The Source Blog

October 12 marked the deadline for the California Governor to sign or veto legislation passed during the 2025 California legislative session, so we now know the fate of this year’s healthcare legislation.  Much of the session’s efforts were focused on ensuring support of Californians in the face of massive federal cuts to social programs, Los Angeles wildfires, a potential budget deficit of over $12 billion, and the state’s highly publicized push to get Proposition 50 passed, which will redraw Congressional district maps.  Lawmakers introduced an ambitious slate of bills aimed at addressing affordability, market oversight, technology regulation, reproductive health, and workforce development.  While the Governor signed several landmark healthcare measures into law, others were vetoed or held in committee.  Governor Newsom vetoed 123 of the 900 bills sent to his desk - that rate of thirteen percent is slightly lower than last year’s 15.7% veto rate.  Since 2025 is the first year of California's two-year biennial legislative cycle, 2025 legislation that has not been enacted or vetoed in 2025 may carry over to the 2026 session.

Transparency and Market Oversight

The 2025 legislative session included incremental steps for strengthening healthcare market transparency and oversight of corporate consolidation.  AB 1415, chaptered on October 13, expands the authority of the Office of Health Care Affordability (OHCA) to review and monitor healthcare transactions involving private equity, hedge funds, and management services organizations (MSOs).  Similarly, SB 351, passed in tandem with AB 1415, codifies California’s long-standing corporate practice of medicine case law precedent by preventing private equity groups and hedge funds from interfering with medical and dental professional judgment and practice management.  The California Medical Association supported the bill, stating that it helps strengthen the state's ban on corporate influence on medicine and healthcare.  These measures essentially replace the previously vetoed AB 3129.  In addition, newly enacted SB 41 introduces new guardrails for pharmacy benefit managers, banning spread pricing, and requiring full rebate passthroughs to insurers to reduce prescription drug costs.  Spread pricing is when PBMs charge payers more for a drug than then amount they reimburse pharmacies for, allowing for PBMs to profit, and giving PBMs an incentive to direct patients towards more expensive drugs and an incentive not to negotiate as strongly with manufacturers to reduce drug prices.

One bill that would significantly strengthen California’s antitrust law, the Cartwright Act, remains in committee. AB1345 would expand the definition of anticompetitive practices under the Cartwright Act, making it unlawful for one or more persons to take actions that restrain trade, impede free competition, or attempt to monopolize or monopsonize trade or commerce.

SB25 passed the Senate and was sent to the Assembly on June 2, but has since been placed on the inactive file, effectively rendering it dead.  The bill would have required businesses that file a Hart-Scott-Rodino premerger notification with the federal government to also file the notification with the California Attorney General if the proposed merger met specific conditions.

Expansion of Mandated Insurance Coverage of Treatment Options

One focus of the 2025 session was on expanding coverage mandates and addressing the costs of services.  Signed measures sought to provide coverage and lower costs for Californians.  SB 40, chaptered on October 13, prohibits health payments for insulin from exceeding $35 per month for individual and small group plans.  Similarly, AB 55, also chaptered on October 13, modifies the licensing and Medi-Cal reimbursement requirements to expand access to alternative birth centers.  In an effort to protect agricultural workers in the state, the legislature passed AB 499, amending the Robert F. Kennedy Farm Workers Medical Plan, a nonprofit voluntary employees beneficiary association, by reducing the state reimbursement threshold from $70,000 to $50,000 (meaning the state will now cover claim payments that exceed $50,000 for a single episode of care) while maintaining a $3 million cap per year for claim payments.  An additional expansion of coverage for individuals experiencing homelessness has also been achieved through the passage of AB 543.  This bill will allow direct access to care through a “street medicine model” under Medi-Cal.  Importantly, SB 306 prohibits health plans and insurers from requiring prior authorizations for health care that the Department of Managed Health Care and the California Department of Insurance have consistently approved at high rates (“ninety percent or more times”).

By contrast, the Governor vetoed both AB 682 and AB 512 that would have further strengthened protections for Californians from prior authorization restrictions from their health insurers.  AB 682 would have required health plans to report annually on prior authorization approval and denial data and AB 512 would have shortened the time health plans and insurers have to respond to electronically submitted prior authorization claims.  In his message supporting the veto of AB 512, the Governor expressed concern about the substantially short timelines presented in the bill, which may result in increased denial rates.  Supporters, however, continue to allege that the prior authorization process is detrimental to good patient outcomes, as it often results in delays in care, prolonged suffering, and increased costs.

