California will borrow $3.44 billion this month to keep its Medicaid program afloat as costs for the state’s healthcare expansion, which includes coverage for illegal immigrants, continue to surge.
The emergency loan, requested by Democratic Gov. Gavin Newsom’s administration in a Wednesday letter to lawmakers, is the maximum amount the state can borrow and will only cover Medi-Cal costs through the end of March, according to Politico. Republicans, including Senate Minority Leader Brian Jones, have seized on the cost overruns.
“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 on X. “The loan is being taken from tax dollars for healthcare providers. This program is out of control.”
Medi-Cal’s financial troubles have been exacerbated by the state’s decision to extend coverage to illegal immigrants, with costs spiraling far beyond initial estimates. When California first expanded Medi-Cal eligibility, officials projected it would cost roughly $3 billion per year. That figure has now ballooned to $8.4 billion for 2024-25 in the governor’s budget proposal — nearly triple the original estimate — placing further strain on the state’s budget.
Defenders of the expansion, including Newsom and Assembly Speaker Robert Rivas, argue that cutting coverage for illegal immigrants is not an option.
“There are tough choices ahead, and Assembly Democrats will closely examine any proposal from the Governor,” Rivas said in a statement to Politico. “But let’s be clear: We will not roll over and leave our immigrants behind.”
Meanwhile, the financial pressure is mounting as California anticipates total Medi-Cal spending will reach $42 billion in 2025-26. State officials blame rising prescription drug prices and a growing elderly population for the increase. There are more than 225,000 more seniors enrolled in Medi-Cal than before the pandemic, a 40% increase, according to the Legislative Analyst’s Office. Seniors make up only 10% of enrollees but cost nearly twice as much per person than the average recipient.
Newsom’s administration continues to downplay concerns over the growing price tag, arguing that rising Medicaid costs are a national trend.
“Rising Medicaid costs are a national challenge, affecting both red and blue states alike. This is not unique to California,” Newsom spokesperson Izzy Gardon wrote in a statement the Daily Caller News Foundation.
California’s financial woes could force Democratic lawmakers to make “tough choices,” as Rivas said, about the state’s generous benefits for illegal immigrants, potentially forcing them to consider enrollment caps and benefit reductions.
The offices of Rivas and Jones did not respond to the DCNF’s requests for comment.
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