California Gov. Gavin Newsom is seeking an additional $2.8 billion loan to address a growing deficit in the state’s Medicaid program, Medi-Cal, caused in part by coverage for illegal immigrants. This request comes after Newsom had previously asked for a $3.4 billion loan to cover outstanding costs in the healthcare program. The additional $2.8 billion loan would help keep the program afloat through June, with the administration attributing the deficit to higher enrollment for all populations and rising pharmaceutical costs, rather than solely on illegal immigrants on the program.
Republican lawmakers in California have been critical of the state’s spending policies, blaming them for the budget shortfalls in Medicaid. California Senate Republican Minority Leader, Brian Jones, criticized Newsom’s handling of the program, accusing him of reckless financial mismanagement. There are questions on why the costs have exceeded projections and what the governor’s plan is to address the financial challenges. Last year, the state expanded Medi-Cal to cover all low-income adults aged 26 through 49, regardless of immigration status, making it the first state to do so. Roughly 1.6 million illegal immigrants are enrolled in the state’s healthcare program.
The state had initially estimated the cost of the program to be just under $6 billion by FY 2024 to 2025, but that budget has significantly increased within a year. As a response, House Republicans proposed cutting $880 billion from various programs, mainly Medicaid, over the next decade. Newsom’s latest budget projection anticipates spending $8.4 billion in Medi-Cal for illegal immigrants in 2024-2025, followed by $7.4 billion in 2025-2026. During a budget hearing, the Department of Health Care Services director, Michelle Bass, admitted that the state had underestimated the number of illegal immigrant enrollees due to new policies.
Despite the administration pushing back on the notion that illegal immigrants are solely responsible for the rising costs, Republicans continue to criticize Newsom’s handling of the Medicaid program. Newsom’s office stated that they are evaluating proposals to rein in long-term spending while protecting essential health and social services for Californians. However, Republicans argue that under Newsom, legal residents are paying the price for the financial mismanagement. The state’s healthcare marketplace, Covered California, allows both lawfully present and not lawfully present individuals to apply for health plans through Covered California or Medi-Cal without waiting periods or a five-year bar.
The Medi-Cal budget deficit in California highlights the growing financial challenges faced by the state’s healthcare program. Newsom’s request for an additional $2.8 billion loan, on top of a previous request for $3.4 billion, highlights the strain on the state’s budget due to rising healthcare costs. Republican lawmakers have criticized Newsom’s policies for contributing to the budget shortfalls, pointing to the decision to expand Medi-Cal to cover all low-income adults regardless of immigration status. The state’s escalating healthcare costs underscore the need for sustainable financial management and policy decisions to ensure the long-term stability of Medicaid in California.