The Governor struck down several other bills that would have required insurance to cover specific care options.  The Governor vetoed AB 554 that would have required coverage of antiretroviral drugs for prevention and treatment of HIV without cost-sharing, and would have prohibited insurers from requiring prior authorization for these drugs.  Supporters of this bill advocated that such coverage would assist the state in the ongoing fight to end HIV transmission, but opponents argue that passage of AB 554 would dramatically increase healthcare premiums. The Governor also vetoed AB 1032 which would have required up to twelve behavioral health visits for individuals in areas where a local or state emergency had been declared as a result of the wildfires.  Despite the increase in the need for behavioral health services in communities impacted by the Los Angeles wildfires, many have argued that this bill is duplicative of other similar bills and prioritizes wildfire survivors over other communities that have also been impacted by natural disasters in the state.  Despite these vetoes, California continues to push incrementally toward broader, more inclusive healthcare access.

AI and Privacy Protections

As the utilization of artificial intelligence in healthcare continually increases, concerns regarding privacy and social responsibility also rise.  California’s 2025 legislative session was demonstrative of this growing awareness of the intersection between healthcare technology, artificial intelligence, and patient privacy.  AB 489 became law on October 11, prohibiting the use of chatbot-based health services to promote the ethical use of technology.  The bill expressly bars the use of AI and generative AI from representing itself as a healthcare professional.  AB 45, signed into law earlier this year, strengthens privacy protections for individuals seeking reproductive or sexual health.  Specifically, this bill prohibits the geofencing of healthcare facilities for the purpose of tracking, collecting personal information, or sending targeted advertisements.  Additionally, AB 45 will establish new standards for protecting the research records of individuals seeking reproductive health care in response to subpoenas.  The overall legislative direction appears clear: California is committed to advancing innovation in healthcare while simultaneously safeguarding the collection of protected health information and transparency through the exploitation and emergence of digital tools.

Reproductive and Gender Health

California reaffirmed its commitment to reproductive and gender health throughout the 2025 legislative session.  As discussed above, AB 45 expands privacy and data protections for individuals seeking reproductive services, preventing the collection and sale of sensitive location data as it relates to research for reproductive health care.  AB 260, chaptered on September 26, reinforces legal protections for healthcare professionals providing abortion-related care.  The bill authorizes the Department of Public Health to regulate mifepristone, as well as similar reproductive health drugs, even if the FDA were to repeal its current approval.  In addition, to further protect the identity of individuals being prescribed and taking the medication, the bill permits the medication to be given without patient names on labels, thereby protecting them from out-of-state prosecutions.  Further, the new law prohibits insurers from limiting coverage of such medicines and safeguards providers from disciplinary actions for providing it to their patients.” Similarly, AB 50, also known as the “Equity in Birth Control Act”, was enacted to ensure Californians on Medi-Cal have equitable access to over-the-counter birth control as compared to individuals on private healthcare.  The bill allows for the allotment of birth control without a prescription.  Supporters note that this bill will allow for continued access to care for underserved communities in care deserts, who often face challenges in obtaining care and treatment.

AB 551, which remains in committee, would create the Reproductive Health Emergency Preparedness Program.  The program seeks to fund training and capacity-building for emergency departments to provide abortion, miscarriage, contraceptive, and reproductive healthcare services.  While emergency departments continue to be the "most accessible source of medical care" for pregnant people, they are often unprepared to deal with such issues, as most providers in that environment lack sufficient training.

SB 418, vetoed by Governor Newsom, would have required insurers and Medi-Cal to cover a 12-month supply of hormone therapy upon patient request and prohibited insurers from discriminating against enrollees in a health plan “on the basis of race, color, national origin, age, disability, or sex.”  Senator Menjivar, the author of the bill, has stated that the bill would be instrumental in ensuring continued care for individuals and families who are at risk of losing access to care, as many families must seek alternative measures, such as rationing medication.  Governor Newsom shared in an official statement that the reason behind his veto was cost containment and ensuring enrollees "receive the right care at the right time.” Collectively, these measures underscore a continued legislative effort to protect reproductive autonomy, expand equitable access to care, and safeguard gender-affirming healthcare throughout the state.

Looking Ahead

As the 2025 session comes to a close, California's healthcare agenda reflects both ambition and restraint.  A variety of the passed measures mark incremental progress on cost transparency and anti-consolidation, setting the stage for increased market accountability, oversight, and regulation.  Newly enacted mandates enhance emergency and reproductive health competence, while privacy and AI legislation position California as a leader in the ethical use of technology in the rapidly growing landscape of generative AI in health.  However, Governor Newsom’s vetoes highlight the continued tension between expansive reform and fiscal containment, which are especially challenging in the face of potential loss of coverage due to the current federal budget cuts.  As the state looks to 2026, it remains to be seen what topics will remain at the forefront of California’s evolving healthcare strategy.

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