Brian Mew: "Medi-Cal Is Running Out of Money. A Billionaire Tax is the Worst Solution."

Earlier this week, the California Democratic Party moved to endorse Proposition 40, the controversial Billionaire Tax Act. Its progenitor, SEIU-UHW President Dave Regan, has claimed his proposed billionaire tax is about saving Medi-Cal (California’s iteration of Medicaid) from federal funding cuts.

Let’s examine that claim. And I’d like to do so as separately as possible from the discussion on whether or not Prop 40 itself is a good idea (although there’s a lot to discuss there, too.) Previously, we posted an excerpt from a Newsmax piece by BRI Founder & Chair Sally Pipes which more directly addresses that legitimate concern that the state stands to lose nearly one-fourth of what it collects in income tax annually if California’s top 200 earners leave as a result of this bill passing. In it, she highlighted the work of her Pacific Research Institute colleague Wayne Winegarden, who wrote that “the state is risking a recurring $30 billion loss in personal income tax revenue for the hope of getting a $25 billion revenue boost.”

That remains a valid criticism to which I have yet to hear an articulate counter. In either case, I want to focus on Regan’s public attestation that a 5% tax on California billionaires is necessary as a response to Trump’s 2025 budget law—the “One Big Beautiful Bill”—which included Medicaid spending reductions and new eligibility requirements. If it were to pass, 90% of the estimated funds are supposed to be channeled into a healthcare account dedicated to supporting Medi-Cal and low-income health programs.

That’s the idea, anyways. The California Legislature doesn’t always have the best track record on allocation. When nearly 70% of California voters approved Proposition 36 in 2024—a bill toughening penalties for repeat offenders and which requires the state to fund public safety programs—legislators delivered a paltry one-time funding of $100 million. Just for context, the state’s spending in 2024-2025 exceeded $495.6 billion.

I bring this up simply to illustrate how, despite a bill’s best intentions, it’s far from a given that the measure will achieve its stated aim. But, in any case, that’s not what I want to litigate.

SEIU-UHW’s website claims that “the federal funding cuts will strip roughly $100 billion from California healthcare.” This ties into an oft-repeated talking point by Democrat legislators that Trump and Republicans in Congress have cut Medicaid by $1 trillion over 10 years.

“There’s just one problem with that claim. It’s not true,” wrote Pipes in a separate Washington Examiner piece earlier this year. “The Congressional Budget Office now projects that federal Medicaid spending will exceed $7.1 trillion between 2026 and 2034. The agency points to ‘technical changes’ that will increase spending by $700 billion over the coming decade.”

“In other words, Medicaid outlays are projected to increase in absolute terms over the next decade. But they’ll rise at a slightly lower rate than the CBO previously projected. Hence, Democrats’ accusation of ‘cuts,’” Pipes continued.

It is worth noting that prior to the Trump administration tightening eligibility requirements, the Biden administration loosened them. This resulted in widespread fraud. In 2024 alone, 6.6 million Medicaid enrollees were ineligible for the program, but the federal government insured them anyways—at an annual cost of nearly $37 billion.

It’s a somewhat similar story for Medi-Cal. In recent years, progressive lawmakers expanded Medi-Cal to provide coverage for an estimated 1.6 million undocumented immigrants, which costs taxpayers $12.4 billion each year.

Is California in a financial position to eat that cost? Consider that Medi-Cal costs $188 billion annually, with two-thirds of that sum being paid by the federal government. The state itself only covers just over one-third of its own medical bill.

On top of all this, California has now seen “four years of projected deficits and a cumulative total of $125 billion in budget problems,” in the words of legislative analyst Gabe Petek. That’s nearly half a decade of government spending outstripping its own revenues.

Despite that sad reality, groups like the SEIU-UHW website continue to place blame at Trump and the federal government, claiming “massive cuts to federal healthcare funding are driving California towards a healthcare collapse.”

But California doesn’t have a revenue problem. Objectively, it has a spending problem.

“Medi-Cal’s finances are not in disarray because the rich aren’t paying their fair share. Rather, it’s because Democrats have swept ever-more people into the program without a sustainable plan to pay for their coverage,” said Pipes.

But that’s context Regan—and supporters of socialized medicine—hope California voters won’t have top-of-mind when they receive their ballots ahead of the November elections.

Take the implications of this example beyond California. This is how government-run health programs can so easily balloon out of control (and out of funds). And when they do, the very people responsible will not readily point their ire inward or find ways to rein in extraneous expenses. They will look for something or someone else to blame. They will look for new ways to collect revenue from taxpayers. Big government begets big government.

And you—the patient, the taxpayer, even if you aren’t a billionaire—still end up paying the price.