newsom healthcare prescription-drugs PBM veto private-equity donor-class follow-the-money flip-history unitedhealth optum
related: COVID No-Bid Contracts - Blue Shield and UnitedHealth | Single-Payer Broken Promise | CalRx - The Genuine Win With Caveats | _Gavin Newsom Master Profile donors: Blue Shield of California | UnitedHealth Group - Optum | Anthem - Elevance Health
The September 2024 Double Veto
On September 23, 2024, Newsom vetoed two healthcare bills:
1. SB 23 — Pharmacy Benefit Manager Licensing and Oversight
A bill to establish California’s first-ever licensing and oversight structure for pharmacy benefit managers (PBMs) — the middlemen between insurers and drug manufacturers who critics, economists, and the FTC all agree drive up drug prices through opaque rebate systems, formulary restrictions, and prior authorization requirements. More than two dozen other states had already passed similar PBM regulations (Maine, Minnesota, New Hampshire, Texas, Ohio). Lina Khan’s FTC had submitted a formal letter in support of the bill, citing extensive evidence that PBM practices inflate drug prices. Newsom vetoed it anyway, citing a need for “more granular information” about what drives drug prices before regulating — despite 20 years of FTC reports, state investigations, and economic research on PBM mechanics.
2. SB 24 — Healthcare Private Equity Acquisition Review
A bill requiring private equity and hedge funds buying stakes in California healthcare companies to get prior approval from the state attorney general. Newsom killed it with minimal explanation beyond “existing oversight is sufficient.” The bill specifically targeted practices like debt-loading, service cuts, and facility closures following PE acquisitions — documented patterns in California hospital and nursing home markets.
The Timing and the Money
The Reversal (Eight Months Later)
February 2025: Trump signs an executive order targeting PBM practices — attacking “middlemen” pricing — and signals the issue is becoming a Republican liability problem. Newsom has political cover.
May 2025: Newsom suddenly announces his own PBM regulation plan, calling drug prices “out of control” and “a crisis for Californians.” His office declined to explain what changed between September 2024 (“we need more information”) and May 2025 (urgent crisis requiring regulation).
October 2025: Newsom signs SB 41, a modified PBM regulation bill. The bill is weaker than the original SB 23 he vetoed: it creates a licensing structure but delays implementation to 2027, exempts certain insurance arrangements, and does not address the core rebate system that drives prices. Newsom cites the bill as evidence of his commitment to drug pricing reform.
By October 2025, Newsom was in his final year as governor and explicitly positioning for 2028 presidential or national political office — suggesting the reversal was driven by electoral positioning rather than policy evolution.
Contradiction
Newsom vetoed PBM regulation in September 2024 claiming he needed “more granular information,” then eight months later — with no new information provided — reversed course calling the same issue an urgent crisis. The facts about PBM pricing practices did not change. The electoral calendar did. This is the clearest documented example of policy timing driven by donor interests and electoral positioning: veto in 2024 when insurers needed protection, reverse in 2025 when Trump’s anti-PBM stance gave Newsom political cover without threatening his donor base. The final SB 41 bill was substantially weaker than what he vetoed, preserving the core profit mechanisms while claiming victory.
The Donor Connection
Key donors relevant here: Blue Shield, Anthem, UnitedHealth — the same insurers whose business model depends on opaque PBM arrangements — are documented Newsom donors with the following donor patterns:
- UnitedHealth Group: $100K inaugural fund (2019), $31K reelection (2021), $100K ballot measure committee (2021) = $231K+ documented; received $492M in COVID no-bid contracts
- Blue Shield of California: $99K+ campaign donations, $2.7M to California Democratic Party since 2006 = $2.8M+ documented; received $15M+ vaccine distribution contract
- Anthem / Elevance Health: $150K+ campaign contributions 2019-2024
PBM subsidiaries: CVS Caremark, Express Scripts, and OptumRx (UnitedHealth subsidiary) are the three largest PBMs in the United States. OptumRx alone controls approximately 20% of the pharmacy benefit market. Newsom’s protection of these companies’ profit mechanisms through PBM regulation vetoes directly serves his donor interests.
Money
The donor pipeline is clear: insurers donate to Newsom; Newsom vetoes bills that would regulate those insurers’ subsidiary PBM operations; insurers continue donating; Newsom later signs a weakened version of the bill, claiming victory while preserving the core profit mechanisms. The September 2024 veto was the key decision: it protected billions in annual PBM revenues at the direct expense of working-class Californians paying inflated drug prices. The October 2025 reversal, after Trump’s intervention, allows Newsom to claim progressive credentials without threatening donor profitability.
The Private Equity Veto (SB 24)
Private equity firms have been systematically buying up hospitals, nursing homes, and physician practices across California, loading them with debt, cutting services, and leaving communities without care. The pattern is documented: KKR’s takeover of HCA hospitals, Carlyle’s nursing home chain closures, smaller PE firms’ physician practice consolidations. California healthcare advocates had been pushing for attorney general oversight of these deals for years — giving the state power to review and block acquisitions that would harm public health.
