HEALTH CARE AFFORDABILITY FUND DISTRIBUTIONS
HB4 revises how revenue from the health insurance premium surtax is split between the health care affordability fund and the behavioral health program fund. Under the bill, a larger share of surtax receipts is directed to the health care affordability fund in the near term, beginning at 55% in September 2025, increasing to 80% in September 2027, and to 95% in September 2028. The remaining share is reserved for the behavioral health program fund beginning in September 2028, at 5% of net surtax receipts.
The bill also amends the behavioral health program fund statute to clarify that the fund is administered by the Health Care Authority and may be used for a broad range of behavioral health purposes, including mental health and substance misuse treatment, infrastructure, workforce supports, matching funds, compliance costs, and regional behavioral health plans. Any money left unspent at the end of a fiscal year must revert back to the health care affordability fund, making the behavioral health fund effectively a pass-through or annually resetting account rather than a permanent carryover fund.
HB4 changes state revenue allocation law by amending the distribution formula for the health insurance premium surtax and by revising the behavioral health program fund statute. It affects the health care affordability fund, the behavioral health program fund, the Taxation and Revenue Department distribution mechanism, and the Health Care Authority’s administration of behavioral health dollars. The bill reduces the amount of surtax revenue available for behavioral health over time and requires unexpended behavioral health balances to revert to the health care affordability fund at fiscal year-end.
The bill appears to have received generally favorable legislative support, passing the House 47-19 and the Senate 23-12 before being signed into law. The vote margins suggest majority backing but not broad consensus, indicating some partisan or policy-based division. The limited committee transcript provided does not show substantive debate, but the final passage history suggests the measure was ultimately accepted as a funding reallocation and administrative clarification.
The main point of contention is the allocation of surtax revenue between health care affordability and behavioral health. Supporters likely viewed the bill as strengthening the health care affordability fund while still preserving a smaller, dedicated behavioral health stream, whereas opponents may have objected to reducing the behavioral health share and requiring unspent balances to revert to another fund. Another likely issue is whether the behavioral health program fund should retain unused money for future projects or be swept back annually, which affects planning, continuity, and local program stability.