{"id":2180,"date":"2026-06-22T20:40:12","date_gmt":"2026-06-22T20:40:12","guid":{"rendered":"https:\/\/hometransferguide.com\/?p=2180"},"modified":"2026-06-22T20:40:12","modified_gmt":"2026-06-22T20:40:12","slug":"californians-left-with-surging-health-insurance-premiums-amid-proposed-tax-increase","status":"publish","type":"post","link":"https:\/\/hometransferguide.com\/?p=2180","title":{"rendered":"Californians Left With Surging Health Insurance Premiums Amid Proposed Tax Increase"},"content":{"rendered":"
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California state lawmakers on Thursday approved a bill to preserve federal funding for the state\u2019s Medicaid program amid concerns that the proposal may cause private health insurance premiums to soar.<\/span><\/p>\n

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The new bill responds to recent federal rules mandating that California overhaul its managed care organization (MCO) tax, which the state collects from health insurance plans, CalMatters reported. <\/span>Senate Bill 125 <\/span>would decrease the tax on Medi-Cal plans while increasing the tax on private plans to the same level, according to the outlet. (RELATED: California Lets AI Determine Prisoner\u2019s Fates Without Telling Anyone)<\/strong><\/span><\/p>\n

If Democratic California Gov. Gavin Newsom signs the legislation into law and the federal government accepts it, the new plan would likely impose higher costs on California residents who purchase private insurance but generate less revenue overall, CalMatters reported. Newsom is expected to finalize the legislation before the end of June, KCRA reported.<\/span><\/p>\n

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(Photo by Arturo Holmes\/Getty Images for National Urban League)<\/p>\n<\/div>\n

The legislation would \u201cimpose an MCO provider tax on a health plan, as defined, for the 2027, 2028, and 2029 calendar years,\u201d and would \u201cprohibit the department from collecting the tax until the Director of Health Care Services certifies that the tax is a federally permissible health care-related tax meeting specified federal requirements, or until the department receives federal approval that the tax is a permissible health-care related tax, as specified,\u201d according to the bill\u2019s text. The bill would also \u201cset the tax amount at $8.85 per countable enrollee per month, unless that amount is modified by the department under certain conditions.\u201d<\/span><\/p>\n

The MCO tax \u201cprovides a dedicated revenue stream that supports or strengthens Medi-Cal services, health care access, and improved care for millions of Californians,\u201d according to California\u2019s <\/span>Department of Health Care Services (DHCS). <\/span>Federal law lets U.S. states levy a tax on MCOs and other medical services to help cover the state share of Medicaid healthcare costs, according to the California Budget and Policy Center.<\/span><\/p>\n

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When reached for comment, DHCS and Newsom\u2019s office each referred the Daily Caller News Foundation to California\u2019s Department of Finance (DOF).<\/p>\n

\u201cWhat\u2019s referred to as the \u2018MCO Tax\u2019 (\u2018MCO\u2019 being short for Managed Care Organizations) has been an important financing mechanism for the Medi-Cal program for more than 20 years,\u201d a DOF spokesperson told the DCNF. \u201cThe federal government is now forcing states to raise higher taxes on commercial health plans to maintain this specific financing mechanism.\u201d<\/span><\/p>\n

\u201c<\/span>To continue an MCO Tax to provide support for the Medi-Cal program,\u202fparticularly as the state continues to face significant out-year structural deficits,\u202fthe Administration\u202fhas to\u202fstructure the tax uniformly across both Medi-Cal managed care plans and commercial plans,\u201d the spokesperson added. \u201cNot adopting this proposal would mean leaving hundreds of millions in federal funds on the table and increasing the structural deficit by over $2 billion dollars, potentially necessitating additional spending reductions for core state programs such as Med-Cal.\u201d<\/span><\/p>\n

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\u201cFor these reasons, the Governor included this proposal in his revised budget plan last month,\u201d according to the spokesperson. \u201cAnd as you noted, both houses of the Legislature have adopted it as part of their version of the budget. So absent any dramatic last-minute changes, it will be reflected in the final budget agreement that we anticipate in the coming days.\u201d<\/span><\/p>\n

The California Medical Association (CMA) warned in a June 18 statement that the state\u2019s 2026-2027 budget and accompanying health bill \u201cinclude a $1.5 billion tax increase that will be passed on to consumers through higher health insurance premiums.\u201d The increase may add up to $400 annually to premiums for a family of four, according to the CMA\u2019s estimates.\u00a0<\/span><\/p>\n

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\u201cAs physicians, we see every day how difficult it is for patients to afford health care,\u201d CMA President Ren\u00e9 Bravo said in a statement. \u201cMany families are often forced to forgo coverage completely to save money for other basic expenses.\u201d<\/span><\/p>\n

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CHICAGO, ILLINOIS \u2013 JUNE 18: Governor of California Gavin Newsom attends the dedication ceremony for the opening of the Barack Obama Presidential Center, in John Lewis Plaza, on June 18, 2026 in Chicago, Illinois. (Photo by Taylor Hill\/Getty Images)<\/p>\n<\/div>\n

The California Association of Health Plans similarly in a June 16 statement that the proposal \u201cwill increase premiums for California families, workers, small businesses, and public employees by hundreds of dollars\u201d annually.\u00a0<\/span><\/p>\n

\u201cWe are extremely disappointed that the Assembly voted to advance the Governor\u2019s proposal to <\/span>impose a $1.5 billion tax increase on health coverage that will increase premiums for California <\/span>families, workers, small businesses, and public employees by hundreds of dollars every year,\u201d The California Association of Health Plans said in a statement. \u201c<\/span>At a time when Californians are struggling with the rising costs of nearly everything, lawmakers should <\/span>be focused on making health care more affordable, not more expensive.\u201d<\/span><\/p>\n

Newsom and the California state Legislature <\/span>halted<\/span> new enrollments by illegal immigrants in full-scope Medi-Cal coverage in June 2025 following criticisms over taxpayer costs, the DCNF previously reported. The freeze in new illegal immigrant enrollments began in January, according to CA.gov.<\/span><\/p>\n

CA.gov\u2019s website notes that if individuals are already enrolled in full-scope Medi-Cal, they will \u201cstay covered no matter your immigration status if you complete your annual renewal.\u201d<\/span><\/p>\n

Democratic state lawmakers unveiled legislation in March aiming to reinstate Medi-Cal coverage for all income-qualifying California residents of any age, which includes illegal immigrants, CalMatters reported.<\/span><\/p>\n

All content created by the Daily Caller News Foundation, an independent and nonpartisan newswire service, is available without charge to any legitimate news publisher that can provide a large audience. All republished articles must include our logo, our reporter\u2019s byline and their DCNF affiliation. For any questions about our guidelines or partnering with us, please contact\u00a0licensing@dailycallernewsfoundation.org.<\/p>\n

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Lawmakers approved a bill aiming to preserve funding for Medi-Cal amid concerns it may cause premiums for Californians with private health insurance to soar.<\/p>\n","protected":false},"author":1,"featured_media":2179,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[166,195,1742,2465],"class_list":["post-2180","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-interesting","tag-california","tag-gavin-newsom","tag-health-insurance","tag-tax"],"yoast_head":"\nCalifornians Left With Surging Health Insurance Premiums Amid Proposed Tax Increase - Home Transfer Guide<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/hometransferguide.com\/?p=2180\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Californians Left With Surging Health Insurance Premiums Amid Proposed Tax Increase - 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