Summary
California Proposition 34 creates a process for designating certain nonprofit organizations that provide health care and prescriptions to low-income people but that also spend resources on other programs and services as “drug price manipulators.” Any such organization would lose its nonprofit status in the state and its license as a health insurance plan and provider unless it spends at least 98% of its revenues from the federal discount prescription drug program on direct patient care and does not engage in unprofessional conduct or conduct contrary to public health, welfare, or safety.
Fiscal Impact
Prop. 34 would have a limited fiscal impact, costing the state a few million dollars to enforce, but the fees on the affected entities would pay for that.
Proponents’ Arguments
Proponents argue that Prop. 34 will cut prescription drug costs and save taxpayers millions of dollars by forcing health care non-profit corporations to spend at least 98% of the revenue they get from government drug discount programs on directly treating patients.
Opponents’ Arguments
Opponents argue that Prop. 34 has nothing to do with helping patients but is a transparent attempt by the California Apartment Association to punish the AIDS Healthcare Foundation (AHF) for supporting rent control on this year’s ballot [California Proposition 33].
Discussion
Even the nonpartisan Legislative Analyst’s Office agrees that Prop. 34 is very narrowly written to apply to very few entities. Indeed, no one has named a single entity it would affect other than the AHF. Certainly, AHF’s support for rent control is controversial (see our ballot guide to Prop. 33), and it has put rent control on the ballot in three elections so far. But for the California Apartment Association to put Prop. 34 on the ballot, seemingly with the intent of reducing their revenue so they won’t be able to continue to advocate for rent control, is an abuse of the California ballot initiative system.
Prop. 34 does not accomplish any real public policy. It would simply reward one advocacy group for using voters to punish a different advocacy group.