Newsom freezes Medi-Cal enrollment for undocumented Californians amid $16 Billion budget crisis

Sacramento, California – Facing a deepening budget crisis, Gov. Gavin Newsom on Wednesday proposed freezing enrollment for undocumented adults in California’s Medi-Cal program starting in 2026 and introducing monthly premiums for some recipients beginning in 2027 — a move projected to save the state $5.4 billion by 2029.

The proposal marks a dramatic shift just one year after California became the second state to offer full-scope Medi-Cal coverage to all low-income immigrants, regardless of legal status. Under the new plan, undocumented adults who do not enroll by January 2026 will no longer be eligible for comprehensive Medi-Cal coverage. However, emergency and pregnancy-related care will remain available through federally funded programs. Children would still be allowed to enroll.

The 1.6 million undocumented immigrants covered by Medi-Cal would not lose their benefits. Still, beginning in 2027, those with “unsatisfactory immigration status” — a category that includes both undocumented and some legally present individuals ineligible for federal Medicaid — would be required to pay a $100 monthly premium.

Newsom’s office framed the plan as a painful but necessary response to worsening economic conditions and the state’s ballooning deficit, which authorities estimate to be around $16 billion. The Medi-Cal program alone is grappling with a $6.2 billion shortfall, exacerbated by higher-than-expected costs — including $2.7 billion more than anticipated to cover undocumented residents.

“The state must take difficult but necessary steps to ensure fiscal stability and preserve the long-term viability of Medi-Cal for all Californians,” Newsom’s office said in a statement. The governor’s fact sheet emphasized that his team has designed the changes to protect existing coverage and maintain the state’s values amid tough financial headwinds.

Democratic lawmakers, however, signaled resistance to the proposed cuts. “These are folks who are working, paying taxes. They should have access to health care,” said State Sen. Scott Wiener, chair of the Senate budget committee, at a recent event.

The financial squeeze comes as California recovers from devastating wildfires, confronts rising prescription drug costs, and braces for further losses linked to federal tariff policies. Newsom has blamed former President Donald Trump’s trade measures for slashing $16 billion from the state’s expected revenues, contributing to the fiscal crisis.

Compounding the issue, Congressional Republicans are advancing proposals to cut Medicaid and penalize states for offering care to undocumented immigrants. This move could cost California an additional $3.2 billion annually in federal funding.

Newsom’s proposed Medi-Cal changes now enter negotiations with the Democratic-controlled Legislature ahead of the state’s final budget deadline in June. With tough decisions looming, Assemblymember Jesse Gabriel, chair of the Assembly budget committee, summed up the challenge: “This is going to be a very challenging budget.”