$1,157,018
5
State Building & Construction Trades Council of California
$100,000
6
California Democratic Party
$42,193
7
Orchard Hospital
$9,430
8
Tri-City Regional Medical Center
$7,050
9
Marina Del Rey Hospital
$4,629
10
Planned Parenthood Los Angeles
$287

No on Prop. 52

1
SEIU United Healthcare Workers West
$4,825,265

Yes on Prop. 52

By State:

California 100.00%
100.00%

By Size:

Large contributions (100.00%)
Small contributions (0.00%)
100.00%

By Type:

From organizations (100.00%)
From individuals (0.00%)
100.00%

No on Prop. 52

By State:

California 100.00%
100.00%

By Size:

Large contributions (39.81%)
Small contributions (60.19%)
39.81%60.19%

By Type:

From organizations (100.00%)
From individuals (0.00%)
100.00%

Proposition 52 Contributions Data

Note on Methodology

There may be discrepancies between Voter's Edge campaign finance data and other sources, such as the Secretary of State's Quick Guide to Propositions, due to differences in methodology. See How we get our data for more information.

Yes on Prop. 52
Yes on Proposition 52, a coalition of California Association of Hospitals and Health Systems and non-profit health care
Email info@yesprop52.org
No on Prop. 52
George M. Yin Californians for Hospital Accountabilty and Quality Care—No on 52, Sponsored by Service Employees Internat
Email gyin@kaufmanlegalgroup.com
Phone: (213) 452-6565
Address:
777 S. Figueroa Street,
Suite 4050
Los Angeles, CA 90017
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