Overview: California’s Medicaid program, known as Medi-Cal, provides healthcare to approximately 40% of the state’s population, but a recent budget plan threatens the wellbeing of millions of Californians. The Republican House budget resolution directs the House Energy and Commerce Committee to cut at least $880 billion in costs from the federal Medicaid program by 2034, which could lead to Medicaid cuts larger than any made in U.S. history. The cuts could impact vulnerable populations such as aging adults, children, people with disabilities, and birthing people.
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An estimated 15 million California residents — nearly 40% — were enrolled in Medi-Cal, California’s version of Medicaid, as of July 2024.
Medi-Cal provides affordable health insurance to California’s most vulnerable and underserved populations, but a recent budget plan threatens the health care program, and the wellbeing of millions of Californians.
A recent vote approved a Republic House budget resolution that directs the House Energy and Commerce Committee to cut no less than $880 billion in costs through 2034. Experts anticipate the budget cuts will come from the federal Medicaid program.
“We’ve estimated that these Medicaid cuts are larger than any that have ever been made in U.S. history,” said Stan Dorn, director of the Health Policy Project for UnidosUS, the country’s largest Hispanic civil rights and advocacy organization, during an American Community Media (formerly Ethnic Media Services) media briefing on March 21.
One of the strategies Republicans have suggested they could employ to cut Medicaid funding is to eliminate coverage for people who don’t meet certain work requirements.
An analysis conducted by the Center on Budget and Policy Priorities identified that more than eight million Californians or 56% of all adult enrollees would lose coverage based on those who could be required to show proof of employment or of exemptions.
While states operate their Medicaid programs within the parameters of federal standards in exchange for federal matching funds, states have the ability to design their programs with different eligibility requirements.
Last year, California passed a law, allowing adults ages 26 through 49 to qualify for full-scope Medi-Cal services, regardless of immigration status. California is the first state to do so, but with recent discussions about cuts to the program, many wonder how sustainable the health care program will be.
How Medi-Cal cuts could impact birthing Californians
Some of those most vulnerable populations like aging adults, children, people with disabilities and birthing people may be hit hardest by cuts to Medi-Cal, according to an analysis by the National Health Law Program (NHeLP).
Medi-Cal finances 40% of all births in California and in recent years added benefits for birthing people such as a doula benefit and postpartum care extension.
According to a brief written by Amy Chen, senior attorney in the NHeLP’s California office, Medi-Cal funding could threaten coverage for millions of pregnant people and infants if block grants and per capita cap proposals were implemented. A block grant is a type of federal payment where the federal government provides a specified amount of funding to state and local governments. Under a per capita cap, the federal government would provide payment per enrollee, which would also be capped based on a preset formula.
“Block grants and per capita cap proposals would reduce the amount of federal funding available to California, and drastically shift costs to the state,” Chen wrote in the brief. “This cost shift will worsen over time because under per capita caps, the per-person federal fund in allocation would likely increase more slowly than the actual health care costs for pregnant enrollees and their children.”
Seniors face significant healthcare challenges with proposed Medi-Cal funding cuts
California is home to one of the fastest growing populations of aging adults who accounted for 16.2% of the state’s population in 2023. By 2040, roughly 10 million Californians will be an older adult, making up one-quarter of the state’s population.
According to Justice in Aging, more than 2.3 million older adults and people with disabilities rely on Medi-Cal for coverage, and who otherwise would be unable to afford home-based care or nursing facilities.
A 2024 Cost of Care Survey conducted by CareScout, a company part of Genworth Financial, a life insurance company, reported that the median cost for an in-home health aide in California was $7,436 per month. The cost of a semi-private room in a nursing home was $11,695 per month.
Most older adults live on a fixed or limited income and are unable to cover the costs of care without support from Medi-Cal.
The largest share of federal funding for health and human services programs is $112.1 billion for Medi-Cal, according to an analysis by the California Budget & Policy Center. In a fact sheet detailing the potential outcomes of cutting funding to Medi-Cal, experts from the center noted that replacing dedicated federal funds in order to protect Medi-Cal could force state leaders to raise new state revenue.
“It is just not accurate to say that states will be able to make up these large cuts. So, states will be left with some very bad choices,” said Joan Alker, executive director of the Center for Children and Families at Georgetown University and a research professor, during the media briefing.
“We have an aging population and Medicaid is the largest payer of long-term care…and states will be faced with pitting very, very vulnerable population against one another.”
With the budget cut resolution passed, House Republicans must figure out what to cut in order to meet the budget cuts outlined. They also have to find a consensus with Senate Republicans who are focused on making President Donald Trump’s 2017 tax cuts permanent.
The House and Senate will have to vote on one final package.
“The cuts proposed in the budget resolution, passed just a few weeks ago, would shred our safety net and is the opposite of what voters called for. Not just forcing families to lose coverage and access to key healthcare services, but shifting costs onto people who are already struggling with costs for everything else,” explained Anthony Wright, executive director of Families USA.
“We do not have to do these cuts. This is a choice. In order to pay for massive tax cuts to corporations, we are making cuts to the core financing program for the healthcare system of the most vulnerable and for all of us.”