(The Center Square) – California officials told the Assembly Health Committee Tuesday that under the governor’s budget proposal, the state will not be able to make up the loss of federal money cut from Medi-Cal.
Assemblymember Mia Bonta, D-Oakland and the committee chair, asked state health officials during the hearing if the state stands a chance of backfilling the loss of federal funds. Health officials cite the state’s projected budget deficit and the severe federal cuts to Medi-Cal as major financial challenges to funding the state’s version of Medicaid.
“Given the state’s significant fiscal situation, it’s really a matter of resources to provide full-scope coverage to the individuals who may lose coverage as a result of state budget actions or as a result of H.R. 1 changes,” testified Michelle Baass, the director of the California Department of Managed Health Care Services, which oversees Medi-Cal. H.R. 1 is the One Big Beautiful Bill Act.
“As proposed by the governor’s budget, we’re not backfilling the loss of federal funds,” Baass said.
According to data from the California Department of Health Care Services, the number of people enrolled in Medi-Cal dropped between August 2022 and August 2025, from more than 15.2 million people to roughly 14.6 million. While the report doesn’t give a reason for why Medi-Cal had fewer people enrolled in that time frame, Assembly members stressed Tuesday that a decline in Medi-Cal enrollment will continue, with many people who were eligible under previous Medi-Cal enrollment criteria losing eligibility.
Starting on Jan. 1, 2026, many illegal immigrants in California lost the ability to access publicly-funded health care.
The concern over who can access health care through Medi-Cal and who can’t comes after Gov. Gavin Newsom released his proposed budget, anticipating a $2.9 billion shortfall. That’s much smaller than the $18 billion budget shortfall that the Legislative Analyst’s Office predicted in a report released in November, according to previous reporting by The Center Square. Newsom released his proposal early this month.
The federal budget, known as House Resolution 1, or the One Big Beautiful Bill Act, was passed in Congress during the summer of 2025 and included drastic cuts to a wide variety of federally-funded programs, including Medicaid and SNAP benefits, otherwise known as Supplemental Nutrition Assistance Program, or food stamps. According to a report released in November 2025 by the Legislative Analyst’s Office, Medi-Cal provides health care for roughly 15 million low-income people throughout the state and is the largest program in the state’s budget, costing about $200 billion between state and federal funds.
“H.R. 1 cuts federal funding for health care by $1 trillion nationally over the next decade,” Dr. Sandra Hernandez, CEO of the California Health Care Foundation, testified during the hearing on Tuesday. “In California, we estimate this will translate to billions of dollars in annual cuts. This is a hole in the budget we simply don’t fill by state reserves.”
Any money that the federal government is trying to save by cutting the Medicaid budget just passes those costs onto counties, who have to provide medical care to those who need it, according to testimony given during the committee meeting.
“Obviously, hospitals are being squeezed, clinics are being squeezed through these cuts that I agree lay squarely at the feet of the federal administration,” Assemblymember Pilar Schiavo, D-Santa Clara, said. “We always talk about how much something will cost, but we never talk about how much it will save in the long term.”
Notably absent were Republican members of the Assembly Health Committee on Tuesday, including Assemblymember Phillip Chen, R-Brea, the committee vice chair. Democratic Assembly members on the committee noted the Republicans’ absence.
Chen’s communications staff did not respond to emails sent by The Center Square.
