California’s progressive lawmakers are pushing to tax the wealthy and corporations to offset Medi-Cal cuts triggered by federal legislation. Budget analysts say the numbers don’t add up.
President Donald Trump signed H.R.1 into law last July. The bill strips tens of billions from California’s Medi-Cal program annually and is projected to push roughly 2 million low-income residents off coverage. That’s the shock wave driving Sacramento’s current revenue debate.
“We know that you are not responsible for these awful cuts, but now the responsibility does lie in your hands,” Judy Mark, executive director of Disability Voices United, told state lawmakers at a January rally. “You have the power to increase our revenue so that we don’t have to make such devastating cuts.”
Mark’s group represents people who can’t afford to wait. Disability Voices United has been among the loudest voices pressing legislators to act before cuts take effect.
Progressive Democrats have introduced at least two corporate tax proposals, one of which would direct money specifically into Medi-Cal. Health care advocates are separately backing a ballot measure targeting billionaire wealth, aiming to replace lost federal dollars that way. The energy behind these efforts is genuine. What’s less clear is whether any of it solves the actual problem.
California’s already in its fourth straight year projecting a deficit. According to Gov. Gavin Newsom’s January budget proposal, the shortfall could reach $22 billion in fiscal year 2027-28 even if the state doesn’t spend a single dollar backfilling the federal Medi-Cal cuts. Down the road, that gap could climb to $30 billion. New tax revenue targeted at Medi-Cal doesn’t erase that hole. It sits on top of it.
Keely Martin Bosler, a former state finance director with more than two decades of fiscal experience, put the dilemma plainly. To “maintain the same insured level of coverage, those costs are on top of the deficits that exist, and so that would be significant,” Bosler said, according to CalMatters. Bosler knows the California Department of Finance books cold, and she’s not offering a comfortable read.
The state has already been making cuts. Democratic lawmakers trimmed certain Medi-Cal benefits and froze new enrollment for undocumented adults to close a $12 billion budget gap last year. The nonpartisan Legislative Analyst’s Office has recommended pairing sustainable revenue increases with ongoing program reductions rather than betting everything on either approach alone.
That’s a sensible framing. It’s also a politically difficult one.
Tax-the-rich bills have circulated through Sacramento for years without landing on Newsom’s desk. Progressive Democrats have pushed corporate tax hikes and wealth levies across multiple sessions, and they’ve hit the same wall each time: moderate resistance, warnings about capital flight, and the fact that California’s top marginal income tax rate is already 13.3%, the highest in the country. Governors from both parties have been wary of anything that looks like a job-killer to business interests.
None of that institutional friction has slowed the current push in 2026. The scale of what’s coming is simply too large for advocates to absorb quietly. When 2 million people stand to lose coverage, the political pressure to do something visible is enormous, even when the fiscal math says visible isn’t the same as sufficient.
Newsom hasn’t endorsed a wealth tax. He hasn’t said he won’t consider one either. His administration’s January proposal sketched out a grim fiscal picture through 2027 without identifying a clean solution. That’s not an accident. It’s a signal that no one in the governor’s office thinks this is easy.
What happens next depends on whether Progressive Democrats can move proposals out of committee this session, whether the ballot measure effort gains enough signatures to qualify, and whether Bosler’s blunt math changes any minds in the Capitol. The $30 billion figure isn’t hypothetical. It’s the Legislative Analyst’s Office projection if federal cuts hit as written and the state does nothing structural to respond.
Judy Mark isn’t waiting on committee votes to make her case.