{"id":846,"date":"2026-05-28T10:30:11","date_gmt":"2026-05-28T10:30:11","guid":{"rendered":"https:\/\/california-relocation-journal.com\/?p=846"},"modified":"2026-05-28T10:30:11","modified_gmt":"2026-05-28T10:30:11","slug":"california-is-teetering-on-a-healthcare-cliff-but-few-are-paying-attention","status":"publish","type":"post","link":"https:\/\/california-relocation-journal.com\/?p=846","title":{"rendered":"California is teetering on a healthcare cliff, but few are paying attention"},"content":{"rendered":"
\n

When Congress passed the big, ugly bill known as HR 1 last year, most Americans understood it meant cuts to Medicaid, the safety net program millions rely on for medical insurance.<\/p>\n

Read more Newsom vows to levy 100% tax on California recipients of Trump\u2019s $1.8-billion \u2018slush fund\u2019<\/a><\/p>\n

But few Californians realized just how much it will affect the Golden State when its provisions really kick in, starting after the midterms (the Republicans aren\u2019t that<\/i> dumb) and continuing on in cascading cuts for the next few years.<\/p>\n

Millions of Californians \u2014 not just low-income folks \u2014 are going to feel the effects, whether through a loss of insurance, fewer providers able to keep their doors open, or rising premiums and costs.<\/p>\n

\u201cThis problem trickles up,\u201d state Senate leader Monique Lim\u00f3n (D-Goleta) told me. \u201cThis is not just going to impact the people that have a public healthcare plan. When you see a hospital close, when you see medical providers no longer being able to practice, it is absolutely going to impact everybody, the middle class included.\u201d<\/p>\n

Added to the loss of federal funds, Gov. Gavin Newsom\u2019s most recent budget plan (which the Legislature has to debate in coming weeks) includes cuts at the state level. This is in part to contend with the loss of federal money, but also because healthcare costs keep rising and even in this wealthy state, we can\u2019t afford the bills \u2014 at least not without some changes.<\/p>\n

What those changes are \u2014 and who should bear the brunt of them \u2014 is a complicated and largely ignored debate happening right now. While our candidates for governor have been grilled on whether they support single-payer healthcare or not, (Becerra is a sort-of, Steyer is a yes) the real question isn\u2019t how is the next governor going to expand access to care \u2014 but how are we going to keep the whole system from collapsing right now.<\/p>\n

\u201cThis is not hypothetical, this is what\u2019s coming down the line,\u201d Lim\u00f3n said.<\/p>\n

The problem<\/h2>\n

About 15 million adults and children, or about 1 in 3 of our state\u2019s residents, rely on Medi-Cal, which is what California calls its Medicaid program.<\/p>\n

Through a creative bit of state financing called the Managed Care Organization, or MCO, tax, the federal government has been paying for a big chunk of the costs of that insurance, about $7 billion a year. President Trump\u2019s HR 1 makes that money go bye-bye by greatly reducing the MCO, leaving the state to figure out how to backfill that cash. And that\u2019s just one of the ways the big, ugly bill hurts California. Yes, it\u2019s complicated.<\/p>\n

Newsom\u2019s budget plan relies in a not-small way on restructuring the MCO tax to fit HR 1\u2019s new rules. But here\u2019s the problem with that \u2014 any fix will require approval from the Trump administration, which has repeatedly shown the welfare of Californians is not a high priority. In fact, the Trump administration in March rejected California\u2019s request to update another fee<\/u> related to hospitals that also generates billions for Medi-Cal.<\/p>\n

So maybe Newsom will be able to negotiate a plan that saves the MCO and California healthcare. But wouldn\u2019t it be much better for the GOP, with a presidential election looming, to watch California (and her presidential-contender governor) tumble off a healthcare cliff? Few states rely on an MCO tax the way ours does, which means our pain is going to be far more visible and profound if we lose this funding.<\/p>\n

