Open Data Initiative

Medicaid Exposure

California heavily relies on federal Medicaid funding, with federal funds making up more than half of the state's $161 billion Medi-Cal budget[6]. This federal support is critical for California's healthcare system, as Medi-Cal covers 14.9 million Californians, representing nearly 38% of the state's population[1][9].

The House of Representatives recently passed a budget resolution that proposes $880 billion in Medicaid cuts over the next decade[1][8]. This resolution narrowly passed with a 217-215 vote on February 25, 2025, and now advances to the Senate, which previously passed its own narrower budget bill[1][8]. The two chambers will need to reconcile their differences and agree on a final budget.

If these cuts are implemented, California could lose $10-$20 billion or more in annual federal funding[6][10]. Such reductions would create a massive budget hole for the state, forcing difficult decisions about healthcare coverage and services. The California Budget Policy Center estimates that cuts of this magnitude would force the state to make painful spending reductions that would jeopardize Californians' access to healthcare through Medi-Cal and potentially threaten other state services[10].

Potential Impacts of Medicaid Cuts

The proposed cuts could be implemented through various mechanisms:

  1. Per capita caps or block grants: This would provide California with a fixed amount of federal funding regardless of actual costs, meaning federal support would no longer keep pace with increased healthcare expenses[7].

  2. Reduced federal matching rates: Lowering the Federal Medical Assistance Percentage (FMAP) or eliminating the enhanced 90% match for Medicaid expansion would shift more costs to California[7].

  3. Work requirements: Imposing work requirements could reduce enrollment by disqualifying beneficiaries who don't meet these criteria[8].

These changes would likely force California to:

  • Cut programs and services not mandated by federal law, with home and community-based services (HCBS) like In-Home Supportive Services being primary targets[7].
  • Scale back eligibility expansions[7].
  • Reduce provider payment rates, potentially worsening access to care and exacerbating workforce shortages[7][9].
  • Eliminate optional benefits like dental, vision, and hearing coverage[7].

Broader Economic and Healthcare System Impacts

The proposed Medicaid cuts would have ripple effects throughout California's economy and healthcare system:

  • Hospitals, nursing homes, and community health centers that rely on Medicaid reimbursements would face financial strain, with rural facilities particularly vulnerable to closure[8][9].
  • The burden of uncompensated care would increase as more people lose coverage, potentially leading to higher premiums for those with commercial insurance[2].
  • Emergency departments would likely become more crowded as preventive care becomes less accessible[9].

The California Medical Association has warned that these cuts would shift financial burdens to hospitals and physicians, potentially resulting in more hospital closures and making it harder for physicians to care for patients[9].

As the budget reconciliation process continues, the final impact on California's Medicaid funding remains uncertain, but the potential for significant reductions presents a major challenge to the state's healthcare system and budget planning.

