California Has a Lot to Lose If Trump Slashes Medicaid

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Perhaps no state has more to lose than California in the federal budget proposal House Republicans passed this week. That spending plan sets up significant cuts to Medicaid, the health insurance program for low-income people. California has taken just about every route and opportunity to expand the Medicaid program, known as Medi-Cal. Today, 14.9 million Californians are enrolled in it, and federal funding cuts would almost certainly roll back services and coverage for some of them.

Looking for a way to offset the cost of extending President Donald Trump’s 2017 tax cuts, the House advanced a bill on February 25 that directs the Energy and Commerce Committee to find $880 billion in spending cuts over the next 10 years. Those cuts, budget and health policy experts say, would largely have to come from Medicaid, also known as Medi-Cal in California.

The Senate voted for its own, narrower budget bill last week. Next, both chambers have to work out their differences and agree on one budget.

At this point, it’s not clear which Medicaid services would be cut or how many people exactly would lose coverage because lawmakers can hit the spending reductions in a number of ways.

Still, enrollees, health advocates and providers in California and across the country are now grappling with what the cuts would mean for them and the people they care for. In press conferences and online meetings, they’ve called the proposed cuts a “five-alarm fire” and  Republicans’ vote “the ultimate betrayal” of their constituents.

Their outcries echo the first Trump administration, when in 2017 House Republicans voted to repeal the Affordable Care Act. The law ultimately survived, but that health care vote helped stir up the “blue wave” that flipped Republican House seats in the 2018 election.

Cuts Would Help Pay for ‘Tax Breaks to the Ultra-Wealthy’

“These cuts would rip care away from children, seniors, disabled Californians, and more while raising costs for everyone, all to give tax breaks to the ultra-wealthy,” Amanda McAllister-Wallner, interim executive director of Health Access California, a health consumer advocacy group, said in a statement following the House vote. “This is just the beginning — we will be pushing our California Congress members at every turn to put the health of their constituents first.”

Medicaid is the backbone of California’s social safety net. It covers half of all children and 40% of all births. It also covers long-term care services for seniors and disabled people.

Since 2014, the state has expanded the program big time — first to more adults allowed in the Medicaid expansion under the Affordable Care Act, and gradually to low-income immigrants, regardless of their legal status. Cuts to the scale that Republicans in Congress are proposing, advocates and providers say, would be harmful across the board.

Hospitals, doctors and county officials are also speaking out against the proposed cuts because Medicaid is a key payer, especially for those located in rural areas or communities with high poverty rates. If these facilities can’t keep their doors open, entire communities, not just people enrolled in Medicaid, could lose access.

House Speaker Mike Johnson, a Louisiana Republican, has said savings could be accomplished through eliminating Medicaid fraud and waste — although that would only get Republicans so far. Johnson has cited about $50 billion in alleged fraud, a small slice of the GOP’s goal total, the Washington Post reports.

Reductions Would Leave a Big Budget Hole for State

Medicaid accounts for a significant portion of states’ budgets. The program is jointly funded by the federal government and states, meaning federal cuts would leave major budget gaps that would force reductions in services and enrollment, and also could trigger cuts to other state programs. California’s budget includes $161 billion for Medi-Cal, of which more than half is paid for with federal funds.

Based on proposals that Republicans in Congress are considering, California could lose $10 billion to $20 billion a year, the California Budget Policy Center estimates.

A big question mark is how exactly Congress will meet its savings goal — Republican lawmakers have floated a number of proposals, but it’s unclear yet what could stick.

They’ve proposed imposing work requirements, for example. The idea behind that is enrollment would drop as people who don’t meet the requirements get kicked off the program. But the spending reductions from such a policy would not get Republicans all the way to their target, said Edwin Park, a research professor at the Georgetown University McCourt School of Public Policy.

A second proposal would require restructuring the program so that instead of the federal government paying states a fixed percentage of Medicaid costs, it could set a spending cap per enrollee.

