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# Sacramento says it’s saving Medi-Cal. Critics say it’s shifting billions in costs onto privately insured Californians.
June 18 2026
Written by Yonatan Mendel.
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MY VIEW - California lawmakers have once again discovered a familiar solution to a budget problem: make someone else pay for it.
This week, the Legislature approved a controversial restructuring of California's Managed Care Organization (MCO) tax, a move that state leaders argue is necessary to preserve funding for Medi-Cal, California's Medicaid program. But beneath the technical language and budget jargon lies a simple reality: privately insured Californians may soon be paying more for health coverage to help Sacramento fill a growing funding gap.
The debate is not about whether Medi-Cal should be funded. It should. The debate is about who pays the bill.
For years, California benefited from billions of dollars in federal funding tied to its health plan tax structure. New federal rules have changed the game. Facing the prospect of losing billions in annual revenue, Sacramento responded with Senate Bill 125, which shifts more of the tax burden from Medi-Cal plans to private insurance plans.
The result is predictable.
Health insurers say they will pass the additional costs directly to consumers through higher premiums. The independent Legislative Analyst's Office estimates the tax could increase monthly premiums by roughly 1.5 percent. Industry estimates suggest the average Californian could pay about $100 more per year, while a family of four could face an additional $400 annually.
Politicians insist the legislation does not directly raise premiums. Technically, they are correct.
But if government increases taxes on insurance providers, and insurance providers increase premiums to recover those costs, consumers still pay more. The distinction may satisfy Sacramento accountants, but it offers little comfort to families already struggling with inflation, housing costs, utility bills, and some of the highest living expenses in America.
The timing could hardly be worse.
California residents have endured years of rising costs in nearly every aspect of life. Housing affordability remains among the worst in the nation. Energy costs continue climbing. Gasoline prices routinely exceed national averages. Grocery bills remain elevated. Now health insurance may become the latest burden placed on middle-class families.
State leaders argue they had few alternatives. But Californians deserve an honest discussion about the true cost of these decisions and who ultimately bears the burden.
The larger concern extends beyond this single proposal. California continues to rely on taxes, fees, and assessments to close budget gaps rather than addressing long-term structural spending challenges.
That approach may solve short-term budget problems. It does not solve long-term affordability problems.
The question facing Californians is simple: How many more hidden costs can working families absorb before affordability becomes more than just a talking point?
Sacramento may have found a way to keep Medi-Cal funding flowing.
But once again, the people footing the bill appear to be California's middle class.
**(Yonthan Mendal** writes on Jewish community issues, antisemitism, Israel, and public policy. His articles focus on civic engagement, education, and issues affecting Jewish communities.)
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