Endorsement: No on Proposition 34. Revenge measures have no place on California’s ballot

In an ad promoting Proposition 34, a friendly registered nurse says that the so-called Protect Patients Now Act on the Nov. 5 ballot would “stop the squeeze on taxpayers,” reduce the cost of prescriptions for Medi-Cal patients and do a bunch of other things that may sound great to the average voter.
If you watch all the way through, you will see that the top funders of the ad, in a disclosure required by state law, are listed as the California Apartment Assn. and California Assn. of Realtors. Huh? You may wonder, as any reasonable person would, why two real estate lobbying groups would invest millions (more than $30 million, as it turns out, most of it from the former group) of their members’ money to push an obscure healthcare policy that does not appear to benefit them.
If so, you have hit upon the hidden agenda of Proposition 34. Dig into the details, and it appears as if the real goal is silencing the AIDS Healthcare Foundation, a Los Angeles-based nonprofit that has backed three state rent control ballot measures, including Proposition 33 on this year’s ballot. The same two real estate associations are also spending millions to defeat Proposition 33.
The folks at the AIDS Healthcare Foundation call this a “revenge initiative,” and we can see why. Proposition 34 would change the state’s rules for healthcare providers participating in the federal 340B drug discount program in ways that seem designed to cut off the foundation’s tenant advocacy.
The 340B program requires pharmaceutical companies to sell drugs to healthcare nonprofits that serve low-income patients at a discount. The nonprofits charge insurance companies full price and keep the difference. The rules say they must use the resulting revenue to expand services for their low-income patients. But what constitutes “services”? Michael Weinstein, the president of the AIDS Healthcare Foundation, says that because a lack of housing harms people’s health, its use of $300 million in 340B revenue to push tenant protections and buy apartment complexes has served its patients.
Proposition 34 would change the rules pretty dramatically — but only for healthcare providers that meet a very specific, somewhat uncommon set of criteria. The providers must have spent more than $100 million in the last decade on expenses that are not considered direct patient care and must operate multifamily housing with more than 500 high-severity health and safety violations. Those entities would have to spend at least 98% of their net revenue earned in California on direct healthcare services — rather than, say, rent control advocacy — or lose their license to operate in the state.
But it appears that only one organization fits the bill perfectly: the AIDS Healthcare Foundation, which owns several affordable rental buildings that have been cited for more than 500 health and safety violations. Proponents say Proposition 34’s criteria may apply to two additional healthcare providers, which are based out of state but operating in California. But it would be up the state attorney general to decide how to enforce the law.
There are other reasons to reject this ballot initiative. Complicated healthcare policy ought to be made by the Legislature, not foisted on the electorate. One of Proposition 34‘s purported benefits is to permanently authorize the state to negotiate Medi-Cal drug prices. But the state has done that for years thanks to an executive action by Gov. Gavin Newsom. So California’s taxpayers aren’t being squeezed by higher Medi-Cal payments to the AIDS Healthcare Foundation.
Proponents insist that the measure is about stopping abuse of the 340B program by nonprofits that operate substandard low-income housing. They told us that apartment owners and real estate investors have spent so much on the measure because these “bad actors” are giving the entire housing industry a black eye. That doesn’t sound plausible.
Incidentally, this would not be the first time the 340B program has been used as a political weapon. In 2016, Wisconsin’s then-governor, Republican Scott Walker, targeted Planned Parenthood with legislation restricting its revenue through the program.
We have often disagreed with Weinstein and the AIDS Healthcare Foundation over the years, including on some of its ballot battles with the adult film industry and Los Angeles County. The group backed a 2017 anti-development measure that would have made the city’s housing shortage even worse had it passed. And its Skid Row properties have had serious habitability issues. But that doesn’t justify bad ballot behavior by other special interests.
Voters should emphatically reject Proposition 34 and send the message that they will not tolerate such a weaponization of the state’s citizen initiative process.