This post was updated Oct. 24 at 11:44 p.m.

Two health care propositions will ask Californians to decide this November on how to spend revenue from Medi-Cal-related programs.

Propositions 34 and 35 seek to place limitations on how revenues from federal discounted prescription drug programs and a tax on insurance plans are used. Both the drug program and the tax provide care for patients covered by Medi-Cal, the state’s version of Medicaid. Unlike the nationalized Medicare program for older people, Medi-Cal primarily serves low-income Californians, said Naomi Zewde, an assistant professor of health policy at UCLA.

Proposition 34 restricts the spending of health care providers participating in the federal discount drug program, which allows providers serving low-income patients to purchase prescription drugs from the federal government at a lower price, then sell them at retail value, said Richard Carpiano, a professor of public policy at UC Riverside.

Providers will be impacted if they meet three criteria in addition to participating in the federal discount drug program and being a licensed care entity: In the past 10 years, they must have spent more than $100 million on services besides direct patient care, operated apartment buildings and recorded more than 500 severe health and safety violations on said units.

Under Proposition 34, such providers would be required to spend 98% of their revenue from the discount program on direct patient care. Consequences of failing to do so could include loss of tax-exempt status or government grants, according to the California Legislative Analyst’s Office.

But only one organization – the AIDS Healthcare Foundation – is known to currently fulfill the three listed criteria, leading the foundation to decry the proposition as a targeted attack. Susie Shannon, a spokesperson for the No on Prop 34 campaign, said she believes the singling out of providers using the discounted drug program is a conservative attack on organizations involved in reproductive care and advocacy.

Another reason for the singling out of this foundation might be the involvement of its president, Michael Weinstein, in the housing market – creating another layer of conflicting interests that Carpiano called “fishy.”

In addition to sponsoring this year’s Proposition 33, which would enforce statewide rent control, the AHF also sponsored unsuccessful rent control measures in 2018 and 2020, Carpiano said. The California Apartment Association, which opposes rent control, has poured $36.1 million into supporting the campaign for Proposition 34, according to CalMatters.

“He’s (Weinstein’s) been the focuses for, or at least gathered the ire of, certain interest groups related to housing,” Carpiano said. “It’s (the AHF has) been become a bit of a player in the housing politics realm or sphere.”

If the proposition is passed, the funding restrictions on targeted providers have the potential to increase Medi-Cal beneficiaries’ access to care, Carpiano said. However, he added that the AHF may also challenge the proposition in court or even leave the state of California entirely, leaving the underresourced patients it treated without care.

Politicization surrounding this proposition also obscures one of its potential benefits, Carpiano said. If approved, it would enshrine the existing Medi-Cal Rx prescription drug program into state law, he added, allowing California agencies to collectively negotiate for lower drug prices.

Since the state is already using this program, there is no reason to not permanently continue with it, Carpiano said. But Shannon said she believes there are no new benefits from codifying Medi-Cal Rx and that the inclusion of that condition is a ploy to encourage voters to approve it.

Proposition 35 similarly carries a mixed bag of pros and cons, experts said.

The proposition seeks to make permanent an existing tax on managed care organizations such as Anthem Blue Cross and Blue Shield of California, which purchase insurance on behalf of those enrolled in Medi-Cal, Zewde said. The revenues from these taxes are used to offset the costs of Medi-Cal, but they also act as a benchmark for the federal government to determine how much funding it will provide to those managed care organizations, said Riti Shimkhada, a senior research scientist at the Center for Health Policy Research at UCLA.

The proposition also seeks to set rules on how those tax revenues can be spent going forward. More funding would be allocated to providers and direct care programs, such as outpatient facilities and postgraduate medical education, while other services such as continuous Medi-Cal coverage for children under 5 and community health workers would not see increases, according to the LAO.

Increased incentives might encourage more providers to accept Medi-Cal patients, who are often turned away because of the low reimbursement, Zewde said.

“Medicaid pays less. … And a lot of providers are like, ‘OK, it’s too low, and I can’t do that,’” she said. “They’re (Medi-Cal patients are) also a more heavily disease-burdened population on average. And so providers are like, ‘They require more resources to treat appropriately, but I’m paid so much less, and it’s just – I can’t break even by providing them care.’”

But Shimkhada said this allocation also could place limitations on the state budget, as funds from the tax may no longer be available for the state general fund – something that Governor Gavin Newsom has expressed opposition to.

The federal government must also approve the tax to match the state’s Medi-Cal funds, and Shimkhada added that a new presidential administration next year may be more reticent about offering that approval. The LAO estimates that the short-term costs to the state budget could add up to $1 to 2 billion annually, with uncertain long-term effects.

“If there could be so much uncertainty on the federal government side, this might be too risky, because now you’re saying we have to – we’re locked into this,” Shimkhada said. “If, for example, the federal government says, ‘Hey, we’re not going to match anymore,’ then that means California is in the hole.”

While the proposition lacks an official opposition campaign, another concern might be a disproportionate effect on smaller managed care organizations, she added. While larger MCOs may benefit from the increased reimbursements due to their higher number of enrollees, smaller ones may not have those same rewards, Shimkhada said.

With the intricacies of health care policy, both Shimkhada and Zewde agreed that the propositions are difficult to understand, even for experts in the field.

Zewde said as a result, she does not believe voters should be tasked with making these choices.

“It doesn’t seem appropriate for this, for a proposition,” she said. “Voters are not going to be versed enough in these questions. It seems really poorly matched to the democratic method of propositions.”

Los Angeles residents can vote in person Nov. 5 at the Ackerman Union, Hammer Museum or De Neve Plaza, among other locations across the county. Voters can also submit a vote-by-mail ballot as long as it is postmarked by Election Day.