California voters approve measure aimed at capping AIDS Fund spending

California voters approved Proposition 34, an apartment trade group measure aimed at capping spending by the AIDS Healthcare Foundation, which has funded several rent control initiatives and criticized the measure as unconstitutional retaliation.

The Associated Press announced the initiative Wednesday evening. The rate is ahead 50.8% to 49.2%, according to the California Secretary of State.

As written, Proposition 34 applies to health care providers who spent more than $100 million in any 10-year period on anything other than direct patient care and maintained multifamily housing with more than 500 “serious health and safety violations.”

If a health care provider meets this standard, it will be required to spend 98% of its federal prescription drug program revenue on direct patient care.

The measure was sponsored by the California Apartment Association, whose campaign committee said the new rules could apply to multiple entities and noted that the initiative’s language did not name any specific group.

In the weeks leading up to the election, most of the advertising in support also did not mention a specific health care provider, but emphasized that Proposition 34 would save taxpayers money while also increasing the cost of patient care.

However, the apartment association chose the AIDS Health Foundation as a target during the campaign, and no other health organization has such a well-publicized history of running housing with health and safety complaints and spending money on things other than direct care for patients. .

In recent years, the AIDS Healthcare Foundation has funded three initiatives to significantly expand rent control, including Proposition 33, which is on this year’s ballot.

All of these measures failed, but forced the real estate industry to spend hundreds of millions of dollars to fight back.

The AIDS Healthcare Foundation (AHF) receives most of its revenue from the federal drug program in question. The program, known as 340B, requires drug makers to sell their drugs at discounts to certain health care providers, who then turn around and charge health insurance companies more for the drugs.

The program should allow health care providers like AHF to serve more low-income patients, but the law “does not directly limit how providers spend their revenue from federal drug rebates,” according to the nonpartisan California Legislative Analyst’s Office.

Proposition 34 restrictions could limit AHF’s ability to fund additional rent control measures or manage the apartments it owns in and around Skid Row, which have been plagued by pest infestations, broken elevators and other problems, according to a Times investigation published last fall. , published last fall.

In a statement, AHF President Michael Weinstein said the organization will continue to fight for tenants.

“The results of Propositions 33 and 34 prove only one thing: If billionaires spend more than $170 million lying and confusing voters, they are virtually guaranteed to win,” Weinstein said.

What will happen next is unclear.

Before the election, AHF unsuccessfully sued to remove Proposition 34 from the ballot, arguing that it was unconstitutional because it solely targeted the organization.

However, one legal expert previously told the Times that courts are generally reluctant to strike down measures before an election and that there is a “good chance” a judge would find the measure unconstitutional if it were to pass.

In an email, AHF spokeswoman Jackie Schechner said the organization will decide what legal action to take once it sees how the law will be applied.

The Yes on 34 campaign declared victory last week, even before the Associated Press called the race, saying voters took action to close a “loophole” that allowed health care organizations to spend money meant for patients on ” luxury apartments, CEO bonuses, naming rights.” about sports stadiums and political campaigns.”