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Proposition 52: Critical For Medi-Cal Or Perks For Hospital Execs?

The front view of Rady Children's Hospital's Acute Care Pavilion.


Kenny Goldberg | KPBS

Proposition 52 on the November ballot has gotten little attention. Even so, supporters said the measure is crucial to hospitals' ability to care for Medi-Cal patients.

The measure asks voters to lock in a special fee that hospitals pay in order to ensure that California receives billions of dollars in federal matching funds.

The state legislature initiated the fee in 2009. Ostensibly, it's a tax that hospitals pay to support the Medi-Cal program.

The fee generates about $4 billion a year. California uses that money to get an equal amount in federal matching funds.

Most of that federal money goes back to hospitals. In essence, it increases the reimbursement rate hospitals get for treating Medi-Cal patients.

Dr. Donald Kearns, president and CEO of Rady Children's Hospital in San Diego, said Medi-Cal fees don't cover the actual cost of care.

"Utilizing the provider fee, we're able to make up that difference," Kearns said. "Effectively, what it allows us to do is take better care of all kids, by allowing that money to come back to support the kids with Medi-Cal."

But the fee is set to expire in 2018. Kearns said what's more, the federal matching funds are an attractive target.

"So, if you can imagine, if the state government is having problems as far as revenue is concerned, this is a tremendous amount of money coming from the feds. It's very tempting to utilize it for something else," Kearns said.

RELATED: California's 17 Ballot Measure Propositions Explained

Proposition 52 would extend the fee indefinitely, and would limit the percentage lawmakers could siphon off to spend on other things.

There is no active opposition to Proposition 52.

The Service Employees International Union-United Healthcare Workers West had planned to fight the measure. But it decided to put its resources elsewhere.

Still, union officials complain there's no requirement that hospitals spend the money on health care for the poor. And they wonder, what's to stop hospitals from padding executive salaries and paying for trips to the Bahamas?

Kearns said not a chance.

"There is incredible oversight on the way that this money is spent," he said. "And, although I'd love to spend some time in the Bahamas, it won't be coming from the provider fee."

Nearly 12 million Californians have Medi-Cal coverage. Supporters said Proposition 52 will ensure that hospitals can continue to provide care to Medi-Cal patients.

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