In fiscal year (FY) 2021–22, California’s Medicaid program, Medi-Cal, spent $121.9 billion to provide a wide range of core health benefits to nearly 15 million Californians with low incomes. This issue brief illustrates how Medi-Cal is financed and the factors that impact total spending on health services through the program. This includes:

• Overview of Medicaid financing and the Medi-Cal budget. Medi-Cal, like all Medicaid programs, is financed using federal and state dollars. This section discusses how the federal government pays, through the Federal Medical Assistance Percentage (FMAP), and what California pays for with state dollars.
• Medi-Cal funding sources. In FY 2021–22, Medi-Cal was financed 70% by the federal government, 21% from the state general fund, and 9% using other state and local funds. This section discusses how these percentages have shifted over time and why.
• Medi-Cal benefit spending. In FY 2021–22, $116.4 billion was spent on medical care for Medi-Cal enrollees, $5.0 billion was spent on county administration, and $447.0 million was spent on the fiscal intermediary associated with processing claims. This section explains how spending on medical care can be further broken down into Medi-Cal managed care and the fee-for-service program.
• Factors impacting Medi-Cal benefit spending. Spending on medical care through Medi-Cal depends on several factors, including eligibility expansions or contractions, the addition or removal of specific benefits, and changes in enrollees’ care patterns or utilization. In addition, the prices paid for medical goods and services — either directly to providers in the FFS program or indirectly through the payment rates to managed care plans — impact total benefit spending and the overall Medi-Cal budget.

Looking ahead, authors note that more data on where spending flows within the acute care delivery system, along with detailed information on enrollees’ access to and experience with that care, can help policymakers improve value in Medi-Cal.