Governor Gavin Newsom just signed a $2.8 billion budget bill to temporarily fix the Medi-Cal budget deficit, helping the program survive through the end of June.
Medi-Cal, California’s version of Medicaid, was deep in a $6.2 billion hole as of March. Newsom had already pulled $3.4 billion from the general fund last month to stop the bleeding. With this latest bill, the current shortfall is covered – for now.
The big reason for this massive Medi-Cal budget deficit? Expanding coverage to all undocumented immigrants. It’s not a new policy – California has been expanding eligibility for years – but the latest move took it to a new level. The total cost of covering undocumented residents under Medi-Cal has now hit $9.5 billion. And the state didn’t expect so many people to enroll, overshooting the forecast by $2.7 billion.
But that’s not the only thing driving the budget shortfall. Prescription drug costs are up, adding another $540 million to the deficit. More older Californians are enrolling too, tacking on $1.1 billion. Plus, Prop 35, passed last year, ended up eliminating $1 billion in funding due to tighter rules on managed care tax usage.
Despite the financial mess, Democratic lawmakers are standing firm on keeping undocumented immigrants in the program. Assemblywoman Dawn Addis called them “vulnerable Californian communities” and even blamed the federal government for California’s funding issues. Governor Newsom also shut down any talk of reversing the expansion, saying it’s not even on his radar.
Republicans, on the other hand, are demanding change. Some want to roll back coverage expansions. Others are pushing for a full audit of Medi-Cal to find where the money is really going. Assemblyman James Gallagher said the program’s financial problems are making it harder for patients to access care and warned that Californians deserve transparency and accountability.
Looking ahead, the state’s not slowing down spending either. Newsom is already proposing another $4.4 billion for Medi-Cal in next year’s budget. That’s an 11.4% jump, and while officials say most of that is tied to Prop 35, it’s pretty clear the expanded coverage is still a major driver.
So yes, the Medi-Cal budget deficit is “fixed” for now – but it’s a temporary patch. With California already facing broader budget issues, it’s likely this will all come back around again in a few months. And if nothing changes, we might be right back where we started by the end of summer.
Should California keep spending billions to expand Medi-Cal, or is it time to reassess priorities?
