Hoping for ‘a miracle’ to cure fiscal woes, lawmakers nix some Medi-Cal cuts for immigrants

As California lawmakers grapple with a multibillion-dollar deficit and looming federal cuts that could undo the state’s health policies for immigrants, they’re banking on a tenuous budget strategy: hope.

Legislators today rejected some of Gov. Gavin Newsom’s cost-saving proposals to limit Medi-Cal for immigrants without legal status, and expanded others. And in the long run, they hope that some good financial news will help them handle the rising costs of the state health insurance and preserve future access for immigrants.

Newsom in May proposed freezing Medi-Cal enrollment for immigrants 19 and older without permanent legal status, canceling dental care and implementing a $100 monthly copay for immigrants.

In contrast, the legislators want to expand that Medi-Cal freeze to block enrollment by more people — all non-citizens with “unsatisfactory immigration status,” which includes some legal permanent residents. But they also want some provisions designed to help immigrants: Stipulating that people already enrolled in Medi-Cal will not “age out” and awarding a six-month grace period to re-enroll if they fall off of the program because their income rises temporarily or other disqualifications.

The lawmakers also want to lower the $100 monthly premium Newsom proposed for immigrants to $30 and limit it to adults 19 through 59, and delay elimination of immigrant dental benefits for two years, until 2027. They also rejected canceling home care for immigrants.

Senate Pro Tem Mike McGuire, a Democrat from Santa Rosa, said earlier this week that the Legislature’s budget reverses the most “draconian” of Newsom’s cuts.

The Legislature’s budget cuts $3.5 billion from overall state spending and borrows or delays $8.8 billion of spending during the 2025-26 budget year. During the next budget year, cuts will grow to $12 billion.

Today’s Assembly vote was 57-19 in favor of the budget plan, including one Democrat, Joaquin Arambula of Fresno, voting against it and three members of the Assembly not casting a vote. The Senate vote was 26 to 8, with one Democrat, María Elena Durazo, opposing it and six senators not casting a vote.

The Legislature and Newsom have two weeks, until June 27, to negotiate a final budget deal. The governor’s office didn't immediately respond to questions about the legislators' Medi-Cal budget.

Lawmakers from both parties, as well as health advocates, have heavily criticized both budget proposals — though for different reasons.

Health equity advocates say the budget reneges on promises lawmakers and Newsom made over the past several years to provide healthcare for all Californians regardless of immigration status.

Kiran Savage-Sangwan, executive director of the group California Pan-Ethnic Health Network, said the Legislature’s budget is “deeply disappointing."

“While the Legislature’s proposal is not as destructive as the devastating reductions proposed in the Governor’s May Revision, it still buys into the flawed premise that immigrant communities are less worthy of care that keeps people healthy,” Savage-Sangwan said in a statement.

Republican lawmakers, who are largely boxed out of budget negotiations, say continuing coverage for non-citizens is fiscally irresponsible because it could come at the cost of services for citizens. Assemblymember James Gallagher, who is the leader of Assembly Republicans, said Medi-Cal is “falling apart,” with inadequate money and providers to serve patients.

Medi-Cal, the state’s health insurance for low-income Californians, covers 15 million people, including 1.6 million immigrants. It has become a flashpoint in national and state debates over rising healthcare costs. California last year spent $8.5 billion on immigrant healthcare alone, and projections indicate that it will cost more than $12 billion in the upcoming year.

Lawmakers earlier this year appropriated additional funds to Medi-Cal to stave off a $6.2 billion shortfall. Growing senior enrollment and pharmaceutical costs accounted for most of the shortfall, but about $2.7 billion came from unanticipated enrollment growth of immigrants.

While the Legislature’s proposal softens some of Newsom’s language to freeze enrollment and implement monthly premiums, it doesn’t eliminate the changes nor does it identify new revenue sources that could sustain its rapidly growing expenses. Instead, Democratic leaders have laid most of the blame for California’s deficit on President Donald Trump’s tariffs, and said they’re banking on a future economic upturn to prevent cuts.

“We have pushed things out for two years, because hopefully there will be a miracle, and we find ourselves at a better point for revenue,” said state Sen. Akilah Weber Pierson, chair of the health budget subcommittee and a Democrat from La Mesa, during a recent news conference.

