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Doctors And Insurers Sue Newsom Over California Health Insurance Tax

The Newsom administration argues the tax is necessary to help finance healthcare services and offset significant federal reductions to Medi-Cal, California’s public health insurance program for low-income residents.

,   and  TIPP Staff
2 min read
California's 'largest tax hike in history' called illegal by doctors, insurance firms. Pic via(@nypost)

Doctors and health insurers have sued California Gov. Gavin Newsom and the state Legislature over a newly approved healthcare tax, arguing that it violates a voter-approved law governing healthcare funding.

The lawsuit challenges California’s Managed Care Organization tax, with plaintiffs alleging that the measure circumvents limits established by Proposition 35 and restrictions on how healthcare tax revenue can be used.

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Health insurers warn that the higher tax could increase premiums by about $100 per person annually, potentially adding roughly $400 a year for a family of four. The lawsuit seeks to block implementation of the measure.

The Newsom administration argues the tax is necessary to help finance healthcare services and offset significant federal reductions to Medi-Cal, California’s public health insurance program for low-income residents.

The dispute follows changes to federal rules governing healthcare taxes, which have required California to restructure its funding approach while seeking to maintain financial support for Medi-Cal.

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