Newsom is being pressured to raise the Medi-Cal tax by unions, progressives

from Maya S. Miller and Jeanne KuangCalMatters

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California health care advocates, unions and progressive lawmakers are calling on the governor and Legislature to find new money to fund medical care and other social services for millions of low-income and disabled Californians.

Their coalition, known as Fight for Our Health, demanded on the Capitol steps Wednesday that the Legislature and incoming Gov. Gavin Newsom take action to fill the funding cuts President Donald Trump and Republicans approved last year.

The dilemma of how to respond to billions of dollars in cuts to social services — especially to the budget for Medi-Cal, the state’s nearly $200 billion Medicaid program heralds a battle that will dominate both the 2026 legislative session and the midterm elections.

While one union is pursuing a controversial wealth tax ballot measure to offset the cuts, progressive Democrats in the Legislature are proposing a separate corporate tax, though details remain scarce. If it materializes into a bill, it is also likely to split the party, which is sensitive to accusations that Californians are overtaxed and recently announced that its leaders would focus on cutting costs for the state’s residents.

In his final year as governor, Newsom faces a battle between two politically radioactive options: raising taxes or letting benefits expire for millions of low-income and disabled Californians. Although his administration has tried only to blame Trump for the federal cuts, health care advocates have made it clear they will push Newsom to help prevent steep coverage losses.

“I want to take a moment to address the governor and the state legislature,” Judy Mark, president of Disability Voices United, said from the Capitol steps. “We know you are not responsible for these terrible cuts, but now the responsibility is in your hands. You have the power to protect us.”

The governor angered health care advocates when he didn’t include money to fill the coverage when he released his proposal for the state budgetwhich acknowledges that tens of thousands will lose coverage and counts fewer services among projected revenue savings. This year, the state began freezing new Medi-Cal enrollment for undocumented immigrant adults due to rising costs in the program, over the objections of progressives and health advocates.

Newsom analysts expect about 522,000 Californians to lose Medi-Cal coverage in fiscal year 2026-2027, rising to 1.8 million in the future. His administration has said the state simply doesn’t have the money to pay for coverage for people who are excluded from the program because of new federal laws.

One union, the Service Employees International Union-United Health Workers of the West, proposed a ballot initiative that would impose a wealth tax of California billionaires to help cover the roughly $30 billion the state will lose annually from Trump’s tax-and-spend law. Supporters say the one-time 5 percent fee would generate about $100 billion for the state’s health care system. About 10% of the money raised will be reserved for public schools.

But Newsom is fighting the measure, which has yet to make it to the ballot but has sent Sacramento and Silicon Valley into a frenzy.

Billionaires are critical to the state budget

The proposal provoked fierce opposition. Google founders Larry Page and Sergey Brin have reportedly moved to relocate some business entities out of California, while others are threatening to leave. Democratic strategists close to Newsom are running a campaign committee to reject the measure as the union gathers the nearly 900,000 signatures needed to qualify it for the November election.

Newsom, who has repeatedly opposed state wealth tax proposals, told Politico this week he has personally pushed for the measure’s supporters to drop it over concerns it could drive the target demographic — and their incomes — out of California. He has too long-standing personal relationships to many of the tech titans likely to be subject to a proposed wealth tax, and he has a reason to keep them close: They are potential donors if he is expected to run for president after his term as governor ends this year.

Even as progressives push for Newsom to raise revenue to support Medi-Cal, few have actually embraced the wealth tax proposal, with most taking a wait-and-see position. They also won’t criticize Newsom’s opposition, a potential sign that liberal lawmakers hope he will be willing to seek other health care funding.

Newsom’s office did not respond to inquiries Wednesday about whether he would consider alternative tax proposals.

Health care advocates have said they will make replacing federal funding a key priority this legislative session. Progressive lawmakers who led the charge against Newsom’s spending cuts proposal freezing Medi-Cal for undocumented immigrantshave signaled that they will also fight.

Assembly health chair Oh my godDemocrat from Oakland, suggested the state should look at imposing new taxes on corporations that employ workers who are paid so little that they qualify for public health assistance.

“We cannot allow these corporations to continue to free ride,” she said. “California has a responsibility to act decisively, and we will.”

But she hasn’t introduced a bill, and health care advocates said they’re still just hoping to have more options on the table.

This article was originally published on CalMatters and is republished under Creative Commons Attribution-NonCommercial-No Derivatives license.