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It was one of the closest and most confusing races among the statewide ballot measures , but the votes are finally in: Californians have accepted new rules restricting how health care providers spend money. In passing Proposition 34 , which squeaked by with just 50.8% of voters saying “yes,” Californians also have potentially knee-capped one of the biggest players in the fight for statewide rent control.
The Associated Press called the race on Wednesday, more than two weeks after Election Day. It was the last ballot measure called. Prop.
34 creates new rules regarding how some California health care providers spend revenue they make selling pharmaceuticals via a particular federal program, requiring them to spend 98% of revenue on direct patient services. What’s not explicitly mentioned in the measure’s text is that it appears only one organization would be affected by the change: The AIDS Healthcare Foundation, which has bankrolled three pro-rent control ballot measures. “For years, healthcare corporations have misused billions in taxpayer funds meant for patients to fund pet projects, and wasted it on things like luxury condos, CEO bonuses, naming rights on sports stadiums and political campaigns,” the Yes on Prop.
34 campaign said in a statement. “With the passage of Proposition 34, California voters have taken action to close the loophole that allows for this abuse and misuse of public funds.” The Yes campaign declared victory almost a week before the AP called the race.
But it’s telling that even though the Yes campaign vastly outspend the opposition, the measure just barely passed, said Susie Shannon, campaign manager for No on 34. “The voters just believe what they’re going to believe,” she said. “You have to do the best with the resources that you have to fight against these things, particularly when they’re funded by corporations that seem to be a bottomless pit in terms of how much money they have.
” The California Apartment Association, which opposes allowing rent control to expand, contributed $44 million to the Yes campaign. Under the leadership of the controversial Michael Weinstein, the AIDS Healthcare Foundation, which provides health care in California and beyond for patients with HIV and AIDS, has become a big player in state and local housing politics. It also owns affordable housing developments in Los Angeles’ Skid Row, where tenants have complained about habitability and health issues.
Prop. 34 could force the AIDS Healthcare Foundation out of housing advocacy, leaving a noticeable hole in the fight for statewide rent control reform. The AIDS Healthcare Foundation so far has sponsored three failed ballot measures to allow for the expansion of rent control in California (the third was this year’s Proposition 33, which was rejected by 60% of voters).
If the foundation backs out of that fight, it’s unlikely anyone else will take its place, said Sharon Rapport, director of California state policy for the Corporation for Supportive Housing. Sponsoring a rent control ballot initiative is both expensive and politically fraught, as it’s guaranteed to alienate the powerful landlord lobby. “I don’t know if too many organizations have the will and the funding to be able to put it on the ballot,” Rapport said.
Her organization hasn’t taken a position on the proposition. But Shannon says the tenants rights movement won’t be derailed so easily. “You have some setbacks, but these movements really do live on,” she said, “and if they think this is in any way going to keep advocates from moving forward with this movement, they have another think coming.
” The AIDS Healthcare Foundation also has thrown its weight (and money) around in other housing-related fights — it campaigned against legislation requiring local governments to approve denser housing and backed a failed two-year moratorium on certain building projects in Los Angeles. The AIDS Healthcare Foundation wouldn’t answer when asked by CalMatters whether it would stop its housing advocacy work. But if the foundation is found to be spending its pharmaceutical revenue on things like rent control ballot measures in violation of Prop.
34’s guidelines, it could lose its license to operate its medical clinics, which serve 16,000 patients in California. That’s because the foundation participates in a federal program that gives health care providers a discount on pharmaceuticals in exchange for serving low-income and at-risk patients. The providers can then turn around and sell those drugs at retail rates, raking in a profit.
Prop. 34 requires the foundation to spend 98% of the revenue it makes through those drug sales on “direct patient care.” As far as the Yes on 34 campaign is concerned, that money should go to patients, not to back political gambits in the housing sector.
“That’s obviously not what this program was designed for,” said Nathan Click, spokesperson for Yes on 34. The other side considers the measure an attempt to silence a nonprofit’s advocacy work, and said it opens the door for this tactic to be used against other groups. “I think it’s very dangerous to set a precedent where organizations can be targeted like this just for helping communities,” Shannon said.
“It would be similar to a tobacco company putting an initiative on the ballot to silence anti-smoking groups.” Technically, Prop. 34 applies to any health care provider that participates in the federal drug program and also spends at least $100 million on expenses other than direct patient care, owns and operates apartment buildings, and has accumulated at least 500 severe health and safety violations in the last decade.
The AIDS Healthcare Foundation appears to be the only entity that fits all of that criteria. Because Prop. 34’s scope is so limited, its next stop likely will be the courthouse.
“Because we don’t believe that it’s legal,” Shannon said. The measure is unconstitutional, The AIDS Healthcare Foundation argues, because it singles out one organization. The foundation already has been to court once over this measure, when it tried without success to get the California Supreme Court to boot it off the ballot.
If voters approve the measure, the foundation has promised to challenge it again. The other side insists the proposition could apply more broadly. “We just have to wait and see what the Attorney General says,” Click said.
“There are a number of entities that could be covered.”.
