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SACROMENTO – After telling lawmakers he received $3.4 billion in loans to pay medical expenses until March, Gavin Newsom’s office told the state legislature on Monday that it is asking the state legislature to approve additional funds for a healthcare program for low-income Californians until the end of the current fiscal year.
The funding decision suggests that Medi-Cal spending exceeds the state’s estimate, above $6.2 billion, from a time when California is experiencing higher than expected costs to expand coverage for undocumented immigrants, increased enrollment and increased program pharmacy costs.
The governor’s office refused to provide information on how many of the new MEDI-CAL price tags could be attributable to the unexpected costs of providing state-sponsored health insurance to undocumented immigrant communities. In February, the Newsom administration said the cost of expanding compensation to all income-qualified immigrants, regardless of their residence status, has surged to $9.5 billion in state and federal funds.
The rising costs have attracted criticism from Republicans and pressured Democrats to consider reducing the program as they anticipate reducing federal funds and other economic headwinds that could force difficult conversations during budget negotiations this year.
“The tight financial choice has led to the need for California’s core and social workers, in collaboration with Pro Tem Mike McGuire (D-Healdsburg) and speaker Robert Rivas (D-Hollister), Gov. Newsom, who is evaluating proposals to curb long-term spending, including Medi-Cal, saying that California’s core and social workers are on the rise.
Republicans in Washington are considering cutting to Medicaid, a federal health insurance for low-income people, to pay President Trump’s $4.5 trillion tax cuts.
Medi-Cal is a state program that provides healthcare coverage to about 15 million low-income Californians and half of state children, relying primarily on federal Medicaid funding. It funds Medi-Cal almost two-thirds of all federal dollars the state has received, or more than $100 billion.
The scale of the Medicaid funding cuts is still unknown, and it is impossible to ensure that the severity of California’s reductions is projected. House Republicans have proposed cutting $880 billion across the federal government, a significant portion of which must come from Medicaid, but they also share their desire to avoid cutting funding for healthcare programs.
The Newsom administration also hopes to monitor the economic blow from Trump’s tariffs that could affect state revenues and the volatility in the stock market that could affect tax collection that funds the state’s programs.
Despite a clear history of cost overruns, the governor’s office pushed back criticism from Republicans in 2024 for expanding health insurance coverage to low-income immigrants, regardless of their California residence status.
Program costs more than doubled from $79.5 billion in 2014-2015 to the estimated $188.1 billion for the January 2025-2026 budget proposal.
Newsom’s Office believes the price surge this year is attributed to higher than expected enrollment, older population and rising health costs across the country.
The governor’s office said Newsom expects to vote for a $2.8 billion request for additional MEDI-CAL funding in April to maintain the programme solvent through the fiscal year ending in June.
Newsom’s Office said the funds will come from the General Fund’s state tax revenue. Collecting individual and corporate income taxes through February was about $3.2 billion above the governor’s January budget proposal this year.
Lawmakers will also need to pay back $3.4 billion in loans at some point in the budget process.
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