Can California Claw Back Some Medi-Cal Care?

There isn’t a ton of research into the effectiveness of making people prove they have jobs in order to access social services. But what evidence there is points in one direction: Placing work requirements on programs like Medicaid does almost nothing to increase employment or hours worked, while actively hurting people in need.

With roughly 15 million Californians relying on Medi-Cal, the state’s version of Medicaid, for their health coverage, the Golden State is staring that grim truth in the face.
 

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A significant part of Congress’ so-called Big Beautiful Bill’s takedown of Medicaid funding revolves around forcing people to show that they’re working 80 hours each month before they can receive benefits. And with about a year left until that requirement takes effect, California policymakers are scrambling to mitigate its most toxic effects — even if they are legally required to implement the broader law.

“At the end of the day, there’s not a full workaround,” said Hannah Orbach-Mandel, a policy analyst at the nonpartisan California Budget & Policy Center. “But I do believe there are some ways that California can try to be a little creative about how the law is implemented, and people are looking into that now.”

Those possibilities include using California’s relatively high minimum wage ($16.90 an hour in 2026) to propose substituting income earned for hours worked under the new Medicaid rules, along with ways to streamline what is likely to be a nightmarish bureaucratic task of recording and verifying the information the federal government is demanding.

The stakes are certainly high enough. According to Gov. Gavin Newsom’s administration, as many as 3 million Californians could be thrown off Medi-Cal based on the work requirement alone — a significant portion of the many millions of Americans across the country who face a similar fate. While the actual numbers will rise or fall depending upon how the requirements are implemented, the resulting strain on California’s health care system from fewer patients and more unreimbursed care could buckle it.

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The work requirement derives from a generations-old Republican talking point that most people on public assistance could be working, but are either too lazy or unmotivated to do so. Research has disproven that theory repeatedly.

As of 2023, nearly two-thirds of all adults aged 19-64 on Medicaid were working full-time or part-time, according to the health policy research site KFF, formerly the Kaiser Family Foundation. Among the remainder who weren’t working, the vast majority fell into one of three categories: sick or disabled, caregiving for another person or attending school. All of those groups receive exemptions to the work requirement in the new law.

It’s no surprise, then, that the Congressional Budget Office has already said implementing work requirements for Medicaid recipients won’t move the needle on employment. During debate on a 2023 Medicaid bill, the CBO concluded that “the employment status of, and hours worked by, Medicaid recipients would be unchanged” by work requirements.

A couple of states have tried such restrictions themselves, with disastrous consequences. In the first seven months after Arkansas implemented work requirements in 2018, for example, roughly 18,000 people lost their Medicaid coverage — most of them, state officials said, not because they didn’t qualify, but because they either didn’t understand the new rules or couldn’t navigate the maze of administrative details and gave up, losing their health care access in the process.

Meanwhile, there was no notable improvement to the state’s employment numbers or to its total number of hours worked, a finding that has been confirmed by more recent research. The Arkansas requirements were halted in 2019 by a federal judge who ruled the program did not meet the objectives of the Medicaid program.

Nevertheless, Republicans enshrined such requirements nationally in H.R. 1 this year, and they are set to go into effect on Jan. 1, 2027. They also further mandated that Medicaid recipients repeat the qualification process twice each year. The budget reconciliation bill says that those in the Medicaid expansion group between the age of 19 and 64 must show that they’re either working, going to school, in job training or doing community service at least 80 hours a month in order to stay eligible.

Those rules will chase people off Medicaid, which could increase death rates and lead to severe financial trouble. Many of those people, Orbach-Mandel says, will still fully qualify to receive benefits, but they either won’t know it or will get lost in red tape.

In California, 3 million people suddenly losing their health coverage means they’ll likely have no health insurance and no access to regular care, and will instead wait to see a doctor until they need to go to the emergency room — the one place where they know they cannot be denied care even if they can’t pay.

It all adds up to a massive new strain on an already overburdened health care system. 

“That burden ends up falling on a lot of hospitals, like safety-net facilities,” Orbach-Mandel said. Many of those hospitals are already struggling to survive financially. The combination of fewer Medi-Cal patients and higher unreimbursed emergency room costs could drive them to discontinue certain services or face possible closure, as hospitals in Willows and Inyo County recently have discussed.

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The Medicaid takedown is an almost perfectly Trumpian gambit: It helps to finance massive tax cuts for the nation’s richest individuals at the expense of some of the most vulnerable Americans, many of whom voted for Donald Trump. Republicans championed the work requirements mostly as a way to kick people off Medicaid.

That they will do — an estimated 6.3 million nationally, though some estimates run many multiples higher than that. California’s total may run higher or lower than the Newsom administration’s 3 million estimate as well, in part because there is no guidance yet on how the requirements are to be administered or monitored.

Orbach-Mandel said the state is ultimately responsible for gathering and producing the relevant documentation. Much of that work will be farmed out to California’s cash-strapped counties that could be saddled with building out the verification process.

Clarifying how that process should work is one way the state could ease some of the administrative effects of the new requirements. In terms of keeping more people eligible for Medi-Cal, the state’s minimum wage may come into play.

Orbach-Mandel said that one idea being tossed around is using the statewide minimum wage in a calculation of what California workers’ output is actually worth. Since that wage is higher than most other states and way above the national minimum of $7.25 per hour, California might argue that its Medicaid enrollees can prove a certain amount of earnings, rather than have to document the 80-hour work requirement.

Since federal implementation guidelines are still lacking, no one is certain what the final rules will be. It’s also possible that Congress ultimately postpones the start of the program, especially given Trump’s miserable approval numbers — and the fact that his approach to health care is the lowest-rated component of those.

Put simply, Trump’s coattails aren’t what they used to be. The Medicaid work requirements are looming, yes — but for many of the president’s longtime Republican loyalists in Congress, the 2026 midterms are going to happen first.

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