Newsom proposes asset test for Medi-Cal eligibility amid California budget crisis

California Gov. Gavin Newsom recently proposed an “asset test” for seniors to prove eligibility for Medi-Cal healthcare benefits for low-income Californians. This comes in response to a budget shortfall, with individuals needing to possess less than $2,000 in assets to qualify for the program. Newsom cited reasons for the increased costs, including higher enrollment, pharmacy costs, and managed care expenses.

Over the past decade, Medi-Cal costs have surged by $20.5 billion, prompting Newsom to take action to curb the rising expenses. In addition to the asset test, the governor also suggested freezing new enrollment for adults living in the country illegally as a measure to reduce costs.

The proposed asset test would encompass various assets, such as salary, bank account balances, cash on hand, additional vehicles, home value, and retirement funds. Individuals with assets exceeding $2,000 would be deemed ineligible for Medi-Cal benefits.

In his 2025-26 budget proposal, Newsom emphasized the urgent need to address the escalating Medi-Cal costs, which totaled $37.6 billion in the previous year. Without intervention, expenses are projected to swell by an additional $10 billion in the upcoming fiscal year. Medi-Cal benefits are crucial for low-income adults, seniors, and individuals with disabilities, providing essential services like in-home care.

Notably, the asset test requirement for seniors seeking Medi-Cal benefits was enforced for decades before being eliminated in 2024. Newsom’s plan to reinstate this test is expected to yield significant savings, potentially saving $94 million in the current fiscal year and up to $791 million by the 2028-29 fiscal year.

However, the proposal has sparked concerns among advocacy groups like Disability Rights California, who warned that the asset test could inflict “tremendous harm” on vulnerable populations. They argued that demanding extreme poverty to maintain critical healthcare coverage is unjust and could jeopardize the well-being of disabled, poor, and elderly individuals in the state.

Newsom defended his proposals, emphasizing the need for fiscal responsibility and budgetary balance. While acknowledging the challenges posed by the budget shortfall, he underscored the importance of making tough decisions to safeguard the state’s financial health.

As the debate over Medi-Cal costs continues, stakeholders are closely monitoring the developments to ensure that essential healthcare services remain accessible to those in need. Newsom’s asset test proposal represents a critical step in addressing the fiscal challenges facing California’s healthcare system, albeit with implications for vulnerable populations.