Two health care groups have filed a lawsuit with the California Supreme Court challenging the state’s managed care organization tax.
The dispute centers on Senate Bill 125’s monthly managed care organization (MCO) tax of $8.85 for all health plan enrollees. The California Medical Association and the California Association of Health Plans said Oct. 2 that the tax violates Proposition 35, a voter-approved state law that capped the tax at $2.50 per enrollee per month for those with private insurance.
The associations also claim that SB 125, which comes into effect 2027–29, diverts MCO revenue to pay for general expenses in the state budget, in violation of Proposition 35 which directs the funds for use in the state’s Medicaid system, Medi-Cal….