Joffe: A health-care union’s ‘one-time fix’ for federal Medicaid cuts could easily become permanent.
Contra Costa County Taxpayers Association takes a look at what the SEIU wants to do with the proceeds from its coercive billionaires' tax proposal. It's not pretty. From National Review
The stated purpose of the revenue is to offset federal spending cuts in the One Big Beautiful Bill Act (OBBBA) last year. SEIU’s main concern is with health care, the industry that employs most of its members, so 90 percent of the revenue would go to backfilling reduced federal spending on Medi-Cal (California’s version of Medicaid), with the remainder devoted to K–12 education and nutrition programs.
One motivation for sharing some of the tax proceeds with public schools is to garner support from the California Teachers Association, but CTA’s ballot priority for 2026 will be making permanent a “temporary” income tax surcharge on high-income earners that the state spends on K–12 schools and community colleges.
Proponents of the billionaire tax estimate that California will lose $100 billion in federal health-care funding from the OBBBA over five years. They also estimate that the billionaire tax will raise a similar amount over the same five-year period. Although the tax is one-time in nature, the measure gives billionaires the option to pay it in up to five annual installments if they tack on 7.5 percent annual interest to any amount not paid in 2027.
Accordingly, the tax seems designed to solve a mere five-year revenue problem. Proponents argue that five years will be enough time for voters to replace GOP lawmakers at the federal level with Democrats who will reverse the OBBBA’s spending cuts.
But, of course, that outcome is far from guaranteed. Although low public approval for President Trump and congressional Republicans today may well result in a Democratic trifecta in 2029, that new ruling coalition will likely face different conditions than Biden’s big spenders did when they took power in 2021. By 2029, impending insolvencies of the Social Security and Medicare hospitalization trust funds could take political center stage. The need to stabilize old-age entitlements may absorb political capital, as well as new revenue sources, that might otherwise go to bulking up Medicaid.
Without the federal funds it expects, SEIU could try to convince the governor and legislature to plow more of California’s general fund into Medi-Cal. But this could prove to be a hard sell, as the state is already facing a long-term gap between its spending requirements and revenue growth.
So, if SEIU hopes to keep Medi-Cal spending growing along its pre-2025 trajectory, it may need to place repeated wealth taxes on the ballot — potentially lowering the net-worth threshold as billionaires flee California and therefore yield fewer wealth-tax dollars.
Another relevant question for voters: Does Medi-Cal need the extra taxpayer money in the first place
Although the OBBBA has been framed as a Medi-Cal killer, it is worth understanding exactly how the bill affects the Medicaid program. Notably, the OBBBA did not reduce the federal matching percentage for states’ Medicaid spending nor did it withdraw benefits from any class of enrollees. Rather, the state Legislative Analyst’s Office and SEIU project a large drop in federal Medicaid revenue due to the OBBBA’s changes to provider taxes and eligibility.
Like many other states, California has been extracting additional Medicaid funds through fake taxes on hospitals, insurers, and other Medicaid providers. The providers are happy to pay these taxes because they know the state will spend the proceeds on the Medi-Cal services that they perform, while receiving federal matching funds ranging from 1-to-1 to 9-to-1 that can also be applied toward Medi-Cal. The OBBBA does not abolish this practice, but it does impose limits on it.
With respect to Medicaid eligibility, the OBBBA requires more frequent eligibility checks and asks some beneficiaries to meet a community engagement requirement to maintain benefits. This requirement can be satisfied through some combination of paid work, volunteering, or classwork totaling at least 80 hours per month.
The state auditor has classified Medi-Cal’s eligibility verification as a “high-risk” issue for the state government since 2007. Insufficient eligibility checking can easily result in wasteful spending on beneficiaries who do not qualify under law. With most Medi-Cal beneficiaries in managed care plans administered by insurers, managed care providers are receiving premium payments for beneficiaries who have moved or obtained employer-based insurance, leaving the firms with unearned revenue.
A final focus of the OBBBA is to restrict the use of federal Medicaid funds for undocumented immigrants. California officials have denied foisting costs for their liberal benefits for illegal aliens on federal taxpayers, but, in truth, they have been overcharging the federal government for this group’s emergency room visits, which the federal government does help cover.
Ultimately, what SEIU is demanding with its wealth tax proposal is that California maintain its regime of sloppy eligibility checks and generous coverage for illegal aliens — many of whom are self-deporting yet remaining on the insurance rolls anyway. They also want taxpayers to provide coverage for those unwilling to commit some of their time to self-improvement or community involvement, while backfilling a provider tax system that overcharges federal taxpayers.
Read the whole thing here.
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