Governor’s Final Budget Advances MCO Tax, Invests in Health Care Workforce

Posted: July 11, 2023

LOS ANGELES – July 11, 2023 – Governor Gavin Newsom has signed a series of budget bills for the 2023-24 fiscal year that demonstrate the state’s commitment to preserve and improve the health and well-being of all Californians. The budget avoids cuts to Medi-Cal and critical health care programs and maintains California’s leadership in expanding health care coverage and access. CCALAC commends the Governor for advancing a Managed Care Organization (MCO) Tax plan that will generate billions in revenue to strengthen Medi-Cal.  

The plan includes $75 million annually to support graduate medical education and, starting in 2025, $2.7 billion annually to improve access and equity in Medi-Cal. For the Governor’s 2024-2025 budget, the Department of Health Care Services (DHCS) will propose rate increases and investments in other services, supports and health care workforce.    

In January 2024, DHCS will increase provider rates to at least 87.5 percent of Medicare for primary care, obstetrics, and non-specialty mental health services. Provider rate increases, however, will not impact community health centers directly due to their unique payment structure. We look forward to working with DHCS and the legislature to put forth a spending plan in next year’s budget that ensures health centers receive critical funding relief.    

“Renewing the MCO Tax alone will not fix the chronic funding gaps in Medi-Cal, but it is a good start,” said CCALAC President and CEO Louise McCarthy. “As Medi-Cal’s patient population and services continue to expand, the much-needed revenue will have a positive impact on patients and providers overall.”  

In addition to the MCO Tax reinstatement, we applaud the decision to maintain the expansion of Medi-Cal to income-eligible adults ages 26-49, regardless of immigration status, on January 1, 2024. With this expansion, Medi-Cal is projected to cover approximately 14.2 million Californians in 2023-24—more than one-third of the state’s population. 

Further, the budget requires that the majority of funds raised from Covered California’s individual mandate tax penalty will be used to lower health care coverage costs for consumers, including significantly reducing deductibles and out-of-pocket costs. 

We are also encouraged by the legislature’s decision to move forward with, instead of delay, health and behavioral health care workforce programs. A comprehensive nursing initiative, administered through HCAI, is a multi-year plan to increase the number of registered nurses, licensed vocational nurses, certified nursing assistants, certified nurse midwives, certified medical assistants, family nurse practitioners, and other health professions. The plan includes upskilling and training programs, and support for nursing student loan repayment, scholarship, and nursing education grant programs. 

The budget includes funding for social work training programs, stipends and scholarships designed to increase the number of social workers trained in the state and create a new pipeline for diverse social workers who cannot otherwise afford the financial or time investment required to complete full-time training programs. Additionally, the budget includes investments in addiction psychiatry and addiction medicine fellowship programs. 

We look forward to continuing our partnership with the Newsom Administration and the Legislature to advance community health center priorities, including investments that support health equity, health centers viability, and a robust health care workforce.  


About the Community Clinic Association of Los Angeles County  

Founded in 1994, the Community Clinic Association of Los Angeles County (CCALAC) is the largest regional association of community health centers in California. Health centers in Los Angeles serve more than 1.89 million patients at over 380 sites across the county. The majority of these patients (75%) have low incomes, and 92% are covered by public insurance or uninsured. CCALAC is dedicated to helping health centers remain at the forefront of health care transformation, in support of the patients and communities they serve. For more information about CCALAC, visit or call (213) 201-6500.  

Contact: Taryn Burks – Communications Manager, | (213) 201-6529. 

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