May 30, 2025
Dear Budget Chairs,
We represent constituents and communities served by Programs of All-Inclusive Care for the Elderly (PACE). Throughout California, there are 35 programs that provide all-encompassing services for more than 24,000 older seniors so they can live safely at home, aging with dignity, supported by their communities.
As you are aware, the Department of Health Care Services (DHCS) is proposing a cut to PACE rates and levy a tax on providers. Combined, these actions will not only stop the growth of this comprehensive, popular care model, it will also force PACE providers to curtail and limit services. Therefore, we urge you to reject the Governor’s May Revise proposal to freeze and lower payments to PACE organizations and the DHCS’ Budget Change Proposal to impose up to a 1% tax on these organizations.
Taken together, these proposals will have a devastating financial toll on PACE providers across the state. The combined impact of rate suppression and an annual tax will force many of these PACE providers to make difficult decisions—including workforce reductions, scaling back of access, and in some extreme cases, program closures. For elderly, low-income Californians who rely on PACE to stay safely in their homes and communities, this means reduced access to care, greater instability, and increased risk of hospitalization and institutionalization.
These proposals represent a massive step backward in the state’s commitment to community-based care for older adults. Rather than strengthening the PACE model—that has consistently demonstrated improved outcomes and cost savings estimated at $350 million annually —this approach penalizes innovation, destabilizes provider networks, and jeopardizes care for thousands of seniors. It is the epitome of being penny-wise and pound-foolish at a time when the state cannot afford to incur more expenses and increase the budget deficit.
We respectfully ask you to reconsider this proposed cut and annual tax. It is imperative that we safeguard PACE organizations and prioritize the well-being of our older residents so they may age safely in an environment that properly cares for their needs.
Thank you for your consideration of this important request. If you have any questions, please contact my staffer, John Duncan, at (916) 319-2062 or John.Duncan@asm.ca.gov.
