Hunter Morgan, upon purchasing an optometry business in Southern California three years ago, immediately began accepting Medicaid patients, which provides health coverage for individuals with low income.

The previous proprietors had refused to accept individuals covered by Medicaid, which includes approximately one third of California’s 39 million inhabitants. However, Morgan believed it was his duty to assist those in need.

After just five months, Morgan had to discontinue treating Medicaid patients due to low pay. Although he charges $175 for eye exams, Medicaid only pays $40, making it challenging to cover staff salaries and rent in the affluent beach town of Encinitas, located 25 miles (40 kilometers) north of San Diego.

“We would not be able to operate in that manner,” he stated.

The number of individuals on Medicaid in California has significantly risen due to the efforts of Governor Gavin Newsom and his fellow Democrats in the state Legislature. This includes covering all eligible adults, regardless of legal status. Despite now providing coverage for approximately 15 million individuals, the compensation rates for doctors have not been adequately adjusted.

The situation has caused problems for rural hospitals, leading to some needing a loan from the state Legislature to avoid shutting down. It has also created difficulties for those with Medicaid to find doctors who are willing to provide treatment, resulting in some having to travel far for care.

Healthcare professionals in California have been demanding increased compensation from Medi-Cal, the state’s Medicaid program. However, due to significant budget deficits, California is unable to allocate additional funds. In order to increase payment to doctors, Governor Newsom and the state Legislature have decided to implement tax increases, but not in the typical manner.

Almost every state imposes taxes on services such as hospitals, nursing homes and ambulances in order to contribute to Medicaid funding. Since 2005, California has been taxing managed care organizations, which are private companies that partner with the state to administer Medicaid benefits.

However, unlike typical taxes, the companies are not responsible for paying the full amount. The state covers the majority of the tax on their behalf and then utilizes the funds to generate additional federal payments for Medicaid. This ultimately results in more money being available for everyone.

In the previous year, Newsom endorsed a legislation that significantly raised this tax amount, resulting in the state receiving $19.4 billion by 2026. This coming Thursday, the Legislature is set to approve an additional increase, which is projected to generate an extra $1.5 billion.

Governor Gavin Newsom stated to The Associated Press that California is utilizing all available resources to improve the availability of affordable, high-quality healthcare throughout the state.

Previously, California utilized such excess funds to reconcile its budget. However, this instance, the state has pledged to allocate a portion of the surplus towards increasing payments to doctors for caring for Medicaid recipients.

The exact amount and recipients of the increase will be determined this year. In the previous year, primary care physicians, maternal care providers, and select mental health services received the first increases. This year’s increases, which have yet to be authorized by the government, may encompass services such as obstetrics, vaccinations, abortions, and also optometry.

The proposed rate increase for optometrists by Newsom would align with the payment rates of Medicare, the health coverage program for individuals aged 65 and above, as stated by the federal government. This change could potentially result in a significant increase in earnings for approximately 8,000 licensed optometrists in California, with a potential rise from $47 to $130 per examination for patients under Medicaid.

The rise in these figures has been lauded by healthcare professionals, yet their apprehension remains as California’s budget deficits continue to expand.

Kristine Schultz, executive director of the California Optometric Association, stated that if the situation were to worsen, the funds could potentially be allocated for different purposes.

Governor Newsom is seeking to amend the tax increase he approved last year by allocating additional funds of $11 billion to increase payments for providers over a period of five years. However, due to the current deficit, Newsom now intends to utilize $8 billion for provider payments over four years instead. This would result in providers receiving the same hike, but its duration would be shortened.

Additionally, every three years, California’s tax on managed care organizations must be granted approval by the federal government. The current Biden administration has expressed a desire to decrease the amount of money that states are allowed to collect, which could potentially require California to decrease their tax in the future. This could potentially impact their ability to sustain higher rates for doctors.

During a recent public hearing with lawmakers, Stuart Thompson, senior vice president for governmental affairs at the California Medical Association, expressed his concern about the potential consequences of a program that devotes four years before coming to a sudden end.

The proposal by Newsom to increase taxes has faced backlash from Republicans in the Legislature. Assemblymember Vince Fong, who is a Republican and also serves as the vice chair of the Assembly Budget Committee, expressed concern over the possibility of the funds being allocated to areas outside of healthcare.

However, it seems that Assembly Democrats are more supportive of the plan. Democratic member Akilah Weber, who leads the budget subcommittee responsible for healthcare spending, acknowledged the need for “some adjustments” due to the deficit, but reiterated her dedication to the proposed rate hikes.

Rework: The prospect of increased payments for optometrists would be welcomed by residents of Fresno, a city in the Central Valley with a significant number of low-income farm workers who rely on Medicaid for their healthcare.

One vision care facility, Fogg Remington, used to have a clientele of 15% Medicaid patients in the city. However, in January, the facility ceased taking in new Medicaid patients due to insufficient payment rates and a law stating that healthcare personnel must earn at least $25 per hour.

Optometrist Dr. Anthony Chavez of Fogg Remington suggests that if California decides to raise its rates, it would be a clear and logical choice to undo that decision.

Chavez expressed a desire to assist these individuals.