Investments in Children’s Health Care Access

How Proposition 56 funds will support critical services for kids on Medi-Cal

By Mike Odeh

November 20, 2020

Earlier this year, we published a blog post about the basics of Medi-Cal – who is eligible, how it works, and the range of services that children and youth are entitled to with this public health insurance. Today, we’re taking a look into access to health care for kids on Medi-Cal, and specifically digging into why some kids aren’t getting the care they deserve, and how Proposition 56 aims to change that. Unfortunately, nearly all of the Proposition 56 payments could be suspended on July 1, 2021 given the fiscal conditions of the state, which would undermine the state’s progress toward improving children’s access to care.


Why are there access issues for kids in Medi-Cal?

While Medi-Cal covers more than five million California kids, unfortunately not all of these kids are getting the care they need and are entitled to by law. For example, last year, the State Auditor reported that fewer than half of children in Medi-Cal had an annual health check-up, and more recent data showed that only 22% of infants and toddlers in Medi-Cal receive critical developmental screenings.

Kids’ lack of access to health care is in part due to how the state contracts with and pays managed care plans, and the relatively low reimbursement rates that are generally paid to Medi-Cal providers. As a result, providers may limit their Medi-Cal patients or not participate in Medi-Cal at all, making access even more challenging for children with Medi-Cal and harder for health plans to maintain adequate networks of child-serving providers. In turn, children in Medi-Cal have longer wait times for appointments and families have to travel further to see a provider.


What is Proposition 56 and how does it address Medi-Cal access challenges?

Proposition 56, also known as the California Healthcare, Research and Prevention Tobacco Tax Act, was approved by California voters in November 2016. Prop 56 increased the excise tax rate on cigarettes, electronic cigarettes, and other tobacco products (effective April 1 and July 1, 2017, respectively).

Prop 56 tax revenues, which generate an estimated $1 billion in this fiscal year (2020-21), are allocated to be used by the Department of Health Care Services to draw down federal matching funds for Medi-Cal health care expenditures through payments to providers.

In short, these funds are used to increase the base payments to Medi-Cal health care providers, which include pediatricians, dentists and specialists. These payments serve to bridge the gap between the historically low Medi-Cal reimbursement rates and the rates that Medicare or other health insurance pays for the same service.


What kind of children’s health services does Proposition 56 funding pay for in Medi-Cal?

Proposition 56 funds payments to providers for a variety of critical services for children, including:

  • Well-child visits and other physician services – $1.2 billion to physicians for base rate increases in payments for preventive check-ups and pediatric specialty care visits, increasing payments by double or more, making them comparable to rates paid by Medicare;
  • Developmental screenings – more than $49 million for payments to providers for administering pediatrician-recommended developmental screenings for infants and toddlers;
  • Trauma screenings – more than $99 million supports the new Adverse Childhood Experiences or trauma screening benefit, including funding to train providers;
  • Early childhood health service incentives – $460 million is set aside for the multi-year “Value-Based Payment” program, part of which incentivizes better early childhood health services like check-ups, vaccinations, blood lead screenings, and oral fluoride varnish application; and
  • Dental services – $523 million for supplemental payments to dentists for a variety of services and procedures, both preventive and restorative. These payments, along with the Dental Transformation Initiative, contributed to a 9% improvement in children’s dental utilization and more than 1,600 dentists joining the Medi-Cal Dental program since 2017.


What happens if Prop 56-funded payments are suspended next year?

Suspension of Proposition 56 payments that are currently directed towards children’s services would exacerbate the access issues children with Medi-Cal face. Ongoing recruitment and retention of child-serving Medi-Cal providers would suffer without reimbursement rates that are at comparable levels to those paid by other health insurance.

Proposition 56 payments, however, are the only specific funding source for trauma screenings, despite the fact that there are nearly 14,000 providers, including pediatricians and family physicians, have already been trained to provide trauma screenings. This is especially concerning now and as we emerge from the COVID-19 pandemic as thousands of children are dealing with the stress and uncertainty brought on by current events, including being isolated from their peers, facing threats of domestic or community violence, and fearing for the health and well-being of their family and caregivers.

Furthermore, we are experiencing an even greater need to invest in better access to health services and supports for children and youth. In 2020, California kids have experienced wildfires, the COVID-19 public health emergency, and racial unrest. Now is not the time to reduce investments explicitly designed to help children and families recover from traumatic events. In order to avoid making health care less accessible when it is needed the most, California leaders should maintain the Proposition 56 Medi-Cal payments for children’s health in the 2021-22 state budget.

To learn more about Prop 56 and how it impacts children’s health care in California, take a look at this factsheet.