Medi-Cal Big Winner In Ballot Propositions

California's voters overwhelmingly approved baking in a hospital bed tax, a hefty new tax on tobacco and electronic cigarettes, and an extension of a tax on its wealthiest residents, all of which will help fund Medi-Cal and other healthcare services statewide. But they narrowly defeated an initiative intended to control rising drug costs that was fought with more than $100 million in money from the pharmaceutical industry, and shot down another intended to protect the health of performers in the adult entertainment industry.

        The hospital bed tax, which was set to expire in 2019, uses the monies raised from hospitals to secure matching funds from the federal Medicaid program, and is the largest such taxing mechanism in the country. It drew about $4.4 billion from the federal government in the fiscal year ending June 30. Proposition 52, which will extend the hospital bed tax indefinitely, passed with a nearly 40-point margin, by far the widest among all 17 statewide propositions on the ballot. It was broadly supported by the California Hospital Association and other provider lobbying groups, and had no organized opposition.

        Voters also easily approved Proposition 56, a new $2 per-pack tax on cigarettes, the first hike on tobacco taxes in California since 1999 and the first tax on electronic cigarettes. It more than triples the existing tobacco tax of 87 cents per pack. It passed despite the opposition – including major tobacco companies and several anti-tax organizations – spending nearly $72 million to defeat it, double the amount of those supporting the initiative.

        “Despite fierce opposition from Big Tobacco, the voters approved Proposition 56. This historic measure will reduce teen smoking, fund the healthcare system, and save lives. Californians rejected the tobacco industry's lies and acted to protect the health of our kids,” said Tom Steyer, co-chair of the Yes on 56 campaign.

        Proposition 56 is expected to generate as much as $1.4 billion in tax revenue next year, although that number is expected to decline as some people give up smoking and vaping as too cost prohibitive. The bulk of the money will go to the Medi-Cal program, as well as training more primary care and emergency room physicians, and cancer, heart, and lung disease research.

        Another initiative that passed by a wide margin was Proposition 55. It extends an income tax on individuals earning more than $263,000 a year and households earning more than $526,000. It was widely supported by the hospital sector and had virtually no organized opposition. It could raise as much as $2 billion a year for healthcare services for low-income Californians, although the revenue is subject to a discretionary component that could cut it in some years to zero.        

        Voters rejected Proposition 61, which drew even greater industry opposition than Proposition 56, by about 7 percentage points. The pharmaceutical industry spent $109 million to defeat the measure, more than seven times the outlay from supporters, one of the biggest outpourings of financial support connected to a ballot inititive in the nation's history. That ballot proposition would have capped what public agencies in California paid for drugs to the equivalent of what the Department of Veterans Affairs pays. Although the proposition had the highly visible backing of Sen. Bernie Sanders, its supporters were challenged by having no clear message as to what the proposition would specifically achieve. Opponents marshaled a variety of veterans groups and labor unions against it.

        “This was a tremendous uphill battle from the very start. The drug companies have managed to kill every other attempt to reign in drug prices, and they were able to defeat Proposition 61 by accumulating the largest war-chest ever seen against a ballot side in California’s history,” said Garry South, the lead strategist for the Yes on 61 campaign. “(We) now challenge legislators to come up with a more comprehensive solution to lower skyrocketing drug prices.”

        Voters also defeated Proposition 60, which would have required adult film performers to wear condoms while performing. It lost by about 8 percentage points. Its primary backer was the AIDS Healthcare Foundation.