Newsom Requests Nearly $3 Billion to Save State Health Program Swamped by Rising Costs

California Governor Gavin Newsom is reaching deep into the state's coffers yet again, requesting an additional $2.8 billion loan to stabilize Medi-Cal, California's Medicaid program, which has been overwhelmed by skyrocketing costs. The financial strain is largely attributed to expanded coverage for illegal immigrants and other growing expenses.

This latest plea comes on the heels of a $3.4 billion loan request just last week to cover Medi-Cal's outstanding costs. A spokesperson for Newsom stated that the governor, alongside legislative leaders, will continue to evaluate strategies to manage the program's spending while ensuring essential health and social services remain intact.

Newsom’s office, however, was quick to push back on claims that illegal immigrant enrollment was the sole driver of these ballooning expenses. According to the administration, broader enrollment across all demographics and rising pharmaceutical costs have contributed significantly to the financial strain. They pointed out that other states, such as Pennsylvania and Indiana, are also grappling with Medicaid budget shortfalls.

Republican lawmakers, predictably, aren't buying it. California Senate Republican Minority Leader Brian Jones blasted the state's fiscal management in a scathing post, calling the $6.2 billion deficit "staggering" and accusing Newsom’s administration of reckless financial mismanagement. He even took a swipe at former Governor Jerry Brown, noting that Brown had refused to expand Medi-Cal to illegal immigrants due to the financial risks.

California made history last year by extending Medi-Cal to cover low-income adults aged 26 to 49, regardless of immigration status, becoming the first state to do so. This expansion has led to roughly 1.6 million illegal immigrants enrolling in the program, alongside 15 million other California residents. The program’s costs, initially estimated at $6 billion for the 2024-2025 fiscal year, have since soared far beyond projections.

During a budget hearing, Michelle Bass, director of the Department of Health Care Services, admitted that the program’s projections were based on limited data, calling the expansion "unprecedented." Newsom's latest budget proposal now forecasts $8.4 billion in spending to cover illegal immigrants in Medi-Cal for the 2024-2025 fiscal year, followed by $7.4 billion the year after.

Meanwhile, House Republicans are proposing cuts of $880 billion to Medicaid and related programs over the next decade, citing fiscal sustainability. Whether Newsom’s administration can pull itself out of this financial quagmire remains to be seen, but one thing’s clear: California’s bold experiment in healthcare expansion is proving to be more expensive than anyone anticipated.