As Donald Trump and Elon Musk’s Department of Government Efficiency (DOGE) make sweeping cuts to the federal bureaucracy and congressional Republicans are thought to be sharpening the knives for Medicaid, California will be forced to borrow almost $3.5 billion to cover a budget gap in its own medical care program.
The figure — given in a letter sent by Governor Gavin Newsom’s administration and seen by Politico — represents the total amount the blue state can borrow and would only be sufficient to pay off bills for Medi-Cal, its version of the national health care program, until the end of the month, according to state Department of Finance spokesperson HD Palmer.
The situation is likely to throw increased scrutiny on the Golden State’s policy of providing health insurance to undocumented migrants, which it originally estimated would cost $3 billion but which is proving more expensive than anticipated in practice, one year into its implementation.
The rising cost of drugs and an increased number of senior citizens eligible for the program are two reasons given for the added expense.
Newsom’s current budget proposal estimates the state will spend $8.4 billion on providing Medi-Cal cover to undocumented immigrants in the 2024/25 financial year and then $7.4 billion in 2025/26.
With the prospect of capping enrollments to the policy or limiting the benefits it makes available looming, Assembly Speaker Robert Rivas has said he is proud of what it has achieved so far.
“There are tough choices ahead, and Assembly Democrats will closely examine any proposal from the governor,” Rivas said.
“But let’s be clear: We will not roll over and leave our immigrants behind.”
In a joint statement of their own, California Senate Leader Mike McGuire, Majority Leader Lena Gonzalez and Budget Chair Scott Wiener said they would work with the Assembly and with Newsom on “responsible and long-term solutions” to the problem.
“Here in the Golden State, we remain steadfast in our commitment to ensuring millions of Californians have the healthcare coverage they need to thrive,” they said.
“That access to healthcare is being threatened by skyrocketing healthcare costs across the nation, and even more by the dangerous cuts threatened by President Trump and Congressional Republicans that will impact the lives of tens of millions across this country.”
Medi-Cal care was first extended to the children of undocumented migrants in 2016 and has since been gradually expanded, first to young adults, then to the elderly and then made available to all last year, but has long been unpopular with state Republicans.
Senate Minority Leader Brian Jones and Assemblymember Carl DeMaio in particular have lashed out at the policy’s inflated price tag, with the former taking to X to demand a hearing, accusing Newsom’s administration of being “secretive” about the rising costs.
“Typical of the secretive Newsom Administration, they just quietly dropped a damning notification that they are taking a $3.44 BILLION loan to fund free healthcare for illegal immigrants,” Jones wrote.
“The loan is being taken from tax dollars meant for healthcare providers.”
“Rising Medicaid costs are a national challenge, affecting both red and blue states alike,” said Newsom’s spokesperson Izzy Gardon.
“This is not unique to California.”
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