Governor’s May Revise Maintains Coverage Expansion, Strengthens MCO Tax Proposal

Posted: May 12, 2023

LOS ANGELES – May 12, 2023 – Today, Governor Gavin Newsom released his revised May budget proposal for the 2023-24 fiscal year. We commend the Governor for a proposal that maintains California’s leadership in expanding health care coverage and avoids major cuts to critical programs in the face of a projected $31.5 billion deficit, $9.3 billion more than the shortfall projected in January.

We are pleased to see that the budget maintains the expansion of Medi-Cal to income-eligible adults ages 26-49, regardless of immigration status, on January 1, 2024. Medi-Cal is projected to cover approximately 15.3 million Californians in 2022-23 and 14.2 million in 2023-24—more than one-third of the state’s population.

The budget also maintains billions in investments in programs essential to improving the health and well-being of communities, including behavioral health and homelessness programs, support for Los Angeles County’s implementation of the Care Act (the state’s new pathway to deliver mental health, housing, and substance use disorder services to Californians most in need), universal school meals, transitional kindergarten, and the expansion of the California Food Assistance Program to income-eligible individuals aged 55 years or older, regardless of immigration status, by October 2025.

Additionally, the May Revise builds on the Governor’s January proposal by moving up the effective date of the Managed Care Organization (MCO) Tax to April 1, 2023. The MCO Tax is a valuable tool for generating much needed additional revenue for the Medi-Cal program. We appreciate the increased revenue this proposed MCO model will generate and the investment in critically needed provider rate increases. The May Revise, however, proposes to spend the revenue from the MCO tax over an 8 to 10-year period. We can make a more meaningful impact toward improving the Medi-Cal program and ensuring a robust provider network by making larger investments over a shorter time frame. We look forward to continued dialog with the administration about the MCO tax structure.

While the May Revise does not call for withdrawing resources from the Budget Stabilization Account (BSA), also known as the rainy-day fund, the budget proposes to utilize half — $450 million of $900 million — of the Safety Net Reserve to offset costs associated with Medi-Cal and CalWorks. While the Governor is mindful to maintain the rainy-day fund in case the state needs it in future years, we discourage dipping into the Safety Net Reserve while proposing an MCO tax that will generate billions in new revenue.

We applaud the Governor’s continued commitment to the health care workforce and no new delays or reductions in this area. Investments that bolster the safety net health care workforce are critically needed as we further expand the Medi-Cal program. Community health centers serve one in three Medi-Cal members in the state – as such, the budget must include investments to expand and enhance workforce programs that we know work for health centers such as educational debt relief for allied and behavioral health professionals, increased investments in advanced practice clinician training, and graduate medical education programs. We implore the Governor and legislature to prioritize, not delay, programs and investments to support growing and strengthening the health care workforce.

We look forward to working with the Administration and the Legislature this year to advance the priorities of our member health centers and their patients and, importantly, to design an MCO tax structure that ensures a robust and sustainable Medi-Cal provider network.


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 Specialist, | (213) 201-6529.

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