Under the Affordable Care Act, California opened up its Medi-Cal roll to low-income adults who had previously not been covered. The federal government pays California 90% of the cost for this expansion group — that’s up from the state’s 50% regular match rate. Republicans may also choose to eliminate the increased match rate for adults covered under this expansion.

“One reason that these types of cuts are popular among federal policy makers is because…it really allows the blame to be placed on governors and state legislatures,” Park said. “The federal government is cutting federal funding, making it harder for states to finance their share of the cost of Medicaid, but it’s not actually saying ‘You have to cut eligibility in this way or cut provider rates in this way.’”

“It’s really, ‘States, you figure it out, you have to balance your budget,’’” Park added. “And you know, there’s only three choices: higher taxes, cutting the rest of the budget, which is primarily education in California, and then, most likely, really dramatically cutting Medi-Cal in the state.”

2.2 Million Seniors and People with Disabilities

President Trump and Republicans have promised to not touch seniors’ Medicare, but millions of seniors also rely on Medicaid. In California, about 2.2 million seniors and people with disabilities are enrolled in Medi-Cal, according to data from the state’s Department of Health Care Services.

Traditional Medicare does not cover services including dental, vision and hearing benefits. Seniors typically have to buy into a Medicare Advantage plan to get that covered. Low-income seniors in California can access those services with no or at a low-cost through Medi-Cal.

Nursing home stays and in-home care are also largely covered by Medicaid. Nationally, about 6 in 10 nursing home residents are covered by Medicaid, according to an analysis by KFF, a health polling and research organization.

“Medicare has huge gaps in coverage and Medicare is really expensive,” said Amber Christ, managing director of health advocacy at Justice in Aging, which advocates on behalf of older adults. “It is Medicaid, not Medicare, that is the primary payer of long-term care in this country.”

Because of their high needs, seniors and people with disabilities are the most costly population. In California, they make up about 15% of the people enrolled in Medi-Cal, but account for roughly half of all the program’s spending.

“So if the state wants to go where the money is, that’s seniors and people with disabilities. That’s long-term care, nursing home care, community-based services,” said Park. To protect the coverage of this population, he said, the state would have to consider potentially making larger cuts for other groups of people.

Roll Back Services for California Kids

More than 5 million kids in California are insured through Medi-Cal and the accompanying Children’s Health Insurance Program. It pays for their preventive care, such as immunizations and screenings, but it also covers support services, such as counseling and therapy. For about 160,000 children in the foster care system, it also pays for an array of social services.

Getting kids insured has long been a priority for California. When the state began expanding Medi-Cal to undocumented people in 2016, children were first in line.

Perhaps less known is that Medi-Cal is also a big player in services provided at schools. It helps fund services and equipment for students with disabilities, such as hearing aids and specialty transportation. It reimburses school districts for certain providers, including psychologists and social workers, for example. Across the state, some districts also provide physical and mental health care to children and their family through school-based health centers that also draw down on Medi-Cal funding.

“The rates of depression and anxiety among youth are rising at alarming rates, and for many, Medi-Cal services are their only option for care,” said Michele Cantwell-Copher, the Fresno County superintendent of schools, on a media call with advocates and parents on Thursday. “Ensuring that children have access to the mental health support they need is critical to their well-being and their success in schools.”

Medi-Cal is a keystone program for many kids but also for their birthing parent — it pays for about 40% of the state’s births. California offers coverage for pregnant people at slightly higher income levels than the regular cut-off, allowing more to qualify. It provides coverage during their pregnancy and 12 months postpartum, paying for standard obstetric visits, prescriptions, laboratory services, doula services and hospital care.

“If we want kids to have a healthy start, that means making sure that their birthing parent has access to health care,” said Mike Odeh, health policy director at Children Now. “Those early years really are important for both babies and parents. There are a lot of services in that time period that really are critical, and any reduction in those services could have very bad effects.”

This article, first published by CalMatters on February 28, 2025, was supported by the California Health Care Foundation.

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