Soda tax initiative would generate billions for health care, LAO concludes

The nonpartisan Legislative Analyst’s Office has concluded that the California Sugar-Sweetened Beverages Tax Act of 2020, a ballot measure filed in July by CDA and the California Medical Association, would generate an estimated $2-3 billion annually from a statewide sales tax of 2 cents ($0.02) per ounce on sugar-sweetened beverages. Between $1.6 billion and $2.5 billion of that revenue would be dedicated exclusively to health care.

In addition to this projected annual revenue from the soda tax initiative, California could double its health care investment through federal matching funds, making between $3 billion and $5 billion available for improving health care in California.

“For too long, California has lacked adequate support for programs that address the health effects of consumption of sugary beverages,” said CDA President Natasha Lee, DDS. “With this initiative, our state has the opportunity to improve public health, especially among children.”  

Alternatively, the Legislature could also utilize these funds to support proposed health care programs such as:

  • Increasing the Medi-Cal rate for primary care services to 100 percent of Medicare.
  • Streamlining Medi-Cal eligibility — thereby increasing access — for approximately 103,000 children and 26,000 pregnant women who receive nutrition and education services through the California Special Supplemental Nutrition Program for Women, Infants and Children.
  • Providing enhanced premium assistance to offset health care costs for approximately 550,000 Covered California enrollees whose income is between 200 and 400 percent of the federal poverty level.
  • Increasing funding for robust Medi-Cal diabetes prevention programs, which could save taxpayers an estimated $45 million a year in treatment costs. 
  • Providing continuous glucose monitors as a new Medi-Cal benefit. Over 2.5 million adults in California have been diagnosed with diabetes, with health care costs of $12.98 billion.  

Read the LAO’s analysis. For more background on why CDA and CMA filed the initiative, read the article published in July.

CDA will keep members informed about the ballot initiative’s progress on cda.org and in the CDA Update.

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A ballot measure to protect public health through a state soda tax has been filed for the November 2020 ballot by CDA and the California Medical Association. The filing comes four days after the multibillion-dollar soda industry proposed a ballot measure that jeopardized the fiscal outlook of local governments, forcing the state to pre-empt local authority and pass an unprecedented 12-year moratorium on any local soda tax.