SACRAMENTO — Days after telling lawmakers that he took out a $3.4-billion mortgage to pay for Medi-Cal prices via March, Gov. Gavin Newsom’s workplace mentioned Monday that he’s asking the state Legislature to approve one other $2.8 billion in further funding for the healthcare program for low-income Californians via the tip of the present fiscal 12 months.
The funding selections counsel Medi-Cal spending is operating as a lot as $6.2 billion above state estimates from final summer time at a time when California is experiencing increased than anticipated prices for increasing protection to undocumented immigrants, larger enrollment and rising pharmacy bills for this system.
The governor’s workplace declined to supply details about how a lot of the brand new Medi-Cal price ticket could be attributed to unexpected bills of offering state-sponsored healthcare protection to the undocumented immigrant group. In February, the Newsom administration mentioned the price of increasing protection to all income-eligible immigrants, no matter residency standing, had ballooned to $9.5 billion in state and federal funding, which was greater than $3 billion over June estimates.
The rising prices have drawn criticism from Republicans and added stress on Democrats to think about scaling again this system because the state anticipates cuts to federal funding and different financial headwinds that would power troublesome conversations throughout funds negotiations this 12 months.
“With robust fiscal selections forward, Gov. Newsom, collectively with Professional Tem Mike McGuire (D-Healdsburg) and Speaker Robert Rivas (D-Hollister), will consider proposals to rein in long-term spending — together with in Medi-Cal — whereas working to guard the core well being and social companies Californians depend on,” mentioned Izzy Gardon, a spokesperson for the governor.
With a view to pay for President Trump’s $4.5 trillion in tax cuts, Republicans in Washington are contemplating sweeping cuts to Medicaid, the federal authorities’s medical health insurance for low-income residents.
Medi-Cal, the state program that gives healthcare protection to roughly 15 million low-income Californians and half of the kids within the state, largely depends on federal Medicaid funding. Almost two-thirds of all federal {dollars} acquired by the state, or greater than $100 billion, fund Medi-Cal.
The size of the funding discount to Medicaid remains to be unknown and it’s not possible to mission the severity of the cuts for California with any certainty. Republicans within the Home have advised slicing $880 billion throughout the federal authorities, a good portion of which must come from Medicaid, however have additionally shared their want to keep away from lowering funding for the healthcare program.
The Newsom administration can also be anticipating financial blowback from Trump’s tariffs that would impression state revenues and awaiting inventory market volatility that would have an effect on tax collections that fund state applications.
Regardless of a historical past of clear value overruns, the governor’s workplace has pushed again on criticism from Republicans that California’s enlargement of healthcare protection to low-income immigrants no matter residency standing, which went into full impact in 2024, is the one motive Medi-Cal spending is over funds.
Program prices have greater than doubled from $79.5 billion in 2014-15 to an estimate of $188.1 billion in Newsom’s January funds proposal for 2025-26.
Newsom’s workplace attributed the value spike this 12 months to higher-than-expected enrollment, an growing older inhabitants and rising healthcare prices throughout the nation.
The governor’s workplace mentioned Newsom anticipates that lawmakers will vote on his request for $2.8 billion in extra Medi-Cal funding in April to be able to preserve this system solvent via the fiscal 12 months that ends in June.
“We took these steps as a result of you will need to keep our dedication to our suppliers and plans to make well timed funds for the rest of the present 12 months to make sure Californians and people on Medi-Cal get the companies within the present 12 months,” mentioned Michelle Baass, director of the California Division of Well being Care Providers, throughout an Meeting funds listening to on Monday.
Newsom’s workplace mentioned the cash will come from state tax income within the basic fund. Tax assortment via February was $4.6 billion above projections made within the governor’s January funds proposal, in accordance with new information launched Monday by the Division of Finance.
Lawmakers may also must pay again the $3.4-billion mortgage sooner or later within the funds course of.
