{"id":2698813,"date":"2026-11-05T07:59:55","date_gmt":"2026-11-05T12:59:55","guid":{"rendered":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/utm_sourcerssutm_mediumrssutm_campaignnewsoms-dirty-medicaid-trick-sticks-californians-with-pricier-premiums-or-a-budget-shortfall\/"},"modified":"2026-11-05T08:07:36","modified_gmt":"2026-11-05T13:07:36","slug":"utm_sourcerssutm_mediumrssutm_campaignnewsoms-dirty-medicaid-trick-sticks-californians-with-pricier-premiums-or-a-budget-shortfall","status":"publish","type":"post","link":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/utm_sourcerssutm_mediumrssutm_campaignnewsoms-dirty-medicaid-trick-sticks-californians-with-pricier-premiums-or-a-budget-shortfall\/","title":{"rendered":"Newsom&#8217;s Dirty Medicaid Trick Screws Over Californians"},"content":{"rendered":"<aside class=\"mashsb-container mashsb-main mashsb-stretched\"><div class=\"mashsb-box\"><div class=\"mashsb-count mash-medium\" style=\"&quot;\"><div class=\"counts mashsbcount\">14<\/div><span class=\"mashsb-sharetext\">SHARES<\/span><\/div><div class=\"mashsb-buttons\"><a class=\"mashicon-facebook mash-medium mash-nomargin mashsb-noshadow\" href=\"https:\/\/www.facebook.com\/sharer.php?u=https%3A%2F%2Fwww.conservativenewsdaily.net%2Fbreaking-news%2Futm_sourcerssutm_mediumrssutm_campaignnewsoms-dirty-medicaid-trick-sticks-californians-with-pricier-premiums-or-a-budget-shortfall%2F\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Facebook<\/span><\/a><a class=\"mashicon-twitter mash-medium mash-nomargin mashsb-noshadow\" href=\"https:\/\/twitter.com\/intent\/tweet?text=&amp;url=https:\/\/www.conservativenewsdaily.net\/breaking-news\/?p=2698813&amp;via=ConservNewsDly\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Twitter<\/span><\/a><a class=\"mashicon-subscribe mash-medium mash-nomargin mashsb-noshadow\" href=\"#\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Subscribe<\/span><\/a><div class=\"onoffswitch2 mash-medium mashsb-noshadow\" style=\"display:none\"><\/div><\/div>\n            <\/div>\n                <div style=\"clear:both\"><\/div><\/aside>\n            <!-- Share buttons by mashshare.net - Version: 4.0.47--><p>Outgoing California governor Gavin Newsom is leaving residents with a costly problem: rising health-insurance premiums unless a lawsuit by health-care providers succeeds &#8211; in which case teh state could face a multibillion-dollar budget shortfall.<\/p>\n<p>The issue stems from how California funds Medi\u2011Cal.the state levies a large tax on managed\u2011care plans to capture extra federal Medicaid matching dollars; that tax is far higher for medicaid enrollees than for others. Federal authorities and Congress closed that loophole in recent legislation and a final rule, requiring california to make the insurer tax uniform by Jan. 1.<\/p>\n<p>Voters approved Proposition 35 in November 2024,which requires the state to maximize federal Medicaid matching funds but caps the insurer tax on non\u2011medicaid enrollees at roughly $2.50 per month and directs proceeds to higher Medicaid reimbursements rather than the General Fund. Despite that, the Legislature and Newsom in June passed a law that raised the non\u2011Medicaid insurer tax to $8.85 per month, allowed transfers to the General Fund, and was not approved by the supermajority the initiative calls for &#8211; actions that conflict with prop 35.<\/p>\n<p>Newsom\u2019s administration plans to first seek federal approval for a tax that would comply with Prop 35 but not the new federal rules,expecting a rejection,and then pursue approval for the higher tax the Legislature passed. Health-care groups that backed Prop 35 have sued, asking the California Supreme Court for immediate relief and arguing the enacted law undermines the voter-approved initiative. The plaintiffs note the state could restructure the tax to meet both Prop 35 and federal law, but doing so would eliminate roughly $2 billion in revenue the june bill would generate.<\/p>\n<p>Critics say the conflict was foreseeable: federal officials had already warned about California\u2019s tax scheme, and some predicted prop 35 might backfire. Rather of opposing the measure, Newsom remained publicly indecisive. As a result, Californians now face the prospect of either higher premiums or another state budget gap &#8211; a situation the piece attributes to newsom\u2019s weak leadership.<\/p>\n<p>(Article by Chris Jacobs, founder and CEO of Juniper Research Group and author of The Case Against Single Payer.)  <\/p>\n<p class=\"readmore\">\n    <button onclick=\"showReadMore()\" id=\"readmorebtn\">Read more&#8230;<\/button>\n<\/p>\n<hr id=\"line\">\n<span id=\"more\"><\/p>\n<div>\n<p>Outgoing California Gov. Gavin Newsom has a going-away present for Golden State residents: <a href=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/biden-admin-anticipates-lower-vaccine-costs-for-seniors\/\" title=\"Biden Admin Anticipates Lower Vaccine Costs for Seniors\">higher health insurance premiums<\/a>. That is, unless a lawsuit recently filed by a series of health care providers succeeds, in which case California could have a multibillion-dollar hole in its budget.<\/p>\n<p>These harmful consequences arise in part from Newsom\u2019s lack of leadership, a trait the would-be presidential candidate would bring to Washington.<\/p>\n<h2><strong>State Funding Gimmick<\/strong><\/h2>\n<p>The problem arises from the intersection of federal law and a 2024 voter proposition. Specifically, California <a href=\"https:\/\/www.wsj.com\/opinion\/newsom-continues-a-medicaid-scam-53ee1bed\" target=\"_blank\" rel=\"noreferrer noopener\">funds its Medicaid program<\/a> via a tax on managed care organizations designed to maximize revenue from Medicaid beneficiaries, for whom the state can get extra federal matching funds. This year, the <a href=\"https:\/\/www.dhcs.ca.gov\/services\/Documents\/1903w3B-and-C-MCO-Tax-2023-2026-Amendment.pdf\" target=\"_blank\" rel=\"noreferrer noopener\">tax on insurers<\/a> covering Medicaid enrollees comes to $274 per enrollee per month, compared to only $2.25 for non-Medicaid enrollees.<\/p>\n<p>Since 2023, the <a href=\"https:\/\/www.dhcs.ca.gov\/wp-content\/uploads\/2025\/10\/CA-MCO-Tax-Waiver.pdf\" target=\"_blank\" rel=\"noreferrer noopener\">Biden<\/a> <a href=\"https:\/\/www.dhcs.ca.gov\/wp-content\/uploads\/2025\/10\/1903w3B-and-C-MCO-Tax-2023-2026-Amendment.pdf\" target=\"_blank\" rel=\"noreferrer noopener\">and<\/a> <a href=\"https:\/\/www.dhcs.ca.gov\/wp-content\/uploads\/2025\/10\/CA-MCO-Tax-Waiver.pdf\" target=\"_blank\" rel=\"noreferrer noopener\">Trump<\/a> administrations have warned California that this disparate tax treatment violated the spirit of the Medicaid statute. Congress agreed, closing this loophole in Section 71117 of last year\u2019s <a href=\"https:\/\/wordpress.juniperresearchgroup.com\/wp-content\/uploads\/2025\/08\/BBB-Summary.pdf\" target=\"_blank\" rel=\"noreferrer noopener\">Big, Beautiful Bill<\/a>. Under a <a href=\"https:\/\/www.federalregister.gov\/documents\/2026\/02\/02\/2026-02040\/medicaid-program-preserving-medicaid-funding-for-vulnerable-populations-closing-a-health\" target=\"_blank\" rel=\"noreferrer noopener\">final rule<\/a> implementing the law released earlier this year, California will have to equalize the insurer tax disparity by next Jan. 1.<\/p>\n<p>That\u2019s where <a href=\"https:\/\/vig.cdn.sos.ca.gov\/2024\/general\/pdf\/prop35-text-proposed-laws.pdf\" target=\"_blank\" rel=\"noreferrer noopener\">Proposition 35<\/a> comes in. The initiative, approved by voters in November 2024, imposes strict parameters on the tax and the programs it funds. While encouraging the state to \u201cmaximize the amount of federal [Medicaid] matching funds\u201d received, the initiative limits the tax on non-Medicaid enrollees to no more than $2.50 per month and prohibits the legislature from diverting the tax to the state\u2019s General Fund. Instead, Prop 35 includes specific instructions that the tax fund higher Medicaid reimbursements for various health care groups, most of whom endorsed the initiative.<\/p>\n<h2><strong>Newsom and Democrats Violate Ballot Initiative<\/strong><\/h2>\n<p>In June, the legislature passed, and Newsom signed, a <a href=\"https:\/\/leginfo.legislature.ca.gov\/faces\/billTextClient.xhtml?bill_id=202520260SB125\" target=\"_blank\" rel=\"noreferrer noopener\">law<\/a> that complied with the new federal requirements \u2014 but not Proposition 35. The law raised the insurer tax on non-Medicaid enrollees to $8.85 per month, which, if fully passed on to consumers, would raise premiums for a family of four by over $300 per year. It also permitted the state to use funds from the tax \u201cfor cashflow loans to the General Fund.\u201d<\/p>\n<p>The higher tax on non-Medicaid enrollees, the language permitting transfers to the General Fund, and the legislature\u2019s failure to approve the measure with a three-fourths margin all violate Proposition 35. Indeed, the bill explicitly stated \u201cthe intent of the Legislature\u201d to enact a provider tax \u201cthat is not subject to\u201d Proposition 35. <\/p>\n<p>Newsom plans to <a href=\"https:\/\/abgt.assembly.ca.gov\/system\/files\/2026-05\/initial-lao-analysis-of-medi-cal-at-may-revision.pdf\" target=\"_blank\" rel=\"noreferrer noopener\">square this circle<\/a> by engaging in a game of three-card monte. His administration will first ask Washington to approve an insurer tax that complies with Proposition 35 but not the new requirements in federal law and regulations. When federal officials reject that application \u2014 as Newsom\u2019s office both expects and hopes it will \u2014 it will then seek approval of the tax the legislature approved.