While walking to Doe Library under a steady April drizzle, I stumbled upon a booth set up a block from the back entrance. A group of students and advocates was asking onlookers to sign a ballot measure that would put the Billionaire Tax on the public voting stage. I had become accustomed to the lively political activity on campus, but still found myself surprised by their dedication: huddled under rain-battered canopies, umbrellas in hand and persuasive pitches memorized to perfection. Dozens of students were stopping by to sign, and I found myself wondering if I, too, should join the specious cause.
Despite having multiple assignments due that day, curiosity took over, and I meticulously examined the dense legalese of the 34-page tax proposal instead. By the time I reached the final page, my curiosity had turned into disbelief and confusion. I did not sign the petition.
The proposed Billionaire Tax would be a one-time 5 percent wealth tax on all California residents who were billionaires on Jan. 1, 2026. The tax revenue would be put into a Billionaire Tax Reserve Fund, of which 90 percent would be earmarked for health care funding for Medi-Cal, California’s Medicaid program that insures about one-third of California’s population. The other 10 percent would go toward education and food assistance programs. If enacted, this would be the first-ever wealth tax in U.S. history.
Within the proposal itself, there are a few structural flaws that create confusion and uncertainty. First, the bill states that it will use “generally accepted accounting principles” to determine the value of private assets such as companies and intellectual property (IP). However, there is no clean market price for private assets and no magic formula to value them, leaving room for disputes and costly litigation between billionaires and the IRS. Second, the liability depends heavily on timing and structure. Who is taxed is determined as of Jan. 1, 2026, but how much is owed depends on what remains taxable as of Dec. 31. This creates strong incentives for billionaires to time profits, retail investments, and asset structure in ways that can drastically change tax liability.
Advocates of the tax say the revenue would help offset the recent funding cuts to Medi-Cal that are making care less accessible to undocumented immigrants. Recent policy changes require many undocumented enrollees to pay monthly premiums while also scaling back certain benefits, such as dental care. However, Medi-Cal spending continues to rise year over year under the Governor’s budget, reaching an estimated record high of $222 billion for the 2026–2027 fiscal year, up from $197 billion in 2025–2026. This paradox of increased funding yet decreased accessibility raises an important question: if the Billionaire Tax worked exactly as intended and raised hundreds of billions without legal disputes or capital flight, would it even accomplish its goal of improving California’s health care outcomes?
To answer that question, we need to understand how funding is being used and where it’s being wasted. A 2024 study comparing highly developed countries — including Australia, Canada, France, Germany, the Netherlands, New Zealand, Sweden, Switzerland, the United Kingdom, and the United States — found that, despite spending 17.2 percent of its GDP on health care, the U.S. ranked dead last in overall performance, particularly in access to care and health outcomes, while comparable countries spent an average of 11.2 percent of their GDP and performed significantly better. When it comes to Medi-Cal specifically, the underlying bureaucratic bloat makes it almost impossible to spend funds efficiently. Federal rules are passed down through state agencies, which then distribute responsibilities to multiple managed care plans across different counties, which in turn hand off duties to medical groups, subcontractors, and separate county behavioral health structures. This extensive delegation creates a severe lack of oversight, making it nearly impossible for the state to track how funds are spent and ensure patients are receiving quality care.
On top of bureaucratic nightmares, Medi-Cal struggles with logistical problems that require larger-scale, systematic fixes. First, Medi-Cal’s renewal process is incredibly confusing to navigate. This was illustrated when two million Californians were kicked off the program between 2023 and 2024, 66 percent of whom lost their coverage due to procedural errors and paperwork hurdles rather than ineligibility. Second, Medi-Cal consistently pays physicians the lowest rates among providers. This discourages physicians from joining the program, resulting in shortages of medical staff and longer wait times for patients.
These issues have one thing in common: they are ongoing. They will continue to grow, cost more and more, and require either a long-term, sustainable funding source or broader health care institutional reform. Unfortunately, the Billionaire Tax provides neither; it is a one-time wealth tax that may temporarily fund the program but is guaranteed to fail in the long run.
It may be tempting to say that the Billionaire Tax could provide a necessary interim solution to keep Medi-Cal afloat amid budget uncertainty, but imposing an unprecedented wealth tax is incredibly risky. Governor Gavin Newsom recently pointed out that the bill’s introduction has already driven some California billionaires to relocate, resulting in fewer tax dollars collected by the state. A temporary tax fix that permanently shrinks the tax base will almost certainly put the state in a permanently worse financial position when the Reserve Fund eventually dries up.
Rather than relying on temporary cash injections to prop up a failing system, the real solution lies in a disruptive reformation of the health care model. One potential path forward is to look toward systems like that of the Netherlands, which resolves inefficiencies through a highly regulated private insurance model. All residents are required to purchase a basic health insurance plan through private providers, which must legally accept all applicants, while the government covers children’s base costs for free.
The key to the Dutch system is that health care insurance providers operate as nonprofit entities, meaning any excess profits must be reinvested or used to reduce prices for the next calendar year. By eliminating the underlying monetary greed embedded in the system, doctors and providers can focus on delivering the best services they can to their clients. The government also plays an active role in regulating prices, managing costs, and supporting low-income individuals through subsidies.
The system has been largely successful, with 99.9 percent of residents having health insurance coverage and 83 percent reporting satisfaction with the quality of health care they receive. Furthermore, only 1.6 percent of the lowest-income patients and 0.1 percent of the highest-income patients reported unmet needs. A staggering 99.7 percent of patients reported satisfactory wait times, and the same proportion reported no financial barriers to receiving care.
When the U.S. attempted to move toward a more regulated, Dutch-style health care system in the 1990s, it faced strong resistance. Bill Clinton’s 1993 Health Security Act, which aimed to expand coverage through private insurers under tighter government regulation, was defeated amid opposition from industry groups and public campaigns, including the famous “Harry and Louise” ads. Similar resistance resurfaced during the passage of the Affordable Care Act. At the time, these reforms were widely seen as politically risky and unnecessary.
Today, however, the situation is fundamentally different. With rising costs, growing patient populations, and financial inefficiencies, the need for structural reform is more urgent than ever. In that context, it may be counterproductive to continually inject large amounts of funding into Medi-Cal, thereby perpetuating a broken system. Instead, allowing Medi-Cal to endure short-term financial strain may create the pressure needed to drive radical, long-overdue reforms and adapt to modern challenges.
So the next time you’re walking on Sproul and a student earnestly pitches the Billionaire Tax with gilded promises, remember that no amount of money can fix a system broken at its roots.
Featured Image Source: Fortune