Governor’s Proposed Budget Big on Health Changes

We are off to a very busy legislative year in Sacramento, starting with the newly-elect governor’s first state budget proposal revealed on January 10 for the 2019-2020 fiscal year.

Governor Gavin Newsom presented an ambitious agenda proposing heavy investments in healthcare, which is not surprising as he aggressively campaigned on the issue of increasing access to care. Nearly one in three dollars in the $209 billion proposed state budget would be allocated to the state’s Health and Human Services Agency.

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Several noteworthy proposals are:

  • Embrace a state health insurance mandate. While Congress eliminated the federal tax penalty for the uninsured, New Jersey, Vermont, and the District of Columbia have passed their own mandates in an effort to keep healthy enrollees from dropping coverage. The governor’s proposal would include a California penalty with collected money going to subsidize health insurance (Covered California plans), building on existing federal subsidies. Massachusetts already had a state mandate before Congress’ action.
  • Extend Benefits for Young Adults. Under a law implemented in 2016, children under 19 years of age became eligible for full-scope Medi-Cal benefits regardless of immigration status. The governor is proposing to extend such benefits to eligible young adults up to age 25, also regardless of immigration status. The state would absorb 100 percent of the increased cost for the expansion.
  • Higher Tobacco Tax Usage. The proposed budget would increase funding from the Prop. 56 tobacco tax investments by more than $1 billion. This increased funding would go toward supplemental payments and rate increases for physicians, dentists, and other Medi-Cal funded programs.

Aside from the budget proposal, shortly after being sworn into office, Governor Newsom signed two executive orders meant to bring greater focus on health issues.

First, Governor Newsom signed an order expanding the power of the Department of Health Care Services to negotiate prescription drug pricing as a block, along with other state agencies. Harnessing the full weight of the state, California would be the nation’s largest negotiator, potentially making it a model for other states. “We will use both our market power and our moral power to demand fairer prices for prescriptions drugs,” Newsom said in his inauguration speech. A second executive order will create the country’s first state Surgeon General.

The governor’s budget proposal will now enter the legislative process, with a clearer picture anticipated with the traditional “May revise.” The final budget is scheduled to be voted on and passed by June 15. 

Governor Newsom’s Budget Proposal can be found at: BudgetSummary


Gabriela Villanueva is CAP’s Public Affairs Analyst. Questions or comments related to this article should be directed to