<\/p>\n<h2><strong>Legal Mess Caused by Newsom\u2019s Lack of Leadership<\/strong><\/h2>\n<p>Unsurprisingly, the health care groups that pushed to enact Prop 35 sued. In their complaint, they <a href=\"https:\/\/www.mcotaxlawsuitfacts.com\/assets\/cahp-v-dhcs-petition-for-writ-of-mandate.pdf\" target=\"_blank\" rel=\"noreferrer noopener\">asked<\/a> the California Supreme Court to intervene directly, given the Jan. 1 deadline for changing the tax, and declare that Newsom\u2019s gambit violates the state constitution by effectively nullifying the voter-passed initiative. Their complaint rightly noted that Newsom and the legislature can readily restructure the insurer tax to comply with both Prop 35 and the new federal law. Doing so, however, would sharply reduce the roughly <a href=\"https:\/\/abgt.assembly.ca.gov\/system\/files\/2026-05\/initial-lao-analysis-of-medi-cal-at-may-revision.pdf\" target=\"_blank\" rel=\"noreferrer noopener\">$2 billion in revenue<\/a> that the bill the legislature passed in June would generate.<\/p>\n<p>This potential fiscal mess was both predictable and predicted when Proposition 35 passed. Federal officials had <a href=\"https:\/\/www.dhcs.ca.gov\/wp-content\/uploads\/2025\/10\/CA-MCO-Tax-Waiver.pdf\" target=\"_blank\" rel=\"noreferrer noopener\">already warned<\/a> California about its insurer tax gimmick, and some groups <a href=\"https:\/\/calmatters.org\/health\/2024\/10\/prop-35-health-insurance-tax\/\" target=\"_blank\" rel=\"noreferrer noopener\">worried<\/a> that Prop 35\u2019s continued reliance on it meant the measure would backfire. But rather than marshaling opposition to the measure as fiscally irresponsible, Newsom instead <a href=\"https:\/\/calmatters.org\/health\/2024\/10\/prop-35-health-insurance-tax\/\" target=\"_blank\" rel=\"noreferrer noopener\">waffled<\/a>: \u201cI haven\u2019t come out publicly against it. But I\u2019m implying a point of view. Perhaps you can read between those many, many lines.\u201d<\/p>\n<p>Talk about a profile in courage. Because Newsom decided to lead from behind, Californians now face the Scylla of higher health insurance premiums or the Charybdis of yet another state budget shortfall. If this is the type of leadership Newsom wants to bring to Washington, better for him to stay in Sacramento.<\/p>\n<hr>\n<div>\n<p>      Chris Jacobs is founder and CEO of Juniper Research Group and author of the book &#8220;<a href=\"https:\/\/www.amazon.com\/dp\/1645720020\">The Case Against Single Payer<\/a>.&#8221; He is on Twitter: <a href=\"http:\/\/twitter.com\/chrisjacobsHC\">@chrisjacobsHC<\/a>.<\/p>\n<\/div><\/div>\n<p><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Newsom plan could raise CA health premiums amid lawsuit<\/p>\n","protected":false},"author":521,"featured_media":2698814,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_mo_disable_npp":"","fifu_image_url":"https:\/\/thefederalist.com\/wp-content\/uploads\/2026\/10\/Governor-Gavin-Newsom-Housing-Press-Conference.jpg","fifu_image_alt":"","footnotes":""},"categories":[],"tags":[37666,32742,41035,87485,87486],"class_list":["post-2698813","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","tag-california-politics","tag-gavin-newsom","tag-healthcare-reform","tag-medicaid-policy","tag-public-policy-controversy"],"fifu_image_url":"https:\/\/thefederalist.com\/wp-content\/uploads\/2026\/10\/Governor-Gavin-Newsom-Housing-Press-Conference.jpg","_links":{"self":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/2698813","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/users\/521"}],"replies":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/comments?post=2698813"}],"version-history":[{"count":3,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/2698813\/revisions"}],"predecessor-version":[{"id":2698817,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/2698813\/revisions\/2698817"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/media\/2698814"}],"wp:attachment":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/media?parent=2698813"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/categories?post=2698813"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/tags?post=2698813"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}