California’s ledger is already burdened with policies that look appealing in theory but translate into long-term structural liabilities. With the passage of Senate Bill 41, that burden has only grown heavier. Marketed as pharmacy benefit manager (PBM) reform, the Department of Finance made clear months ago what this bill really is: an unfunded mandate with consequences that Californians will now be forced to absorb.
Those consequences start with the price tag. The Department of Managed Health Care has warned of millions in new annual costs to expand its regulatory staff and audits. The Department of Justice anticipates investigation expenses that could escalate into the tens of millions each year. Even the Department of Insurance projects multimillion-dollar obligations. These are not one-time costs, they are structural, ongoing, and enacted without a dedicated funding source.
And how will they be paid for? Not by Sacramento, but by Californians. Every additional dollar pulled from the Managed Care Fund requires higher plan assessments, which flow directly down to consumers as increased premiums. SB 41 doesn’t eliminate costs from the health system; it simply shifts them onto families’ monthly bills.
Redundancy compounds the problem. Just this year, the state passed AB 116, a sweeping health omnibus bill that already created licensing, registration, and reporting requirements for PBMs, along with specific funds to manage compliance and enforcement. SB 41 does not build on that framework; it duplicates it, creating overlapping mandates while ignoring the fiscal fallout.
This is precisely what the Department of Finance warned against. Instead of a coherent fiscal plan, California has now locked itself into unbudgeted commitments at the very moment the state faces structural shortfalls.
The Governor vetoed a nearly identical bill last year, citing the need for a data-driven approach that led to the reforms already enacted in AB 116. With SB 41 now on his desk, the same logic applies. Governor Newsom should veto this bill again, before Californians are saddled with higher premiums, deeper deficits, and another layer of costly bureaucracy.
SB 41 was billed as a crackdown on PBMs, but what it really represents is another example of Sacramento choosing headlines over hard numbers.
