California faces a $6.2 billion budget gap for state Medicaid services, allowing Democrats to reevaluate future compensation for the 15 million people receiving health care through programs that include immigration.
The shortage comes a year after California began an ambitious expansion of coverage to provide free healthcare to all low-income adults, regardless of their immigration situation. That would cost much more than the expected state.
California is enduring major budget hits when Congressional Republicans are following plans that could cut Medicaid billions and put a range of millions of people at risk. California offers free healthcare to more than a third of its 39 million people.
Here’s what you need to know about the Medicaid gap in California:
Has widening compensation for adult immigration caused a gap?
Partially. California first extended medical benefits to low-income children without legal status in 2015, and later added benefits to young adults and people over 50 years old. Last year, the program expanded again to cover adults ages 26 to 49.
As California underestimated the number of people signing up for services, the cost of the recent expansion covering all low-income adults is $2.7 billion more than the state budget. California officials said last year they only had a month of data that the state had to prepare budget forecasts.
The state has not said how many people are registered through the expansion. Last year, the state predicted about 700,000 state residents living illegally in the United States and obtained full health insurance to access preventive care and other treatments.
Other factors putting pressure on state budgets across the country are also playing a role in California, state officials said. These included $540 million in pharmacy costs and $1.1 billion from other issues, including large enrollment of enrollees by seniors.
In Illinois, which has expanded coverage to lower-income residents in recent years, regardless of immigration status, Democrat Gov. JB Pritzker has proposed a $330 million cut in coverage for immigrants aged 42 to 64, citing rising costs.
What does California do about the shortage?
The Newsom administration told lawmakers last week that it received a loan of up to $3.444 billion allowed by the General Fund to make payments this month.
The Department of Healthcare Services, which oversees the state’s Medicaid program, said this week that an additional $2.8 billion would be needed to cover costs that took place through June. The money must be approved by Congress in April.
The state proposes ending protections in the pandemic era that are preventing people from freeing people from Medicaid. Newsom’s administration is also preparing for “significant volatility” after President Donald Trump’s immigration crackdown.
Will California roll back compensation for immigrants without legal status?
Newsom told reporters this week that rolling back coverage expansions “is not on my docket.”
Other Democratic leaders, including Speaker Robert Rivas and Senate Speaker Pro Tempore Mike McGuire, also vowed to protect immigrant benefits, but acknowledged “a tough choice for the future.”
The budget hole has rekindled criticism from Republican lawmakers about the expansion.
“Californians should not be forced to force the burden of radical Democrats’ reckless financial mismanagement,” Sen. Brian Jones said in a social media post this week.
Newsom recently defended the expansion in one of his podcast episodes, adding that ensuring that preventive care for all low-income people has access to preventive care will help save state money in the long run.
How will Congressional plans to cut Medicaid funding affect California?
The $6.2 billion budget gap is “solvable,” the lawmaker said this week. However, the threat of Congress’ Medicaid funding cuts could add to even more tension.
California needs to cut coverage, limit registration and raise taxes to cover costs if the legislature continues.
State officials said they are confident it will overturn compensation for millions of people in the state.
Even if the nation’s largest state budget is around $322 billion, officials said California has no capacity to fill federally funded services.
More than half of the state’s Medicaid funds come from the federal government. For the next fiscal year, that would be around $112.1 billion. Federal funding does not cover costs associated with preventive care for immigrants without legal status.
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