03-07-2025
- Health
- San Francisco Chronicle
How the record cuts coming to Medicaid could devastate California health care
Millions of Californians who get health insurance through Medicaid, the joint federal-state health insurance program for low-income residents, will likely lose or see major cuts to their health benefits under the Republican tax and spending megabill passed by Congress on Thursday.
The tax and policy bill, which now heads to President Trump to be signed into law, slashes federal Medicaid funding nationwide by about $1 trillion over the next decade, the largest reduction in the program's history. That could result in nearly 12 million Americans without health insurance by 2034, according to estimates from the Congressional Budget Office.
In California, where more than one in three residents rely on Medicaid — known here as Medi-Cal — the impact will be devastating, health policy experts say.
The nearly 15 million Californians on Medi-Cal are poised to either get less comprehensive benefits or lose eligibility. Hospitals, nursing homes and other health care providers that serve this population will be paid significantly less, likely resulting in reductions in services or closures.
'California is going to take a huge hit,' said Kristof Stremikis of the California Health Care Foundation, a nonprofit that researches health policy. 'There's really no way around it. Millions of people are going to lose health insurance coverage, that insurance is going to be less generous, and providers are going to get paid less.'
It will hit some parts of the state harder than others. In the Central Valley counties of Tulare and Fresno, 54% to 64% of residents are on Medi-Cal. In San Francisco, 29% of residents are on Medi-Cal, according to UC Berkeley Labor Center. More than half the children in California from birth to age 5 are eligible for Medi-Cal, according to First 5 Center for Children's Policy.
Overall, California is slated to see a 19% cut in federal funding for Medicaid, or roughly $164 billion over the next decade, according to an analysis by KFF, the nonprofit health care research and polling organization.
While the state may be able to backfill some of those losses by pulling money away from other parts of the state budget, it will be hard to make up for all of it.
'It's going to be extremely difficult if not impossible for California to make up tens of billions of dollars in reduced federal revenue on an annual basis going forward,' Stremikis said.
The main way the bill will cut federal Medicaid spending is by imposing new work requirements for Medicaid beneficiaries. Even though research shows that the vast majority of people who receive the benefits already work full time, the additional paperwork and more frequent administrative hurdles are expected to cause about 5 million people to lose coverage, 'not necessarily because they're not working, but because they'd fail to navigate reporting procedures,' said Alice Burns, associate director of KFF's Program on Medicaid and the Uninsured.
People who get benefits through Medicare, the federal health insurance program for seniors and people with disabilities, will also likely be harmed, policy analysts said.
This is because many low-income seniors get both Medicare and Medicaid, known as 'dual eligible' individuals. Many rely on Medicaid to cover the cost of long-term nursing home care, because that is not covered by Medicare.
The bill does away with two rules that help these low-income seniors enroll in Medicare Savings Programs and streamline the application and renewal process for Medicaid. As a result, there will likely be a dropoff in renewals and enrollment.
There are other ways California may be uniquely impacted. California is one of a handful of states that expanded Medicaid under the Affordable Care Act, commonly called Obamacare.
States that expanded Medicaid can tax health care providers up to 6% of providers' revenue to help pay for the state's share of Medicaid spending. Under the new bill, that tax will be limited to 3.5%, thus reducing a key state funding source.
The bill also cuts food assistance to the neediest Americans. Forty million people in the U.S. — about 4.4 million of them in California — utilize the Supplement Nutrition Assistance Program, from which $230 billion will be cut over the next decade. Those cuts, plus changes to how the program is administered at the state level and increased work requirements, are expected to lead to 3 million Americans no longer being able to access the food assistance program. Most households (nearly 4 in 5, according to the USDA) that use SNAP benefits include a disabled person, an elderly person or a child.
'Today will go down as one of the most tragic acts of government, as this vote does more than cut funding to Medicaid — it will directly result in the loss of health care for millions and will jeopardize the health and safety of people across the country,' said Dr. Shannon Udovic-Constant, president of the California Medical Association, which represents more than 50,000 doctors in the state. 'Today's vote will steal that care away from millions of our most vulnerable patients.'
