California is getting ready to increase a health insurance tax. Will it affect your premium?
Cal Matters / June 18, 2026
Legislators this week (June 18) approved a health tax bill meant to continue critical federal funding for the state’s Medicaid program, also known as Medi-Cal. Their approval comes despite warnings from health industry leaders that the tax, as designed, will raise premiums for privately insured Californians.
New federal rules are forcing the state to restructure its managed care organization tax, or MCO tax, which the state collects from health insurance plans that coordinate care for their members. California has been charging Medi-Cal insurance plans at a higher rate than private plans. The state’s newly-designed solution, Senate Bill 125, will lower the tax on Medi-Cal plans and raise the tax on private plans to the same level. If finalized by the governor, and accepted by the federal government, the new plan would shift more of the cost burden onto people who buy private insurance but bring in less revenue overall.
Senate President Pro Tem Monique Limón, a Santa Barbara Democrat, told reporters earlier this week that there was no perfect plan for redesigning the tax and that the Senate still has concerns, but the proposal they voted through is one that would bring in money quickly.
SNIP
The proposal would require all health plans, both public and private, to pay a monthly rate of $8.85 per enrollee – a total cost of about $1.5 billion a year for private plans. If health plans pass the entire tax to their members, Californians could see about a 1.5% increase in their monthly premiums, according to the independent Legislative Analyst’s Office. That’s on top of the yearly premium rate increases that people see year to year.
FULL STORY: https://calmatters.org/health/2026/06/california-health-tax-medi-cal-premiums/
From the link:
• Estimates from a health insurance lobby suggest this would translate to consumers paying about $100 more in premiums each year. A family of four would pay $400.00
Full details at the link.