This law establishes a permanent tax on managed care organizations (MCOs) to support Medi-Cal,
California's Medicaid program that provides health coverage for low-income individuals. Major MCOs like
Kaiser Permanente, Anthem Blue Cross, and Blue Shield deliver healthcare services through Medi-Cal.
Revenue from the tax will be used to cover Medi-Cal enrollment and administrative expenses immediately.
In 2025 and 2026, the tax is expected to generate $2.7 billion for Medi-Cal and health workforce
initiatives, with an additional $2 billion directed to the general fund to help offset Medi-Cal costs.
Starting in 2027, the tax will also help subsidize drug prices, and replaces the existing, annual, highly
political process of funding Medi-Cal. It holds the Governor's mansion to the terms of the original MCO
tax.