Newsom Continues a Medicaid "Scam"
My latest for the WSJ...
I wrote an op-ed for this morning’s Wall Street Journal highlighting how Gov. Gavin Newsom (D-CA), whose press office has spent the past week trolling red states regarding health care fraud, released a budget reliant on billions of dollars in funding from a provider tax “scam” that Congress already outlawed last year. Excerpts are below, but you can find the full piece here.
Gavin Newsom’s press office has been pumping out social-media posts on healthcare fraud in red states. But the California governor’s latest budget maintains a Medicaid funding gimmick designed to bilk federal taxpayers of billions of dollars, even though Congress outlawed it months ago.
Mr. Newsom’s budget, released last month, assumes that a Medicaid provider tax on managed-care organizations will remain in place through December. In 2026 this assessment taxes insurers covering Medicaid enrollees at $274 a month per enrollee, while the tax for other enrollees is $2.25 a month. The disparate treatment seeks to maximize revenue from Medicaid beneficiaries, for whom California can gain additional federal matching funds, without raising costs for people with other forms of insurance, such as employer-sponsored coverage….
Congress closed the loophole through a provision in the Big Beautiful Bill Act. The law provides that the provision became effective “upon the date of enactment . . . subject to any transition period determined appropriate” of up to three fiscal years.
In November, CMS issued guidance suggesting that the transition period would last until the end of the state’s current fiscal year; in California’s case, until June 30. Yet despite years of warnings that California needed to modify or repeal this abusive tax, and explicit guidance from CMS, Mr. Newsom’s budget assumes it can maintain the status quo for all of 2026….
At a bare minimum, federal officials should reject any attempt by California to extend the transition period beyond June. If Mr. Newsom wishes to couple his continued reliance on this abusive—and now illegal—gimmick with online trolling, the Trump administration could respond: Be careful what you wish for in focusing on fraud—you just might get it.