A dedicated CT scan room. HCA Florida Englewood Hospital held a ribbon-cutting ceremony Friday, Mar. 21, 2025, for its new free-standing Emergency Room in Wellen Park.
Sacramento, California – California lawmakers are grappling with a $6.2 billion shortfall in the state’s Medicaid program, Medi-Cal, just a year after launching a historic initiative to provide free health care to all low-income adults, regardless of immigration status. The expansion, while hailed as a progressive milestone, has proven significantly more expensive than anticipated, forcing the state to consider cost-cutting measures and reevaluate its long-term commitments.
The coverage expansion, which extended full Medi-Cal benefits to adults aged 26 to 49 without legal immigration status, added to previous efforts that began in 2015. The state had projected around 700,000 people would enroll, but underestimated how many would sign up. The miscalculation has contributed to a $2.7 billion overspend, exacerbated by a $540 million increase in pharmacy costs and $1.1 billion from unexpected enrollment trends, particularly among older residents.
To meet its financial obligations in March, the Newsom administration borrowed $3.44 billion—the legal maximum—from the general fund and secured an additional $2.8 billion in state funding, which unlocked matching federal dollars. Still, officials have warned the situation is “unsustainable.”
Compounding the challenge is the looming threat from Congress, where Republican lawmakers are proposing steep Medicaid cuts that could jeopardize care for millions in California. With over a third of the state’s 39 million residents reliant on Medi-Cal, any reduction in federal funding would leave the state with difficult options: reduce coverage, limit enrollment, or raise taxes.
Governor Gavin Newsom has defended the expansion, arguing in a recent podcast that preventive care for low-income residents ultimately saves money. However, his administration is now weighing cost-saving strategies for the upcoming fiscal year, including ending pandemic-era protections that temporarily blocked disenrollment from Medi-Cal.
While Newsom has insisted scaling back coverage is “not on my docket,” other Democratic leaders have acknowledged hard decisions are ahead. Senate President Pro Tem Mike McGuire and Assembly Speaker Robert Rivas have both vowed to protect immigrant benefits but concede that trade-offs may be necessary.
The shortfall has sparked renewed criticism from Republican lawmakers. Assembly GOP Leader James Gallagher accused Democrats of poor planning and called for an audit of Medi-Cal. “Democrats’ bad accounting has brought Medi-Cal to the breaking point,” he said. “We owe it to Californians—and to the vulnerable people who depend on this program—to make sure Medi-Cal is meeting their needs.”
Even with the state’s massive $322 billion budget, California officials say they lack the capacity to replace lost federal support—especially since federal funding doesn’t cover preventive care for undocumented immigrants.
