Medi-Cal needs an additional $2.8 billion in extra funding from the state in order to maintain operations through the end of the fiscal year.
California Gov. Gavin Newsom is asking the Legislature to approve $2.8 billion in funding just days after he told lawmakers that the state took out a $3.4 billion loan to help Medi-Cal make it through the end of this month.
Flashback: Last week, the Newsom administration told state lawmakers that it needs a $3.44 billion loan to fund Medi-Cal through March.
- Part of the Medi-Cal trouble comes from the state covering illegal immigrants, which the state estimated at a $3 billion annual cost last year.
- The actual cost to cover illegal immigrants under Medi-Cal ended up being $8.4 billion in the current budget, with a projected $7.4 billion cost for the 2025-2026 fiscal year.
The big picture: California ultimately needs $6.2 billion more than it budgeted for to fund Medi-Cal, necessitating the $3.4 billion loan and the $2.8 billion funding increase request.
- Nearly 15 million low-income California residents are covered under Medi-Cal.
- Michelle Baass, the director of the Department of Health Care Services, told lawmakers in a hearing this week that California underestimated the number of illegal immigrants who would sign up for the program.
- Baass also attributed the shortfall to increasing pharmacy costs and a larger aging population.
What we’re watching: Newsom’s office expects state lawmakers to vote on the $2.8 billion request next month to keep Medi-Cal funded through June, at which time the 2025-2026 budget will be in the process of being finalized.
- The extra funding would come from tax revenue in the general fund, with California’s tax revenue coming in $4.6 billion over the projections through February.
