The Billionaire Tax Is A Retirement-Security Measure

Medicaid Is America’s Default Long-Term Care Insurance

Medicare does not pay for long-term care. Medicare pays for hospital care, physician care, prescription drugs, and limited skilled nursing or home health care under specific rules. Medicare does not pay for ordinary custodial care.

But Medicaid can and does.

How much depends on the states’ Medicaid programs. When middle-class families need long-term care, they often begin with unpaid care then move to private pay. They use the energy and effort of their loved ones and they use up savings and retirement accounts. Then, when the money is gone or nearly gone, Medicaid becomes the fallback payer. In California, that payer is Medi-Cal.

Medicaid is the de facto long-term-care insurance system for the middle class. And long-term care is not a rare catastrophe: the Department of Health and Human Services estimates that 70% of adults who reach 65 will develop severe long-term-care needs before they die, and 48% will receive some paid care in their lifetime. When that care is needed, the wealthy self-insure and the poor qualify for Medicaid. The middle class must spend down—exhausting their savings until they are poor enough to qualify. Unless their state supplements Medicaid generously, that is the only insurance they have.

KFF reports that in 2020, about 5.6 million people used Medicaid long-term services and supports. Of that group, 4.0 million used only home- and community-based services, 1.4 million used only institutional care, and 0.2 million used both. People using Medicaid long-term supports were 6% of Medicaid enrollment but accounted for 37% of federal and state Medicaid spending. Both stats tell a simple story. Long-term care is expensive and the United States has no universal long-term-care insurance system. Medicaid fills that role by default.

Medicaid is the primary payer for long-term care nationwide. But home care and community-based services exist only where states choose to provide them, through optional benefits and federal waivers—meaning a state’s fiscal capacity determines how generous Medicaid is for the poor and for the middle class sliding toward poverty. Because H.R. 1 cut the federal support state budgets depend on, Prop. 40’s drafters structured the Billionaire Tax to replace what the law took away.

Billionaire Tax Patches a Medi-Cal Hole in California.

The Billionaire Tax is tied to a specific hole in California’s health-care financing. The California Attorney General says Medi-Cal is projected to lose about $190 billion over ten years, because of recent federal budget legislation.

If Prop. 40 fails, no elder will lose benefits overnight. In-Home Supportive Services (IHSS) and other Medi-Cal long-term care benefits come with rules, categories, and legal protections that make cuts slow. But states have dials. When Medicaid money is squeezed, states can tighten eligibility, trim optional services, cut provider payments, pile on enrollment and renewal paperwork, or quietly push more care back onto families.

Californians are trying to patch a California-sized hole in a national health-care system that already leans heavily on families. Imagine your grandmother gets enough home-care hours to stay out of a nursing facility. Those hours do not just protect her. They protect your mother and the daughter who otherwise might drain her retirement account, cut her hours, or quit her job to become the long-term care system herself.

The Poison-Pill Proposition 42 Does Not Protect Retirement and Pensions

The kill-switch measure, marketed as “Retirement and Personal Savings Protection,” borrows the language of ordinary savers while protecting the forms of wealth billionaires actually hold. Prop. 42 would ban new state taxes on the ownership or control of personal property—financial assets, business interests, digital assets, intellectual property, and tangible property such as boats and planes. Notably, it would not ban new taxes on real property.

That matters because most middle-class wealth is not structured like billionaire wealth. Ordinary retirement savings are deferred wages. A 401(k) is deferred wages. An IRA is deferred wages. Social Security is earned insurance. Medi-Cal long-term care is the public backstop when wages, savings, family labor, and Medicare are not enough.

Billionaire wealth is different. It is concentrated ownership. It is company stock, private business value, intellectual property, and financial control. Calling a shield for that wealth “retirement security” is not neutral branding. It is camouflage.

The Retirement Issue Is Long -Term Care

The strongest argument for the Billionaire Tax is arithmetic.

A billionaire tax is about patching the holes left by the Big Beautiful Bill (HR 1). Those holes run through Medi-Cal and Medicaid spend-down, and they would leave many people—including middle-class families—without long-term care. Most of California’s 200+ billionaires have stayed mostly silent on the tax but they, like the rest of us, should care about what and who gets lost if the HR 1 holes are not patched.

Long-term care is predictable at the population level and devastating at the household level. Medicare does not cover ordinary custodial care. Private long-term care insurance does not cover the population at scale. Families absorb the gap with unpaid labor, lost wages, depleted savings, and postponed retirements of their own.

The Billionaire Tax will help protect Medicaid/MediCal — the system that ordinary retirees may need after their savings are gone. The Billionaire Tax is not a tax on your retirement. It is a tax to help protect the public system your retirement may one day depend on.