As 2026 begins, California faces a transformed health care environment defined by major federal cuts, skyrocketing costs, and rapid technological change. It is a reality that Sandra R. Hernández, president and CEO of the California Health Care Foundation, wrestles with daily.
I recently sat down with Dr. Hernández to understand how she is making sense of this moment. Our conversation covered all of the big issues, from the future of Medi-Cal and the uninsured to artificial intelligence (AI) and the affordability crisis. Across all of them, she lays out a strategy that marries lessons from the past with modern innovation to address California’s most pressing health care challenges.
Q: The past year has been enormously consequential for California’s Medi-Cal program. By imposing severe funding cuts in the federal Medicaid program, Congress and the administration have engineered a potential nightmare scenario for California. What are you thinking about the impact of these changes on our state?
A: H.R. 1 completely disrupted the relationship between the state of California and the federal government, turning it from a partnership into something punitive. The fiscal repercussions will challenge the ways we provide health care to vast numbers of Californians in every eligibility category.
These new policies also raise fundamental questions about the role of government in health care. Are we moving toward a system where care is guaranteed only for those who can pay, while everyone else is left to fend for themselves?
Regardless of federal policy, California will take care of its own. That’s who we are.
“H.R. 1 completely disrupted the relationship between the state of California and the federal government, turning it from a partnership into something punitive. … Regardless of federal policy, California will take care of its own. That’s who we are.”
Q: After years of progress toward universal coverage, we are all bracing now for the reality that the number of uninsured Californians will rise. What can California do in response?
A: What we will do instead is go back to the future. We’ll revisit what we did for the uninsured in the days before the Affordable Care Act, when the focus was more on access to care as opposed to formal coverage. With the knowledge and tools we’ve gained since that era, we can do things even better. We have telehealth and AI to help stretch our limited resources further and reach people differently. We can apply the lessons from COVID, when we leaned on community health workers and other prevention best practices to deliver care in a more upstream way.
Q: Immigrants are feeling the impact of these changes more than anyone else. I know that weighs heavily on you, as it does all of us.
A: Health care decisions are going to be much more complicated in an environment that is aggressively targeting and demeaning immigrants. Families’ worries go well beyond such things as meeting work requirements to stay enrolled in Medi-Cal. They are most concerned about how to keep their family together and what happens if a husband, a son, or a primary caretaker in the household gets deported. Those assessments will be unique from family to family.
My hope is that this country realizes that to be globally competitive, we need immigrants. We have an obsolete immigration system, and the current administration has exacerbated this crisis by cruelly dismantling any meaningful way for legal immigration to occur.
Q: Let’s return to Medi-Cal. CHCF is a co-funder of the recently announced Future of Medi-Cal Commission. Why does Medi-Cal need a commission and how do you see its role?
A: Everyone agrees that if you were to build a health care program from scratch to serve low-income Californians, it wouldn’t look anything like today’s Medi-Cal. Our surveys consistently show that members want a simple, dignified, easy-to-use system. Medi-Cal today is not that — it’s a complicated, convoluted patchwork. And providers say the same thing.
That complexity is also expensive to maintain. And in the wake of major federal cuts, California simply cannot afford to use limited, public health care dollars inefficiently.
Medi-Cal didn’t just appear out of the ether. It was made by people like us. That means that collectively we can remake it into something that fundamentally works better for patients, providers, and taxpayers. I believe this commission can jump-start that process.
Q: What does success for the Future of Medi-Cal Commission look like?
A: A year from now, I hope the commission will recommend a handful of high-impact reforms that improve care by reducing complexity. Ideally, these will be recommendations with elements that a new governor and new federal administration could act on and jointly adopt over time. I also expect the commission to factor in what’s possible with the help of existing and new technologies.
Q: One problem that is bigger than Medi-Cal is the fact that the cost of health care continues to grow and grow. I know this is an issue that is also very much on your mind. Is health care affordability a problem California can solve?
A: Rising health care costs have been unsustainable for decades. The federal health care cuts will make that problem even worse.
In California, both the legislature and the governor have affirmed that it’s time to restrain — not simply reduce — the rate by which health care costs are growing. They granted the Office of Health Care Affordability the authority to set targets for the total cost of care, and that agency has now said that health care costs cannot grow faster than median income. California families and employers have to work within a budget. The health care system should too.
The good news is there are real opportunities to reduce costs while improving care. Today 25% of every health care dollar is wasted — on administrative complexity, incompatible data systems, and treating preventable illnesses we could have avoided by investing in primary care and basic social services.
These are all issues California has the power to address right now. And there’s never been a stronger mandate from consumers and voters. They want their leaders to act on affordability with great urgency.
Q: AI has been billed as a game changer for health care. How real is that?
A: AI holds incredible promise for the health care system. The big question is who will benefit most from the innovation. Will it just be wealthier commercial players and people who have the money to pay for elite concierge care? Or will community health centers, public hospitals, and public programs like Medi-Cal be able to use this technology to better serve their patients? AI holds tremendous potential to help eliminate disparities. Without leadership to drive how and where it gets deployed, it could also exacerbate them.
We are already seeing glimmers of hope. We have safety net partners who are using AI to solve language access barriers, enable providers to spend more time focusing on their patients, and help consumers navigate the system more easily. The challenges ahead are scaling these solutions and bringing consumers along so that trust is built at each step of the way.
“AI holds tremendous potential to help eliminate disparities. Without leadership to drive how and where it gets deployed, it could also exacerbate them.”
Q: I’m glad you brought up the issue of trust. The foundation will celebrate its 30th anniversary this year. Trust is a theme that constantly comes up in nearly every area of the foundation’s work. How are you thinking about the issue of trust?
A: Health care runs on trust. More and more, we’re facing a shortage. It’s not hard to understand why.
Trustworthy relationships require intentionality, listening, humility, time, and attention. Those things are lacking in virtually every health care setting. If you have a regular provider who actually knows you, your family, your circumstances, where you live, how you live, and how you make a living, it makes conversations easier — whether the subject is vaccinating your child for hepatitis or how to plan for the end of life.
Q: Where do you find hope these days?
A: You have to be able to see where the assets are. And I’m not talking financial assets, I’m talking people assets. In addition to all this disruption and all this chaos, I look around and see a lot of young, bright talent. And so that makes me really hopeful generationally.
Philanthropy has spent a lot of time trying to build a cadre of young leaders who have a value set around public good and about public service. When I think about more of the future being in their hands, it makes me profoundly optimistic.
Q: Looking ahead to the gubernatorial transition in 2027, what is your advice for the next leader of the state?
A: California possesses state-of-the-art health care capabilities, but most of the investment in innovation benefits the few and ends up driving up costs and limiting access for everyone else. My advice to the next governor is to flip that dynamic and use California’s unparalleled innovative capabilities to make the health care system work better for everybody.
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