California’s Medicaid program, known as Medi-Cal, has borrowed $3.4 billion from the state’s general fund to manage rising healthcare costs for its 15 million low-income and disabled residents. This borrowing comes as the state faces increasing expenses, particularly due to surging prescription drug prices and a rise in enrollment among newly eligible seniors and undocumented immigrants.
The loan was disclosed by the state Department of Finance in a letter to lawmakers, highlighting the urgent need for funds to ensure timely payments to healthcare providers. As costs continue to climb, Governor Gavin Newsom’s administration has warned that the program may require even more financial support in the coming months. A Senate document has indicated that additional funding might be necessary to cover expenses until the end of the fiscal year on June 30.
This budget shortfall poses significant challenges for California’s Democratic leaders, who are already dealing with potential cuts to Medicaid funding from Congress. Currently, federal support accounts for 60% of Medi-Cal’s $174.6 billion budget. Critics, including former President Donald Trump and some Republican lawmakers, have targeted California’s decision to extend healthcare coverage to all residents, regardless of immigration status.
Despite the financial strain, Newsom’s spokesperson, Izzy Gardon, emphasized that rising Medicaid costs are a broader issue affecting states across the country. Health officials previously estimated that California would spend around $6.4 billion in the 2024-25 fiscal year to cover undocumented immigrants. However, recent projections suggest these costs could reach approximately $9.5 billion, with the general fund covering a significant portion.
In light of these developments, Republican leaders are calling for a detailed examination of the state’s spending, particularly regarding the coverage of undocumented residents. They argue that the program is becoming unsustainable, demanding a thorough review to clarify how taxpayer money is being utilized.
Patient advocates, however, caution against singling out immigrant coverage as the main issue. They argue that healthcare costs are influenced by various factors, including prescription drug prices and hospital expenses. Medi-Cal’s rising costs have also been attributed to unexpectedly high enrollment numbers, particularly among seniors, and ongoing expenses related to the pandemic.
California’s legislative leaders are now assessing the state’s financial situation and considering cost-containment measures in their upcoming budget proposals. Assembly Speaker Robert Rivas has committed to preserving Medi-Cal services, especially for vulnerable populations.
As the state grapples with these financial challenges, some lawmakers acknowledge tough decisions lie ahead. The focus remains on ensuring that vulnerable groups, such as children and those with chronic conditions, continue to receive necessary coverage, even as the state navigates a complex budget landscape.