California is grappling with a major budget crisis after Governor Gavin Newsom and the Democratic legislature pushed forward an aggressive Medicaid expansion, including free health care for illegal immigrants. The expansion has now contributed to a $6.2 billion shortfall in the state’s Medi-Cal program, which covers over 15 million residents.
The state had severely underestimated the costs of its immigration-inclusive health care policy. The recent expansion alone, meant to cover all low-income adults regardless of immigration status, cost $2.7 billion more than projected. Officials admitted they based their budget estimates on just a month of data. As a result, they’ve been forced to pass emergency legislation to fill a $2.8 billion gap and take out a $3.44 billion loan from the general fund.
State officials have now admitted the program is “unsustainable.” They’re eyeing cost-cutting moves for next year, including ending pandemic-era protections that have kept people enrolled. But when asked if he would roll back coverage for illegal immigrants, Newsom said, “It is not on my docket.” Democratic leaders echoed the sentiment, while acknowledging “tough choices ahead.”
Republicans are sounding the alarm. Assembly GOP Leader James Gallagher blasted the administration, saying, “Democrats’ bad accounting has brought Medi-Cal to the breaking point, making it harder for patients to get in to see a doctor.” He and other conservatives are calling for an audit of the Medi-Cal system to ensure accountability and prioritize services for legal residents.
Adding to the uncertainty, California officials are bracing for a potential cut in federal Medicaid funds proposed by Republicans in Congress. With over half of Medi-Cal’s funding coming from Washington, California would face grim choices: raise taxes, cut coverage, or limit enrollment. Officials admit the state’s massive $322 billion budget can’t cover the gap if federal dollars are pulled, and the shortfall could threaten coverage for millions of Californians.
Despite the fiscal chaos amid the crisis, Newsom continues to defend the program, claiming that expanded preventive care for illegal immigrants will save money in the long run. Yet the numbers — and the growing chorus of concern — suggest a reckoning is fast approaching.
