The California health care program that covers almost 15 million people is costing more money than Gov. Gavin Newsom projected, creating a in a lean year.
Now his administration is borrowing $3.4 billion from the state鈥檚 general fund to cover the unexpected cost increase. It鈥檚 unclear when the administration plans to restore the money.
The administration acknowledged that more people are enrolled in the program than the state anticipated, and that the state is spending $2.7 billion more than it planned on coverage expansions for immigrants without legal status.
Roughly 1.6 million immigrants without legal status are enrolled in l, according to state data. The program is a lifeline to people who traditionally have not had access to health insurance, and California is one of six states that regardless of whether they are in the country legally.
Senate Minority Leader Brian Jones said Newsom has overpromised and under-delivered on health care at a time when all Californians are struggling to afford the cost of living in the state.
鈥淒emocrats and the governor are picking priorities, and they鈥檙e prioritizing people that have come into our country illegally over people who immigrated here legally, people that are citizens,鈥� Jones said.
The state鈥檚 Medi-Cal expansion for undocumented immigrants costs about $8.5 billion from the state general fund annually, according to .
鈥淚f we weren鈥檛 spending eight-and-a-half billion dollars on illegal immigrants, we wouldn鈥檛 need to borrow $3.4 billion to cover the difference,鈥� Jones said.
H.D. Palmer, a spokesperson for the state鈥檚 finance department, acknowledged that the rise in spending is partially attributable to higher-than-projected costs associated with larger enrollment numbers for California鈥檚 undocumented population. In January, the , which oversees Medi-Cal, estimated California is spending $2.7 billion beyond what it budgeted due to the cost of covering care and prescriptions for newly enrolled immigrants.
But immigrants aren鈥檛 the only population that is using Medi-Cal more than the state expected.
California鈥檚 Medi-Cal population in general ballooned during the COVID-19 pandemic when the federal government temporarily suspended income eligibility checks to keep people insured during the national emergency. Before the pandemic about 13 million people used Medi-Cal. That number peaked at 15.6 million in 2023 when . Today 14.9 million people are enrolled, according to .
The Legislative Analyst鈥檚 Office has also noted in the number of seniors enrolled in Medi-Cal. While seniors make up only about 10% of the program鈥檚 enrollees, they account for a large part of the program鈥檚 spending because benefits such as long-term care are among the most expensive.
Medi-Cal spends about $15,000 a year per senior. That compares to the $8,000 a year the program spends on average on other enrollees.
Newsom鈥檚 office said these issues are neither new nor unique to California. Medi-Cal is California鈥檚 version of Medicaid, the federal-state program that provides health coverage nationwide to low-income households.
鈥淩ising Medicaid costs are a national challenge, affecting both red and blue states alike,鈥� Elana Ross, a spokesperson for the governor鈥檚 office, said in an email.
Democrats pledge to protect immigrant health care
Sen. Roger Niello, a long-time critic of the state鈥檚 closed-door budgeting process, which is typically hashed out between Democratic leaders and the governor, acknowledged that other factors like senior enrollment and high drug costs could be contributing to the high expenses. He said Republicans are worried about increasing spending on immigrant health care.
The Republican from Roseville criticized the lack of transparency from Newsom鈥檚 finance department.
鈥淭he completely opaque nature of the request, which says nothing about any of that, is entirely inappropriate,鈥� Niello said.
Democratic lawmakers said they need more information about what exactly is behind the unexpected spending increases, but pushed back on the idea that the state would need to roll back coverage for its undocumented population.
鈥淚mmigrant workers and families, who pay billions in taxes, deserve access to care, and I am proud to protect California鈥檚 progress expanding Medi-Cal,鈥� Assembly Speaker Robert Rivas said in a statement. 鈥淭here are tough choices ahead, and Assembly Democrats will closely examine any proposal from the governor. But let鈥檚 be clear: We will not roll over and leave our immigrants behind.鈥�
Immigrants lacking permanent status contribute approximately , according to an analysis by the California Budget and Policy Center, a nonprofit research group. That鈥檚 about the same amount it鈥檚 costing the state to give them Medi-Cal.
State lawmakers first allowed undocumented children to enroll in Medi-Cal in 2016 under Gov. Jerry Brown. Since then Newsom has approved adding young adults up to age 25 in 2020 and older adults and seniors in 2022. Adults ages 26-49 were the final group added in 2024. Throughout those years, even
鈥淭he Republicans need to take a better and keen-eyed look at the timeline associated with those expansions,鈥� said Assemblymember Mia Bonta, an Oakland Democrat who leads the Health Committee. 鈥淔or them to just try to play the blame game and put it all at the feet of California values to ensure that we have universal health coverage for all with this particular age group being included is just specious.鈥�
Billions more in potential Medicaid cuts
Assemblymember Dawn Addis, who chairs a budget subcommittee on health, said she will be questioning Newsom officials closely about the spending increase in an upcoming hearing.
鈥淲e really need to understand the details of what the Department of Finance is saying, what the executive is seeing, and how they鈥檙e calculating this information,鈥� Addis, a Democrat from San Luis Obispo, said.
Addis emphasized that the biggest threat to Medi-Cal right now is coming from the federal government.
House Republicans recently voted to advance a proposal that could result in cuts of , largely Medicaid, over the next 10 years. The California Budget and Policy Center has estimated that the proposals currently at play in Congress could translate into annual losses of $10 billion to $20 billion a year for the state.
鈥淭he reason why it鈥檚 so important for us to fight back against cuts at the federal level to Medicaid is because there is no easy or painless solution to fill that budget hole,鈥� said Amanda McAllister-Wallner, interim executive director of Health Access California.
Health Access California along with the California Immigrant Policy Center spearheaded the campaign nearly a decade ago to insure all immigrants in the state.
McAllister-Wallner said it was unfair and unreasonable to pin the state budget shortfall on the immigrant expansions. Over the same time period, the state has added benefits, such as , and invested heavily in reforming the system through a multibillion-dollar initiative called CalAIM.
鈥淭hose changes that we鈥檝e made in Medi-Cal made the program stronger (and) have made the state healthier,鈥� McAllister-Wallner said.
CalMatters reporter Alexei Koseff contributed to this story.