The 2025-26 Budget: Overview of the Governor's Budget

Jan 13, 2025 - The reason for the reduction is the recent voter approval of Proposition  35 (2024), which requires the state to spend less MCO tax money on offsetting General Fund spending and more money on provider rate increases.
https://lao.ca.gov/Publications/Report/4951

The 2025-26 California Spending Plan: Health

Oct 16, 2025 - To support the fund, the legislation allocates a portion of money from excess balances in health plans ’ special abortion accounts. Health plans that participate in Covered California must use these accounts so that federal subsidies do not pay for abortion services.
https://lao.ca.gov/Publications/Report/5075

The 2025-26 Budget: Medi-Cal Pharmacy Spending

Apr 3, 2025 - These rebates provide money back to the Medi ‑Cal program, effectively helping to offset some of the cost of the drugs. Most of the savings come from federally negotiated rebates. In addition, the state also negotiates supplemental rebates.
https://lao.ca.gov/Publications/Report/5026

The 2025-26 Budget: MCO Tax and Proposition 35

Feb 26, 2025 - This is because Proposition  35 ’s new rules in 2027 tend to direct larger portions of funds toward augmentations, leaving less money for offsetting General Fund spending in Medi-Cal. For example, were the MCO tax to generate about as much net revenue in 2027 as it does today, we estimate only around one-third of the net revenue (rather than more than half under the Governor ’s budget) would be available for the General Fund offset.
https://lao.ca.gov/Publications/Report/4992