California’s Medicaid program has borrowed $3.4 billion from the state’s normal fund — and can probably want much more — to cowl ballooning well being bills for 15 million residents with low incomes and disabilities.
The state Division of Finance disclosed the mortgage to lawmakers in a letter late Wednesday, noting funds had been wanted to make crucial funds to well being care suppliers in Medi-Cal, the state’s model of Medicaid. In latest months, Gov. Gavin Newsom’s administration has warned of skyrocketing well being care prices, together with increased prescription drug prices and increased enrollment by newly eligible seniors and immigrants without legal status.
Finance spokesperson H.D. Palmer stated the mortgage will cowl Medi-Cal obligations via the top of the month. He declined to specify the whole of this system’s potential shortfall. Nevertheless, a doc circulated by state Senate leaders warns that extra funding could also be wanted to cowl bills via June 30, the top of the fiscal 12 months.
The fee overrun provides a brand new layer of problem for Democrats who management the legislature and are already grappling with congressional budget plans that might slash Medicaid funding, which accounts for 60% of Medi-Cal’s $174.6 billion funds. President Donald Trump and Republican lawmakers have additionally criticized California Democrats for masking residents no matter their immigration standing.
Newsom spokesperson Izzy Gardon downplayed the mortgage. “Rising Medicaid prices are a nationwide problem, affecting each pink and blue states alike,” Gardon stated. “This isn’t distinctive to California.”
Well being officers final 12 months stated the state would spend roughly $6.4 billion within the 2024-25 fiscal 12 months to cowl immigrants with out authorized standing, which the Democratic governor has hailed as a key step towards his purpose of offering “common protection” for Californians. In latest testimony, nonetheless, finance employees instructed legislators that advantages to all income-eligible Californians are projected to value roughly $9.5 billion, of which $8.4 billion will come from the final fund.
Republicans referred to as for contemporary scrutiny of the state’s choice to cowl residents with out authorized standing. “This program is uncontrolled,” Senate Minority Chief Brian Jones posted on the social platform X. “We’re demanding a full listening to and a full value evaluation so the general public is aware of precisely the place their tax {dollars} are going.”
Affected person advocates objected to Republicans singling out the enlargement for immigrants.
“Well being care prices are influenced by many elements together with pharmaceuticals, hospital prices, and extra,” stated Rachel Linn Gish, a spokesperson for Well being Entry California, a client well being advocacy group.
In keeping with a fall update from the Division of Well being Care Providers, Medi-Cal spending grew resulting from higher-than-expected enrollment of seniors, fewer Californians shedding Medi-Cal protection than anticipated, and elevated pharmaceutical spending, in addition to increasing protection of immigrants. As an illustration, the state is spending $1.1 billion extra on residents who had been anticipated to lose protection after the covid-19 pandemic, and an extra $2.7 billion greater than anticipated to cowl unauthorized residents.
Meeting Speaker Robert Rivas stated he’s dedicated to sustaining the state’s expansions of Medi-Cal providers.
“There are robust selections forward, and Meeting Democrats will carefully study any proposal from the Governor,” he stated in an announcement. “However let’s be clear: We won’t roll over and depart our immigrants behind.”
Senate leaders stated they had been wanting carefully on the state’s estimated prices and caseloads and would advocate value containment measures as a part of their funds proposal within the coming weeks.
Scott Graves, funds director on the California Funds & Coverage Middle, stated it’s commonplace for the state authorities to make changes when spending doesn’t line up with projections.
Final 12 months, as an illustration, the state borrowed $1.75 billion towards its normal fund when revenues from a state supplier tax had been delayed. Previous to that, Division of Finance officers stated, California took out the same mortgage in 2018 for $830 million.
“The truth is all of those are simply estimates, particularly with a really difficult program like Medi-Cal,” Graves stated, noting that $3.4 billion is roughly 2% of the state’s general Medi-Cal funds. “It looks like we’re on the verge of constructing a mountain out of a molehill.”
Mike Genest, who served as finance director below Republican Gov. Arnold Schwarzenegger, agreed that changes could be routine. However he stated the magnitude of Medi-Cal’s present overrun was not.
“For this to occur in the course of the 12 months — we’re solely in March — I imply, that’s fairly astounding,” Genest stated.
California Democrats proceed to characterize Trump and congressional Republicans as the largest risk, pointing to the Home funds plan to shrink Medicaid spending by as a lot as $880 billion. They are saying cuts of that magnitude would depart thousands and thousands of residents uninsured, lowering entry to preventive care and driving up costlier emergency room providers.
They cautioned that some short-term value will increase may very well be pushed by newly eligible residents searching for long-delayed care, which might degree off in coming years. Nevertheless, some acknowledge troublesome selections forward.
“We positively have to make sure that those that are our most susceptible — our youngsters, these with power circumstances — proceed to have some kind of protection,” stated Democratic Sen. Akilah Weber Pierson, a San Diego County doctor. “The query is, what’s going to that seem like? To be fairly trustworthy with you, at this level, I don’t know.”
This text was produced by KFF Health News, which publishes California Healthline, an editorially unbiased service of the California Health Care Foundation.
