Innovative Medi-Cal Expansion Threatened by Budget and Trump Pressures

One of the great ironies of Gov. Gavin Newsom’s on-again, off-again push to make health care available to all Californians is that, to hear him tell it, it worked too well.

That success — an unexpectedly high number of Californians who signed up to see a doctor under Newsom’s expansions of Medi-Cal — is now cited as one of the reasons Newsom wants to back away from the program he loudly championed — a cornerstone of his election and re-election campaigns.

The proposed move to roll back Medi-Cal access, announced Wednesday as part of the governor’s revised 2025-26 state budget, will have profound repercussions for many of the estimated 1.6 million undocumented immigrants who use the safety net program. It left the director of one California immigrant rights group “outraged,” as he put it.

Newsom’s explanation for the cuts is prosaic: The state is facing an additional $12 billion budget deficit, bringing the total to $39 billion, and the money has to come from somewhere. Modifying a program that benefits undocumented people is probably also politically expedient, although you won’t find Newsom acknowledging that. And there is the ongoing pressure from Washington, D.C., for states to quit providing health care to their undocumented populations.

What it actually means for California is harder to gauge. The governor’s office says the proposed Medi-Cal changes will save $5.4 billion by fiscal year 2028-29. But budget figures can’t predict what happens when people who work and live in California get sick and can’t afford to receive care, nor how hospitals will handle a likely surge in emergency room visits by patients who put off health issues until they become severe — patients whom the hospitals by law cannot refuse, even if they have no ability to pay.

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Newsom’s proposal will freeze Medi-Cal enrollment for undocumented adults (age 19 and older) beginning next year. It also would charge $100 a month to those already in the program, even though by definition Medi-Cal — the state’s version of Medicaid — is designed for those whose earnings are so close to the poverty level that any medical expense is likely to be too much.

Given the state’s financial picture, some have argued that the Medi-Cal cuts could’ve been worse. Newsom’s office was quick to point out that no one’s coverage is being cut off, and there’s truth in that.

But the key word in the conversation is “undocumented.” Under Newsom, the state dramatically expanded health coverage for undocumented residents, a program first begun under Gov. Jerry Brown to cover those under age 19. Newsom has used a series of moves to extend that Medi-Cal coverage to Californians of all ages regardless of their immigration status, and he has touted it as a fulfillment of his campaign promise of universal health care.

In truth, Newsom originally campaigned for office as a strong advocate of single payer health care, a very different program. Under single payer, a lone (usually government-run) entity provides for and finances health care for all residents. That position won Newsom the support of powerful nurses’ unions and helped him get elected. But once in office, the governor, whose heavy political contributors have also included Blue Shield and the California Medical Association, quietly backed away from the issue.

Newsom chose instead to try for a mix of public and private insurance — including the Medi-Cal expansion — so that almost all the state’s residents have some form of coverage, even if, as critics have consistently pointed out, the insurance is often too expensive for many Californians to actually use.

The effect of the Medi-Cal expansions regardless of immigration status has been significant, and it shouldn’t be dismissed. It isn’t a perfect system; more than half a million undocumented Californians still earn too much to qualify for Medi-Cal yet don’t have employer-based coverage, rendering them effectively uninsured, according to research by the University of California, Berkeley, Labor Center.

But by bringing so many of the state’s residents under the Medi-Cal umbrella, the program has offered care to people who live and work in the state, and who produce. Undocumented workers paid $8.5 billion in state and local taxes in 2022, according to the Institute on Taxation and Economic Policy, and they’re the source of more than half a trillion dollars of products in California, either by direct, indirect or induced production levels.

Although no one can factor that output into a state budget, keeping these people and their families healthy and productive makes straight common sense. But that’s only if you factor out the politics.

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Running in the background of this discussion is the obvious: Donald Trump’s administration and the GOP-led Congress are threatening to penalize states that provide health care to undocumented immigrants. California could lose as much as $27 billion in federal funds between 2028 and 2034, according to the Center on Budget and Policy Priorities.

And without question, the Medi-Cal expansion has cost more than expected. The Department of Health Care Services estimated that the state is paying $2.7 billion more than budgeted on Medi-Cal for undocumented immigrants, driven by “higher than anticipated enrollment and increased pharmacy costs.” (There has also been a significant uptick in overall Medi-Cal sign-ups, especially among older adults.)

In other words, the expansion worked. California residents, including those who are undocumented, signed up for Medi-Cal. And now that the budget crunch is real, it’s immigrants whose coverage is deemed the most expendable.

“We are outraged by the governor’s proposal to cut critical programs like Medi-Cal,” said Masih Fouladi, executive director of the California Immigrant Policy Center. “At a time when Trump and House Republicans are pushing to slash health care access and safety net programs while extending tax cuts for the wealthy, California must lead by protecting, not weakening, support for vulnerable communities.”

Wednesday was a step back in that regard. It certainly won’t be the last word. And what does not change is the most profound truth: The need for California’s immigrants to have access to basic health care didn’t go away. It’ll be there again tomorrow.

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