California is finally asking who should really pay for Medi-Cal | Opinion
For years, we’ve argued over whether California spends too much on Medi-Cal.
Now, we’re finally beginning to ask the more important question: Why are taxpayers paying so much in the first place?
Gov. Gavin Newsom and California legislators deserve credit for taking that question seriously. This week, by signing Senate Bill 177, Newsom directed the California Department of Finance to develop options for requiring the state’s largest corporations to help cover Medi-Cal costs generated when their workers earn too little to afford premiums for private health insurance.
That conversation has become far more urgent now that President Trump’s H.R. 1 budget reconciliation bill has imposed new work requirements, more frequent eligibility checks and deep cuts, which researchers predict will leave 2.2 million Californians without health coverage.
California can no longer assume it will have the resources to keep absorbing costs that many large employers have shifted onto taxpayers.
State residents appear ready for that conversation: A recent statewide poll found 76% of respondents support requiring large corporations to contribute to Medi-Cal.
“Gov. Newsom and the Legislature listened when Californians said corporations should pay their fair share to keep our health care system strong, and today they put that plan into motion,” said Rachel Linn Gish, the interim deputy director for Health Access California. “Even as Washington abandons its responsibility to our health care, California is proving it will keep fighting to protect it.”
SB 177 also marks a turning point in California’s conversation about work, wages and public responsibility.
The timing is especially significant because a new study has shown exactly why this debate matters: According to researchers at UC Berkeley, just 34% of California’s low-wage workers receive health insurance through their own employers, compared with 69% of higher-wage workers.
Many have little choice. Berkeley researchers found that 22% of low-wage workers rely on Medi-Cal, nearly four times the rate of higher-wage workers.
Taxpayers absorb the consequences. California spends an estimated $36 billion in state and federal dollars providing Medi-Cal coverage to 3.6 million working Californians.
California is hardly blazing a new trail.
Massachusetts has required employers to help finance public health care for decades. Vermont also requires employers with multiple uncovered workers to contribute toward public healthcare costs.
Other states have started with transparency; Nevada, New Jersey and Washington public identify employers with workers relying on Medicaid and estimate the resulting cost to taxpayers. New Jersey has now approved an employer assessment, and Colorado and Washington are exploring similar approaches.
This isn’t anti-business. It’s pro-market because markets work best when prices reflect actual costs.
Legislators and probably the next governor must develop a system that protects taxpayers without discouraging investment or punishing responsible employers. Any new revenue should strengthen Medi-Cal access; reward insurers delivering high-quality, equitable care; expand preventive services; and keep Californians healthy enough to work, raise families and contribute to their communities.
California has taken an important first step, and if lawmakers follow through thoughtfully, taxpayers may finally stop paying twice — once at the cash register and again through their taxes — for compensation practices that leave too many working families unable to afford healthcare on their own.
If taxpayers are absorbing part of a corporation’s labor costs, then the market isn’t working as advertised. That’s a market distortion.
SB 177 doesn’t send Walmart, Amazon or any other corporation a bill. Not just yet.
Rather, it gives California a challenge — a hard and important one.
