Newsom seeks another $2.8B for bloated health program overwhelmed by illegal immigrants
California Gov. Gavin Newsom is facing a significant budget shortfall in the state’s Medicaid program, prompting him to request an additional $2.8 billion loan to address the bloated deficit. This comes on the heels of a previous request for a $3.4 billion loan from the general fund to cover outstanding costs for Medi-Cal, the state’s primary healthcare program.
The rising healthcare costs have been largely attributed to coverage for illegal immigrants, with roughly 1.6 million undocumented individuals enrolled in the program. However, Newsom’s office insists that the increased costs are also due to higher overall enrollment for all populations and rising pharmaceutical costs. They point to other states, such as Pennsylvania and Indiana, which are also grappling with budget shortfalls in their Medicaid programs.
Republicans in the legislature have been quick to criticize Newsom’s handling of the situation, blaming the state’s policies for the under-projection of costs. Senate Republican Minority Leader Brian Jones called the $6.2 billion budget overage “reckless financial mismanagement” and questioned Newsom’s plan to address the financial disaster.
Last year, California expanded Medi-Cal to cover all low-income adults ages 26 through 49, regardless of immigration status, making it the first state to do so. While the state initially estimated the program would cost just under $6 billion in FY 2024 to 2025, the actual budget has far exceeded that projection. In response, House Republicans have proposed cutting $880 billion from programs over the next 10 years, primarily targeting Medicaid.
Newsom’s latest budget proposal projects spending $8.4 billion on illegal immigrants in Medi-Cal for 2024-2025, followed by $7.4 billion in 2025-2026. During a budget hearing, Michelle Bass, director of the Department of Health Care Services, admitted that the department significantly underestimated the number of illegal immigrant enrollees, citing limited data and the rapid implementation of new policies.
As Newsom navigates the financial challenges facing the state’s Medicaid program, tough fiscal choices lie ahead. The governor, along with Pro Tem McGuire and Speaker Rivas, will evaluate proposals to rein in long-term spending while working to protect essential health and social services for Californians. It remains to be seen how Newsom will address the mounting deficit and provide sustainable solutions for the state’s healthcare system.
