(Image Credit: IMAGN) California Gov. Gavin Newsom arrives at the late Ethel Kennedy’s funeral at Cathedral of St. Matthew the Apostle in Washington, D.C., for her memorial service on Oct. 16, 2024.
Sacramento, California – California’s budget crisis is hitting its health care system hard. Days after maxing out its borrowing capacity to sustain Medi-Cal through March, Gov. Gavin Newsom’s administration has asked the Legislature for another $2.8 billion to keep the program running through June.
Medi-Cal, which provides health coverage for nearly 15 million Californians, is facing financial strain due to larger caseloads, rising pharmacy costs, and other unexpected factors. Last week, the Department of Finance informed legislative budget leaders that it had already borrowed $3.44 billion to cover critical payments. Now, the state is seeking additional funds to ensure providers and insurers continue receiving payments on time.
“We took these steps because it is important to maintain our commitment to our providers and plans,” Michelle Bass, director of the Department of Health Care Services, said during a budget hearing Monday. “This ensures Californians and those on Medi-Cal get the services they need for the remainder of the year.”
The funding request comes as the state grapples with a broader budget shortfall, forcing lawmakers to weigh difficult decisions. Adding to the pressure, federal funding for Medicaid could be in jeopardy if President Donald Trump and Congress move forward with proposed cuts.
“We should all be clear about what the greatest threat to California’s ability to provide health care really is,” Assemblymember Dawn Addis, D-San Luis Obispo, said at the hearing. “And that is our own federal government that appears fixated on rectifying years of its own mismanagement on the backs of those with the least economic means—seniors, people with disabilities, and others in our community.”
However, not all lawmakers see Washington as the primary problem. Assemblymember Carl DeMaio, a Republican from San Diego, took aim at Newsom and Democratic leadership, questioning the sustainability of the state’s recent Medi-Cal expansion.
“How many more multi-billion emergency bailout loans will it take before Gov. Gavin Newsom and the state Legislature finally put the interests of California citizens first and immediately cancel the free health care handouts to illegal immigrants?” DeMaio said.
The expansion DeMaio referred to took effect in January 2024, extending Medi-Cal eligibility to undocumented adults between the ages of 26 and 49. The move added approximately 750,000 people to the state’s health care system, marking a major step toward universal coverage but also increasing financial demands. Just three years ago, state leaders celebrated Medi-Cal expansion as a landmark achievement. Now, they face difficult choices about whether to scale it back.
Newsom’s administration is expected to provide a more detailed breakdown of Medi-Cal’s rising costs when the revised state budget is released in May. In the meantime, his office says it remains committed to protecting essential health services.
“We will work with Senate Pro Tem Mike McGuire and Assembly Speaker Robert Rivas to rein in long-term spending—including in Medi-Cal—while working to protect the core health and social services Californians rely on,” Newsom spokesperson Izzy Gardon said in a statement.
The Legislature is set to vote on the funding request next month, setting the stage for a high-stakes debate over the future of California’s health care system.
