California Republicans are calling on the Trump administration to reject a recently approved managed care organization tax, arguing it will lead to a significant increase in healthcare premiums for residents. The tax, signed into law by Gov. Gavin Newsom, is intended to generate funding for the state's Medicaid programs.
Assembly Republicans have directed their appeal to Centers for Medicare and Medicaid Services Administrator Dr. Mehmet Oz and Health and Human Services Secretary Robert F. Kennedy. They contend that the tax, if approved, could raise annual premiums by $400 or more per family. "Newsom and Sacramento Democrats blew billions, can’t balance a budget, and now they want working families to pay the price with another $425 in higher healthcare costs," stated Assemblymember Carl DeMaio.
The proposed tax would require health insurers to pay a monthly rate of $8.85 per enrollee. Industry groups and analysts warn that these costs could be passed on to consumers. The Legislative Analyst's Office has estimated that Californians might see a 1.5% increase in monthly premiums, in addition to standard annual rate adjustments.
"Californians are already struggling to afford coverage—the last thing they need is another backdoor tax hike from Sacramento," DeMaio added. The tax is part of Newsom's upcoming state budget and has reportedly drawn criticism from some Democrats, amid broader economic concerns over rising prices for gas, housing, and utilities.
"Raising health insurance premiums to help balance the state budget is simply robbing Peter to pay Paul," said Dr. René Bravo, president of the California Medical Association. Sen. Akilah Weber Pierson, a Democrat from San Diego, also described the tax plan as "extremely problematic" during a recent hearing.
According to Republicans, the tax hike requires approval from the Centers for Medicare and Medicaid Services to be enacted. A letter signed by DeMaio, Assembly Republican Leader Heath Flora, and other Republican legislators argued that approving the tax would "reward" California for perceived mismanagement of federal healthcare resources. "Rather than addressing the underlying causes of these escalating costs, California is seeking to shift the burden onto privately insured families while leveraging additional federal taxpayer dollars to sustain spending commitments that have proven financially unsustainable," the letter stated.
A spokesperson for the White House indicated that while the administration cannot prejudge an application before a thorough review, Governor Newsom's support for the tax is consistent with actions by California Democrats. Newsom's office did not immediately respond to a request for comment.