Sen. Scott Wiener, budget chair and Democrat from San Francisco, pushed back on the idea of a miracle alleviating the state’s financial woes but said the state’s revenues frequently change unexpectedly. In 2020 and 2021, California’s budget swung wildly from a brief recession caused by the COVID-19 pandemic to a historic surplus because of the state’s reliance on capital gains taxes.

Other lawmakers say tax returns from Los Angeles County, which have been delayed until October because of the January wildfires, may also provide some relief.

“You never know. In a year, two years, three years, our revenue could be very different from what we’re projecting,” Wiener said.

Unhappy Democrats

Some Democrats are among the most vocal critics of the budget.

Many members of the Latino Caucus, which pushed for the expansion of Medi-Cal for more than a decade, say the enrollment freeze and the monthly premium create a “two-tiered” healthcare system that makes immigrants second-class residents.

State Sen. Caroline Menjivar, a Democrat from Van Nuys, said in a statement earlier this week that McGuire removed her from the budget health subcommittee because of her opposition to cuts for immigrants. McGuire’s office did not respond to questions about why Menjivar was removed.

On the floor today, Menjivar, who abstained from voting on the budget, said her vote wasn’t needed for the budget to pass, but her constituents needed to know she fought for them.

“Your community is my community, and we’re suffering right now and hurting. I need to be able to stand firm and tall for my constituents and say this is why I dissented,” Menjivar said.

Senate Majority Leader and Latino Caucus Chair Lena Gonzalez, from Long Beach, urged Newsom and other lawmakers to protect “healthcare for all.”

Other Democrats defended their choices.

“We are keeping the promises that we made,” Weber Pierson said on the Senate floor. “No one will be disenrolled from Medi-Cal. That means no one currently covered will automatically lose their healthcare coverage.”

Unhappy Republicans

In a rare showing of bipartisanship, a handful of Republicans opposed another Newsom proposal, which would reduce in-home supportive services that many seniors and people with disabilities rely on. But they criticize the choice to continue offering healthcare for immigrants, especially with a large deficit.

Newsom is “trying to prop up this faulty system, and a big part of it was expanding it to illegal immigrants. It's not fiscally feasible. It’s ballooning the budget out of control,” Gallagher said.

State Sen. Roger Niello, a Republican from Roseville and ranking minority member on the budget committee, said the Democrats’ proposal relies on budget gimmicks, such as delayed spending or fund shifts, and fails to address the structural deficit caused by growing Medi-Cal costs.

Niello pointed out that the nonpartisan Legislative Analyst’s Office projects steep deficits for the next three budget years.

“Hoping against hope, that's not a good budget strategy,” Niello said. “What you should do is hope for better, but prepare for the worst, and we're not preparing for the worst. We're not even preparing for the negative, reasonable expectation that we're looking at over the next three or four budget years.”

Unhappy health advocates

In past years, the Medi-Cal expansion to immigrants has been popular, with some Central Valley Republicans supporting it. But recent polls indicate Californians have mixed feelings about providing Medi-Cal to people who are not citizens.

In a new poll commissioned by the California Endowment, 56% of likely voters supported allowing all low-income Californians regardless of immigration status to use Medi-Cal. But a Public Policy Institute of California poll published Thursday shows nearly the opposite, with 58% of adults opposing healthcare for immigrants without legal status. That’s in contrast to 2023 and 2021 polls from the institute showing clear majorities of Californians supported health care for immigrants.

Still, health advocates who have pushed for the expansion said the Legislature is callously sacrificing the healthcare of immigrants.

Amanda McAllister-Wallner, executive director of Health Access California, said lawmakers have not proposed any real solutions to keep health access for immigrants intact. Instead, they accepted Newsom’s framework to scale it back, she said.

That is especially troubling, she said, because deep federal funding cuts likely to be approved before the end of the year will cause California even more financial pain. One cut approved by House Republicans last month in the federal budget bill punishes states that give healthcare to immigrants by reducing their federal reimbursements.

“If they’re not willing to fight now, I’m worried about that,” McAllister-Wallner said.