SACRAMENTO, CA — This week, the No on 40 coalition is continuing its fact check of proponents’ false healthcare-related promises with a deeper dive into their misleading claim that Proposition 40 lowers costs, improves care, and protects against more health insurance company profits. The reality is that Proposition 40 funnels billions to health insurance companies with no accountability, no oversight, and no guarantee that any of the money would go to patient care or to help lower healthcare costs.
KEY QUESTIONS: Why wasn’t Prop. 40 designed to link its cash infusion with improvements to the healthcare system, including lower costs and better care for patients? How will proponents stop funding from continuing to just pad health insurance company profits?
THE CLAIM: Proposition 40 lowers costs, improves care, and protects against more health insurance company profits.
THE FACTS:
The state contracts with private health insurance companies to cover low-income patients. More than 90% of Medi-Cal enrollees receive their care through managed care plans, the majority of which are operated by health insurance companies. Managed care accounts for nearly 70% of total Medi-Cal spending. Under the state’s system, health plans receive per-patient payments that include a profit for the insurance company.
Prop. 40 means health insurance companies will reap even more profits. 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.
It does nothing to lower health care costs. Healthcare costs continue to outpace inflation, leaving most patients falling further behind. That is a serious policy problem that deserves attention. But Prop. 40 does nothing to address skyrocketing healthcare costs. It does nothing to increase price transparency or competition in healthcare, eliminate middlemen, or change the system’s incentives to reward health instead of sickness.
It does nothing to improve patient care. Prop. 40 fails, for lack of even trying, to make any reforms to the broken parts of the healthcare system. Unlike nearly every other major healthcare funding infusion in recent memory, Prop. 40 does nothing to demand that these health insurance companies do more for patients with those dollars.
It contains a giant loophole that leaves healthcare funding unprotected. Prop. 40 promises that its revenues will supplement rather than supplant existing state funding. But California’s experience with previous ballot measures demonstrates the limitations of such protections, and Prop. 40’s own language creates an even more significant problem: it expressly authorizes its revenues to replace existing General Fund support for health care and education. The bottom line is that it is perfectly legal for the Legislature to spend Prop. 40 revenues in a manner that produces zero net benefit for health care and education.
WHAT THEY’RE SAYING:
California Medical Association President René Bravo, MD: “The measure lacks the kind of guardrails Californians should expect when tens of billions of taxpayer dollars are pouring into Sacramento coffers. In fact, Prop. 40 includes no guarantee that its funding will reduce costs for patients or improve the care they receive. That means health insurers and pharmaceutical companies could reap the biggest benefits, while our patients are left behind.” (9/26/26)
Former Director of the California Department of Health Care Services Jennifer Kent: “Put simply: Insurance companies can expect billions more in revenue from Proposition 40 without new checks and balances or new requirements to improve patient services or access…California voters deserve to know where the money will go, who will control it, and whether it will produce lasting improvements or simply fatten profits for health insurance companies.” (9/29/26)
Top Progressive Democrat and Former Congresswoman Katie Porter: “There is zero guarantee the measure’s funds will actually help reach patients or ease the medical bills of struggling families. Instead, the revenue could easily be swallowed up by health insurance companies and executives — the very entities that helped create our healthcare crisis in the first place. Prop 40 fails, for lack of even trying, to make any reforms to the broken parts of our healthcare system. It is hard to fathom how steering tens of billions of dollars to for-profit health insurance companies somehow solves wealth inequality or addresses our healthcare needs.” (9/21/26)
California Budget & Policy Center Executive Director Chris Hoene: “I’m not sure that you can say, with full security, that this will stop clinics from being closed or healthcare workers from being laid off, or people from losing their healthcare.” (10/7/26)
Planned Parenthood Affiliates of California President & CEO Jodi Hicks: “While Planned Parenthood Affiliates of California recognizes the need to address the devastating impacts of H.R. 1 and ongoing attacks on health care, [Prop. 40]’s uncertain impacts on the state budget and lack of specificity on health care allocations will do more harm than good in the long term. In order to protect access to care for the millions of patients that safety net providers like Planned Parenthood serve, we have opposed this measure and urge our health care partners to do the same in order to work towards a real long term solution.” (6/4/26)
In recent weeks, the No on 40 coalition has fact-checked claims Prop. 40: will solve California’s budget problems, is just a one-time tax, won’t impact California’s economy, and will address California’s healthcare needs.