Authors cite “fiscal emergency” to justify experiment, but Prop. 40 only makes healthcare problems worse

The California Medical Association, California Primary Care Association, Planned Parenthood Affiliates of California, California Hospital Association, California Children’s Hospital Association, United Domestic Workers, and others are all saying no to 40. They cite Prop 40’s long-term negative revenue impacts and no clear accountability for how the money will be spent, including the fact that likely much of the funding generated would go to health insurance companies and provide nothing for patient care or to lower healthcare costs. Together, these organizations represent hundreds of thousands of physicians, specialists and caregivers that serve on the frontlines. And together, they are all warning that Prop 40 will do more harm than good.

In a Bloomberg Businessweek interview, Governor Gavin Newsom, who opposes Prop 40, argues that the tax would ultimately backfire on the very services it’s meant to fund: “The fact is it actually will reduce investments in education. It will reduce investments in teachers and librarians, childcare. It will reduce investments in firefighting and police.” 

Incredibly, Prop 40 doesn’t guarantee any funding will support healthcare workers, hospitals or frontline patient care. 

Prop. 40 is being pushed by a single special interest, with a long history of using ballot measures as blunt negotiating tools. 

“One rationale for the supposedly one-time measure is that the state needs to fill an emergency gap in the California Medicaid program, which is in line to lose substantial amounts of federal funding. But two-thirds of the reduction will hit after 2030, when a one-time tax’s revenue would be exhausted. The state would have to enforce the tax more than once to help when the budget crunch really begins to hurt.”—Stanford Professors Josh Rauh and Benjamin Raros in The New York Times

In addition to Prop 40’s deep hit to state tax revenues over time, the claim of a catastrophic budget hole that must be filled immediately is in itself a challenged premise. Consider that California’s state budget has grown by 79% or more than $100 billion–since 2019 alone.  This growth is thanks in large part to growth in California’s economy—which Prop 40 is poised to blow a hole straight through. 

In the measure’s 30+ pages, just one paragraph is dedicated to how funds will be spent on healthcare—and that text lacks necessary specificity and accountability to ensure Prop. 40 actually addresses California’s healthcare challenges. There is nothing to guarantee that care improves or costs come down for Californians.

Under Prop. 40 health insurance and pharmaceutical companies stand to benefit the most. There are no protections against these companies from padding their profits and bonuses at the expense of California’s taxpayers and patients. Health insurers already make billions from Medi-Cal, and under Prop. 40 will see even more.