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Gov. Gavin Newsom touted California’s role as the first state in the nation to offer healthcare to all income-eligible immigrants one year ago. But cost overruns and threatened fed clawbacks are forcing some tough trade-offs in Sacto. LA Times reports.
California became the first state in the nation to offer healthcare to all income-eligible immigrants one year ago, which gave Gov. Gavin Newsom another liberal achievement to tout when lauding the Golden State as a national trailblazer.
But the $9.5-billion price tag of California’s program is already more than $3 billion above the budget estimate from last summer and is expected to grow even higher.
“We should not bear these costs. Period. But especially in a budget crisis,” said Assemblymember Carl DeMaio (R-San Diego).
California’s expansion of healthcare coverage for all residents, regardless of immigration status, has made the state a ripe target for conservatives as President Trump pushes a nationalist agenda in Washington, which includes his aggressive push for deportations.
It’s illegal for undocumented immigrants to vote in California, but the Republican attacks on free state-sponsored healthcare has morphed a policy conversation about medical care into a highly politicized talking point about immigrant rights.
The potential for cuts to Medicaid, the federal government’s health insurance for low-income residents, could also leave Democrats at the state Capitol forced to decide whether they should maintain coverage for immigrants if services for legal residents must be significantly reduced.
“If you pull $10 billion out of California healthcare annually, that’s a lot of dough and that’s going to have very serious impacts that would ripple across every sector of the healthcare delivery system from hospitals, physicians, home care, nursing homes and to services that millions depend on,” said David Panush, a healthcare policy consultant who worked in the state Capitol for decades, about potential federal cuts.
Absent federal cuts, California’s financial footing already was so shaky that Newsom proposed taking $7.1 billion from the state’s rainy day fund, which acts like a savings account to buffer the budget during an economic crisis, to cover the cost of state programs next year. DeMaio has argued the state wouldn’t need to break open its piggy bank if Democrats cut healthcare for undocumented immigrants.
The California Department of Finance said $8.4 billion of the funding to provide healthcare to undocumented immigrants is paid by state taxpayers through the state’s general fund. The remaining $1.1 billion pays for emergency room visits and pregnancy care, which the federal government covers under a federal law that requires hospitals to stabilize and treat uninsured patients in emergen
The governor’s advisors have warned lawmakers the state has a lot to lose if federal funding is slashed by the Trump administration.
Federal funds typically make up about one-third of the state budget. Medi-Cal relies on $107.5 billion in federal funds in the current budget year, nearly two-thirds of all federal dollars received by the state. Roughly 15 million Californians, a third of the state, are on Medi-Cal and more than half of the children in California receive healthcare coverage through the program.
Despite the current political polarization, support for state-subsidized healthcare for immigrants hasn’t always been divided by party lines in California.
In 1988, a bill authored by then-state Senate Minority Leader Ken Maddy (R-Fresno) and signed by Republican Gov. George Deukmejian provided prenatal care for undocumented pregnant women and nursing home care for severely disabled immigrants.
Republican Gov. Arnold Schwarzenegger’s failed push for universal healthcare, which started in 2007, included state-subsidized coverage for all children regardless of legal residency status.
DGov. Jerry Brown, a Democrat, signed a bill in 2015 that offered Medi-Cal coverage to all children under age 19.
Newsom grew the Medi-Cal coverage pool to include all income-eligible immigrants in Californian,under a multiyear expansion by age categories that began in 2020 and concluded in 2024.But the program has been plagued by cost overruns since it started.
The cost estimate to provide coverage to all-income eligible undocumented immigrants was $6.4 billion in the 2024-25 state budget approved last summer, which marked an increase from earlier projections.
In February, the Newsom administration told lawmakers at a budget hearing at the state Capitol that the cost of expanding coverage to all immigrants for the current year had ballooned again from $6.4 billion to $9.5 billion. The California Department of Finance attributed the increase to “higher-than-anticipated enrollment, and higher pharmacy costs.”
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