California lawmakers are calling for answers after the governor’s office floated a loan to bail out the state’s Medicaid program, bringing renewed scrutiny on the state’s coverage of undocumented immigrants.
The $3.44 billion loan, first floated to lawmakers Wednesday, will cover obligations for the state program, known as Medi-Cal, through March, but it’s raising questions about a bigger budget hole that may need to be filled later on. Lawmakers said on Thursday they were caught off guard by the news and still don’t understand the extent of the shortfall.
It’s especially a concern for the state as Congress eyes dramatic cuts from Medicaid that could eat into California’s funds, and as leading figures in Washington like Elon Musk slam the state’s undocumented coverage.
“Gavin Newsom has now put Medi-Cal on the brink of financial collapse because he decided to gift free health care to illegal immigrants a year ago,” Republican Assemblymember Carl DeMaio said on Thursday. “It’s time for this madness to stop. It’s time for us to protect citizens rather than prioritizing illegal immigrants at their expense.”
The Newsom administration said the rising cost of health care has been a problem across the board and around the country, and it’s neither exclusive to undocumented immigrants nor to California.
“This isn’t new — as the administration already outlined in the Governor’s January budget proposal, additional funding is needed to support Medi-Cal,” Newsom spokesperson Izzy Gardon said in a statement Wednesday night. “Rising Medicaid costs are a national challenge, affecting both red and blue states alike. This is not unique to California.”
The administration has also pointed out that undocumented coverage is not the only factor running up the budget for the state’s insurance program for low-income people: Prescription drug costs are also on the rise, and more seniors — who require more expensive care — are on the program.
But the news Wednesday of the shortfall prompted calls from both Democratic and Republican lawmakers for more information on how big the problem is and where the extra costs are coming from.
“There are all these issues that I’m willing to admit are part of it, but we won’t know, the citizens won’t know, unless we have a [budget] hearing on this,” said Republican state Sen. Roger Niello.
Democratic state Sen. Maria Elena Durazo, who for years has advocated for expanding Medi-Cal to immigrants, said rolling back or ending benefits for undocumented people shouldn’t be on the table. But she also called for more details from the Newsom administration — not just on the role of the undocumented program in driving up costs, but also on the whole system.
“Our goal was to get as many people as possible onto health care, and we’ve accomplished that goal,” Durazo said. “As Californians, we should be very proud that we’ve gotten closer to everyone having access to health care, that that was our explicit goal. We weren’t hiding about that.”
A spokesperson for Newsom declined to comment on lawmakers’ calls for more details.
Dr. Akilah Weber Pierson, chair of the Senate health budget subcommittee, said she also hasn’t gotten all the information she needs to understand the scope of the problem. Every part of the Medi-Cal program will need to be examined, she said, but health care costs are simply too high across the board.
“The loan is the only thing that I’ve heard of. Now, are we going to need more? I do not know. I did not get a clear answer,” Weber Pierson said.
Even the suggestion by Republicans of ending the benefits, though not popular with the vast Democratic majority in the Legislature, was enough to worry immigration advocates.
“Time and time again, immigrants are being scapegoated as the reason why certain programs aren’t working as intended,” said Carlos Alarcon, the health and public benefits policy analyst at the California Immigrant Policy Center. “When we are seeing such a shortfall, immigrant communities are the first ones to be on the chopping block.”
Contingency planning
Though lawmakers said they were surprised by the news of the shortfall, others in the health care world have been preparing for weeks, if not months, for the possibility of budget cuts. And the fact that state budget problems are playing out so publicly could bring even more federal scrutiny.
Doctors, clinics and hospitals have been talking among themselves about potential contingency plans to keep providing care to everyone if Medi-Cal is no longer an option.
California is one of only three states alongside New York and Illinois that provide any kind of coverage to undocumented immigrants outside of the emergency room, but Illinois announced this year that it would be defunding its undocumented insurance program.
Congressional Republicans looking to cut from Medicaid without harming red states could potentially single out California and New York, impacting how much those states are able to pay doctors and hospitals.
“I would consider [undocumented health care coverage] in jeopardy,” said John Baackes, former CEO of the L.A. Care Health Plan — the largest publicly-operated insurance plan in the country. Baackes was also a major player in statewide Medicaid policy when he ran L.A. Care. “If I were Gavin Newsom, I’d be balancing this against that $40 billion [federal] request for the LA fires.”
Before Newsom expanded Medi-Cal to undocumented adult immigrants, Los Angeles County created the Expanded Access to Primary Care program, which reimbursed doctors a set amount per undocumented immigrant to provide the care they needed, including pharmacy benefits and dental care. The program was underfunded but “extremely successful,” covering 28,000 people at one point, according to Jim Mangia, the president and CEO of St. John’s Community Health in Los Angeles.
St. John’s is a community clinic network that serves around 25,000 undocumented immigrants, one of the largest providers in the country. While EAPC was helpful, he said, Newsom’s expansion of Medi-Cal has had a huge impact on the community he serves, making it easier to stay on top of chronic conditions and improving children’s health.
“This was an incredible accomplishment that he led, it’s a key part of his legacy,” Mangia said of Newsom. “It would be a mistake to allow this to sunset because of threats from Washington.”
But Mangia said both he and his patients are worried about the future. His clinic gets 10-15 cancellations per day from people afraid to come in and face the risk of deportation. In response, St. John’s has started a home visit program to provide care with a lower threat of immigration enforcement.
“I don’t think it’s unrealistic to expect attempts by Trump to attack this program,” Mangia said.