California’s Medicaid program has borrowed $3.4 billion from the state’s basic fund — and can doubtless want much more — to cowl ballooning well being bills for 15 million residents with low incomes and disabilities.
The state Department of Finance disclosed the mortgage to lawmakers in a letter late Wednesday, noting funds have been wanted to make crucial funds to well being care suppliers in Medi-Cal, the state’s model of Medicaid. In current months, Gov. Gavin Newsom’s administration has warned of skyrocketing well being care prices, together with greater prescription drug prices and increased enrollment by newly eligible seniors and immigrants without legal status.
Finance spokesperson H.D. Palmer mentioned the mortgage will cowl Medi-Cal obligations by way of the top of the month. He declined to specify the whole of this system’s potential shortfall. However, a doc circulated by state Senate leaders warns that extra funding could also be wanted to cowl bills by way of June 30, the top of the fiscal 12 months.
The value overrun provides a brand new layer of issue for Democrats who management the legislature and are already grappling with congressional budget plans that might slash Medicaid funding, which accounts for 60% of Medi-Cal’s $174.6 billion finances. President Donald Trump and Republican lawmakers have additionally criticized California Democrats for overlaying residents no matter their immigration standing.
Newsom spokesperson Izzy Gardon downplayed the mortgage. “Rising Medicaid costs are a national challenge, affecting both red and blue states alike,” Gardon mentioned. “This is not unique to California.”
Health officers final 12 months mentioned the state would spend roughly $6.4 billion within the 2024-25 fiscal 12 months to cowl immigrants with out authorized standing, which the Democratic governor has hailed as a key step towards his aim of offering “universal coverage” for Californians. In current testimony, nevertheless, finance workers instructed legislators that well being advantages prolonged to all income-eligible immigrants with out authorized standing are projected to value roughly $9.5 billion, of which $8.4 billion will come from the final fund.
Republicans referred to as for recent scrutiny of the state’s resolution to cowl residents with out authorized standing. “This program is out of control,” Senate Minority Leader Brian Jones posted on the social platform X. “We are demanding a full hearing and a full cost analysis so the public knows exactly where their tax dollars are going.”
Patient advocates objected to Republicans singling out the growth for immigrants.
“Health care costs are influenced by many factors including prescription drugs, hospital costs, and more,” mentioned Rachel Linn Gish, a spokesperson for Health Access California, a shopper well being advocacy group.
According to a fall update from the Department of Health Care Services, Medi-Cal spending grew as a consequence of higher-than-expected enrollment of seniors, fewer Californians dropping Medi-Cal protection than anticipated, and elevated pharmaceutical spending, in addition to increasing protection of immigrants. For occasion, the state is spending $1.1 billion extra on residents who have been anticipated to lose protection after the covid-19 pandemic, and an extra $2.7 billion greater than anticipated to cowl unauthorized residents.
Assembly Speaker Robert Rivas mentioned he’s dedicated to sustaining the state’s expansions of Medi-Cal companies.
“There are tough choices ahead, and Assembly Democrats will closely examine any proposal from the Governor,” he mentioned in an announcement. “But let’s be clear: We will not roll over and leave our immigrants behind.”
Senate leaders mentioned they have been wanting carefully on the state’s estimated prices and caseloads and would advocate value containment measures as a part of their finances proposal within the coming weeks.
Scott Graves, finances director on the California Budget & Policy Center, mentioned it’s common for the state authorities to make changes when spending doesn’t line up with projections.
Last 12 months, as an illustration, the state borrowed $1.75 billion in opposition to its basic fund when revenues from a state supplier tax have been delayed. Prior to that, Department of Finance officers mentioned, California took out an analogous mortgage in 2018 for $830 million.
“The reality is all of these are just estimates, especially with a very complicated program like Medi-Cal,” Graves mentioned, noting that $3.4 billion is roughly 2% of the state’s total Medi-Cal finances. “It seems like we’re on the verge of making a mountain out of a molehill.”
Mike Genest, who served as finance director underneath Republican Gov. Arnold Schwarzenegger, agreed that changes may be routine. But he mentioned the magnitude of Medi-Cal’s present overrun was not.
“For this to happen in the middle of the year — we’re only in March — I mean, that’s pretty astounding,” Genest mentioned.
California Democrats proceed to characterize Trump and congressional Republicans as the largest menace, pointing to the House finances plan to shrink Medicaid spending by as a lot as $880 billion. They say cuts of that magnitude would go away tens of millions of residents uninsured, decreasing entry to preventive care and driving up costlier emergency room companies.
They cautioned that some short-term value will increase could possibly be pushed by newly eligible residents looking for long-delayed care, which might stage off in coming years. However, some acknowledge tough selections forward.
“We definitely have to ensure that those who are our most vulnerable — our kids, those with chronic conditions — continue to have some sort of coverage,” mentioned Democratic Sen. Akilah Weber Pierson, a San Diego County doctor. “The question is, what will that look like? To be quite honest with you, at this point, I don’t know.”
This article was produced by KFF Health News, which publishes California Healthline, an editorially unbiased service of the California Health Care Foundation.
[Clarification: This article was revised at 5 p.m. ET on March 13, 2025, to clarify projected costs of extending Medi-Cal benefits to immigrants without legal status.]
Christine Mai-Duc:
[email protected],
@cmaiduc
Related Topics
src=”//platform.twitter.com/widgets.js” charset=”utf-8″>