That means if Newsom\u2019s budget is approved by the state Legislature with the MCO fix, the state is taking a gamble. If the feds don\u2019t approve some new version of the MCO tax, \u201cit would have major implications,\u201d Adriana Ramos-Yamamoto told me. She\u2019s a senior policy fellow with the nonpartisan California Budget and Policy Center.<\/p>\n

Sort-of solutions<\/h2>\n

What\u2019s the fourth-largest economy in the world to do? Lim\u00f3n would like to see the state stop subsidizing corporations who pay so meagerly that their employees qualify for Medi-Cal.<\/p>\n

\u201cWe don\u2019t have the luxury of being able to provide these tax subsidies,\u201d Lim\u00f3n said.<\/p>\n

Read more Garden Grove crisis exposes Southern California\u2019s hidden industrial risks<\/a><\/p>\n

Turns out, 42% of Medi-Cal enrollees are full-time workers, according to a Although most big corporations offer some sort of health insurance, it\u2019s often tied to working a certain number of hours (which they then make sure not to schedule) or it has prohibitive costs or other barriers.<\/p>\n

In 2022, the Labor Center found, 34% of low-wage workers received their health insurance through employers, compared with 69% of higher wage workers \u2014 meaning California is picking up insurance costs because low-wage employers are finding ways out of them. <\/p>\n

\u201cOver the decades, Medi-Cal has really undergone a significant transformation. It\u2019s shifted from a program that primarily served the disabled and indigent and elderly folks to one that largely supports folks that work in low-wage industries,\u201d Tia Orr, the executive director of SEIU California, told me. \u201cMedi-Cal has now become a program where folks that work every single day have to rely on it. The idea that someone can work every day and qualify for food stamps and Medi-Cal, it should be eye-opening to folks.\u201d<\/p>\n

Right now, she points out, California taxpayers are paying about $7,800 a year for each person on Medi-Cal.<\/p>\n

\u201cThe corporations that they work for don\u2019t have to pay one dollar of that, right?\u201d<\/p>\n

Lim\u00f3n and her Senate colleagues would like to change that. They have proposed the \u201cFair Share\u201d plan that would impose a tax on the state\u2019s largest and wealthiest corporations whose employees rely on public assistance. It\u2019s more of an idea than a fleshed-out policy at this point, but as ideas go, it ain\u2019t a bad one. It\u2019s been done in Massachusetts<\/u>, and New Jersey\u2019s governor has suggested it.<\/p>\n

In California, it deserves more attention than it\u2019s currently being given.<\/p>\n

To be fair, Newsom\u2019s plan also would also limit state corporate tax credits to $5 million, as my colleague Taryn Luna points out<\/u>, or 50% of a firm\u2019s tax liability, whichever is greater. That change could bring in $850 million next year to state coffers and grow to $1.8 billion by the end of the decade. That\u2019s still not nearly enough to cover healthcare costs. <\/p>\n

To add to the drama, the California Legislative Analyst\u2019s Office predicts all this will get worse \u2014 that the number of Californians losing health insurance coverage could roughly double in the next four years. The Newsom administration projects federal Medi-Cal changes could push off 44,000 people in 2026-27, growing to 1.3 million people by 2029-30.<\/p>\n

That means more people getting sick and dying because they can\u2019t afford a doctor. It means more doctors, clinics and hospitals losing income vital to keeping their doors open, and more emergency rooms being overloaded because it\u2019s the only option.<\/p>\n

\u201cThe worst is yet to come,\u201d Rachel Linn Gish, interim deputy director at Health Access California, a consumer healthcare advocacy coalition, told me. \u201cIf you wait to take action until it gets bad, it\u2019s already going to be way too late.\u201d<\/p>\n

She\u2019s right, and however you look at it, a fix should include corporations paying their fair share. <\/p>\n

Read more Alabama asks Supreme Court to allow use of congressional map helping GOP, despite racial bias ruling<\/a><\/p>\n<\/p><\/div>\n","protected":false},"excerpt":{"rendered":"

Across the U.S., MAGA voters made themselves heard this week with a resounding vote of confidence for President Donald Trump. 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