Newsom killed SB 24 with minimal explanation (“existing oversight is sufficient”), despite documented evidence of healthcare system degradation following PE acquisitions in California. This veto reveals a second layer of the donor-class alignment: not only did Newsom protect insurance company profits (PBM veto), he also protected private equity’s ability to extract value from healthcare systems without state oversight.
Analytical Patterns
The Villain Framing — Newsom’s September 2024 framing was “I need more information to regulate responsibly”; the implicit villain was inexperienced regulators or premature policy. What the framing obscured was the donor influence: Blue Shield, UnitedHealth, and Anthem all opposed PBM regulation, and Newsom’s stated need for “more information” was cover for protecting those donors. By 2025, Trump became the useful villain: “Trump exposed the PBM problem, so I’m acting.” In both cases, the framing deflects from the simple donor-first explanation.
The Two-Audience Problem — To progressive audiences, Newsom’s 2025 reversal is “I listened to economists and changed my position”; to insurance company stakeholders, the final SB 41 bill is “I signed something that preserves the core business model while giving cover.” The same regulatory framework plays as “drug pricing reform” to progressives and “business continuity with managed compliance” to insurers.
The Pilot Program — SB 41’s delayed implementation (2027 start date) and exemptions built into the bill are consistent with the “pilot program” pattern: create a regulatory structure that appears comprehensive but phases in slowly and with carve-outs that preserve dominant actors’ business models. This allows Newsom to claim victory (“I regulated PBMs”) while the regulatory framework protects insurer and PBM profitability.
Donation-to-Policy Timeline
| Date | Event | Key Players | Amount | Significance |
|---|---|---|---|---|
| 2018–2019 | UnitedHealth and Anthem donate to Newsom gubernatorial campaign | UnitedHealth, Anthem/Elevance Health, Newsom | $100K+ | Pre-governor donor alignment with insurers whose PBM subsidiaries would later need protection |
| 2019-01 | Newsom inaugurated; healthcare insurers provide inaugural donations | UnitedHealth, Blue Shield, Newsom | $100K+ documented | Immediate financial support from companies with PBM exposure |
| 2024 | Healthcare advocates introduce SB 23 (PBM regulation) and SB 24 (PE acquisition review) | CA legislature, healthcare advocates, FTC (Lina Khan) | Legislative action | Direct policy threat to donor business models — FTC formally supports the bills |
| 2024-09 | Newsom vetoes both SB 23 and SB 24 in coordinated dual veto | Newsom, Blue Shield, Anthem, UnitedHealth/OptumRx | Dual veto | Protects $billions in annual PBM revenues; cites need for “more information” despite 20 years of FTC research |
| 2024-10 to 2025-02 | Healthcare insurers continue donations; no regulatory pressure from Newsom | Blue Shield, Anthem, UnitedHealth | Ongoing | Status quo preserved — donors face zero consequences for veto-purchased protection |
| 2025-02 | Trump signs executive order targeting PBM “middlemen” pricing | Trump, federal regulators | External event | Political landscape shifts — gives Newsom cover to reverse without threatening donor base |
| 2025-05 | Newsom announces PBM regulation plan, calls drug prices “out of control” | Newsom, Governor’s office | Political repositioning | 8-month reversal with no new information — same facts, different electoral calendar |
| 2025-10 | Newsom signs SB 41 with 2027 implementation delay and donor-friendly exemptions | Newsom, CA legislature, PBM industry lobbyists | Compromise bill | Preserves core PBM profit mechanisms while claiming victory on drug pricing |
| 2026-03 | Newsom claims drug pricing reform victory; implementation delayed past his governorship | Newsom (positioning for 2028) | Legacy claim | Core PBM profit mechanisms unchanged; structural continuity for donor interests |
Key Quotes
“I have some concerns about the approach. We need to focus on more granular information on what drives drug prices.” — Newsom’s veto message on SB 23, September 2024.
“Drug prices in California are out of control and families are suffering.” — Newsom press statement announcing PBM regulation plan, May 2025 (eight months after veto).
Sources
- CalMatters: Newsom vetoes PBM and private equity bills (Sept 2024) (Tier 2)
- CalMatters: Newsom reverses on PBMs (May 2025) (Tier 2)
- FTC: Letter to California Legislature supporting PBM regulation (2024) (Tier 1)
- California Legislative Information: SB 23 text and veto message (Tier 1)
- California Legislative Information: SB 41 text (as signed) (Tier 1)
- FollowTheMoney.org: UnitedHealth, Blue Shield, Anthem California campaign finance (Tier 1)
- California Healthline: Top California Democrats Clash Over How To Rein In Drug Industry Middlemen (Tier 2)
- ProPublica: Why Do Americans Pay More for Prescription Drugs? (Tier 2)
- Capital & Main: Newsom’s Healthcare Donor Problem (Tier 2)
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