Sources [1] California Has a Lot to Lose if Trump Slashes Medicaid. Seniors, Kids Could Face Coverage Cuts https://ww2.kqed.org/news/2025/03/02/california-has-a-lot-to-lose-if-trump-slashes-medicaid-seniors-kids-could-face-coverage-cuts/ [2] Proposed Medicaid cuts would threaten access to health care for all https://thealliance.health/proposed-medicaid-cuts-would-threaten-access-to-health-care-for-all/ [3] Understanding the Governor's 2025-26 State Budget Proposal https://calbudgetcenter.org/resources/understanding-the-governors-2025-26-state-budget-proposal/ [4] Who does Medicaid cover? How Congress' proposed budget cuts could be felt https://www.nbcnews.com/health/health-news/medicaid-cover-congress-proposed-budget-cuts-felt-rcna193897 [5] Medicaid: What to Watch in 2025 - KFF https://www.kff.org/medicaid/issue-brief/medicaid-what-to-watch-in-2025/ [6] California has a lot to lose if Trump slashes Medicaid. Seniors, kids ... https://laist.com/news/health/california-if-trump-slashes-medicaid-seniors-kids-and-more-could-face-coverage-cuts [7] Federal Cuts to Medicaid Will Harm Older Californians on Medi-Cal https://justiceinaging.org/federal-cuts-to-medicaid-will-harm-older-californians-on-medi-cal/ [8] House Passes Budget Resolution Cutting Billions From Medicaid Funding https://www.ajmc.com/view/house-passes-budget-resolution-cutting-billions-from-medicaid-funding [9] CMA urges Congress to protect access to care and oppose ... https://www.cmadocs.org/newsroom/news/view/ArticleId/50836/CMA-urges-Congress-to-protect-access-to-care-and-oppose-Medicaid-cuts-160 [10] California at Risk: Proposed Federal Funding Cuts Jeopardize Key Services https://calbudgetcenter.org/resources/california-at-risk-proposed-federal-funding-cuts-jeopardize-key-services/ [11] The 2025-26 Budget: Medi-Cal Fiscal Outlook https://lao.ca.gov/Publications/Report/4941 [12] California has a lot to lose if Trump slashes Medicaid. Seniors, kids and more could face coverage cuts https://www.capradio.org/articles/2025/02/28/california-has-a-lot-to-lose-if-trump-slashes-medicaid-seniors-kids-and-more-could-face-coverage-cuts/ [13] California braces for potential federal cuts to Medi-Cal program https://www.abc10.com/article/news/local/california-braces-potential-federal-cuts-medi-cal/103-a0c3659b-88d6-4b74-a8ee-4c05794dc7c2 [14] The Republican House Budget Resolution's Potential $880 Billion in Medicaid Cuts by Congressional District https://www.americanprogress.org/article/the-republican-house-budget-resolutions-potential-880-billion-in-medicaid-cuts-by-congressional-district/ [15] The 2025-26 Budget: Health Care Access and Information https://lao.ca.gov/Publications/Report/4979 [16] Eliminating the Medicaid Expansion Federal Match Rate: State-by-State Estimates https://www.kff.org/medicaid/issue-brief/eliminating-the-medicaid-expansion-federal-match-rate-state-by-state-estimates/ [17] Defending Medi-Cal in 2025 - California Health Care Foundation https://www.chcf.org/publication/defending-medi-cal-2025/ [18] California Has a Lot to Lose If Trump Slashes Medicaid https://www.chcf.org/blog/california-has-lot-lose-proposed-cuts-medicaid/ [19] The 2025-26 Budget: MCO Tax and Proposition 35 https://lao.ca.gov/Publications/Report/4992 [20] New Congressional Attempt to Cut Medicaid Through Budget Reconciliation https://www.medicarerights.org/medicare-watch/2025/02/13/new-congressional-attempt-to-cut-medicaid-through-budget-reconciliation [21] Potential Medicaid Cuts: Who Would Be Affected and What ... - KQED https://www.kqed.org/news/12028454/potential-medicaid-cuts-who-would-be-affected-and-what-are-republicans-proposing [22] The Debate Over Federal Medicaid Cuts: Perspectives of Medicaid Enrollees Who Voted for President Trump and Vice President Harris https://www.kff.org/medicaid/report/the-debate-over-federal-medicaid-cuts-perspectives-of-medicaid-enrollees-who-voted-for-president-trump-and-vice-president-harris/ [23] [PDF] 2025-26 Governor's Budget Department of Health Care Services ... https://www.dhcs.ca.gov/Documents/Budget-Highlights/DHCS-FY-2025-26-Governors-Budget-Highlights.pdf [24] Protect Medicaid! Call Congress Now to Say No to Cuts! https://cahealthadvocates.org/protect-medicaid-call-congress-now-to-say-no-to-cuts/ [25] Overview of Potential Medicaid Changes in 2025 Budget ... https://www.gih.org/publication/issue-focus-overview-of-potential-medicaid-changes-in-2025-budget-reconciliation-bill/ [26] ITUP Blog: Governor's Fiscal Year 2025-26 Budget Proposal https://www.itup.org/itup-blog-governors-fiscal-year-2025-26-budget-proposal/ [27] Governor Newsom's Healthcare Budget Proposal for 2025-26 https://sourceonhealthcare.org/governor-newsoms-healthcare-budget-proposal-for-2025-26/ [28] Federal Funds Drive One-Third of California's State Budget https://calbudgetcenter.org/resources/federal-funds-drive-one-third-of-californias-state-budget/