As California grapples with soaring Medi-Cal costs — including billions spent on healthcare for immigrants without legal status — Gov. Gavin Newsom and Democratic lawmakers have backed a revised health-plan tax in response to new federal restrictions, a move critics warn could shift more costs onto privately insured Californians.
The tax has united an unlikely coalition of doctors and health insurers against him, with critics warning it could make California even more expensive.
To preserve billions in Medi-Cal financing after Washington tightened the rules governing health-plan taxes used to draw federal matching funds, Newsom backed a redesigned tax that would raise the levy on private health plans beginning in 2027 if federally approved, potentially increasing premiums for their customers. Providing healthcare to illegal immigrants cost California an estimated $12.4 billion in 2025, the Associated Press reported.