California Assembly Republicans ask Trump administration to halt Newsom plan raising private-insurance premiums

Assembly Republicans said Gov. Gavin Newsom’s newly signed “managed care organization” tax could raise premiums by about $400 per year for Californians, and urged federal health officials in the Trump administration to intervene.

By The Apex Times Newsroom2 min readAI-assisted Apex article

California Republicans asked the Trump administration to stop a state health-care tax plan they said would function as a “backdoor” premium increase for people with private insurance, according to a report published July 6. The request targets federal health officials including Centers for Medicare and Medicaid Services (CMS) Administrator Dr. Mehmet Oz and U.S. Department of Health and Human Services Secretary Robert F. Kennedy, the report said.

The state plan, signed by California Gov. Gavin Newsom last week, would require health insurers to pay what opponents call a “managed care organization tax,” the report said. The measure is intended to generate funding for California’s Medicaid program, but critics warned that insurers could pass the costs to consumers through higher premiums.

Assemblymember Carl DeMaio, a Republican who led the complaint, said Newsom and state Democrats “blew billions” and are now seeking additional funding from working families. DeMaio said the policy would impose additional costs, describing the proposal as another tax hike on Californians who are already struggling with household expenses.

The report said industry groups warned the tax could raise annual premiums by about $400 or more for a family of four, with a California Legislative Analyst’s Office estimate of a 1.5% increase in monthly premiums on top of typical rate increases. It also said the tax would require insurers to pay $8.85 per enrollee each month, which the report described as more than $100 per year per individual if companies pass costs through.

The request also reflects a broader budget fight over Medi-Cal funding in California. A separate report from CalMatters in January 2026 described competing proposals and pressure on the state to find money to fund Medi-Cal, California’s nearly $200 billion Medicaid program, amid federal and state-level funding constraints and disputes over whether to raise taxes or restructure spending.

The July 6 request did not, in the account provided, describe what federal action the Trump administration could take or whether any CMS approvals, waivers, or federal requirements are currently pending. It also did not provide the text of the California law or an official timetable for federal review, focusing instead on the cost impacts cited by critics and the direct appeal to federal agencies.

Why It Matters

If federal health agencies become involved, the dispute would put pressure on how state health funding mechanisms interact with federal oversight and consumer cost impacts.
The debate centers on whether a state tax earmarked for Medicaid financing will be reflected in private-market premium pricing, affecting affordability for insured households.
The timeline of any federal response could affect near-term rate setting and insurer implementation choices for the next coverage period.
The fight also underscores ongoing Medicaid budget disputes in California, where multiple stakeholders have argued for different revenue and cost-management approaches.
The request highlights how state budget decisions can become national policy questions when federal health agencies hold review, compliance, or program-administration responsibilities.

Sources

Key Facts

California Assembly Republicans urged CMS Administrator Dr. Mehmet Oz and HHS Secretary Robert F. Kennedy to reject or stop Gavin Newsom’s newly signed health-care tax plan, according to a July 6 report.
The plan would assess a “managed care organization tax” on health insurers and is intended to raise funding for California’s Medicaid program, the report said.
The report said the tax requires insurers to pay $8.85 per enrollee each month.
Critics cited potential premium effects of about $400 per year for a family of four, and a California Legislative Analyst’s Office estimate of a 1.5% increase in monthly premiums on top of typical annual rate changes.
The report quoted Assemblymember Carl DeMaio saying the policy would add healthcare costs for working families.
A separate CalMatters report in January 2026 described Medi-Cal funding pressure and disputes over whether California will backfill reductions through tax or spending actions.