Gov. JB Pritzker proposed a $330-million budget cut last month to scale back an expansion of healthcare coverage for undocumented adult immigrants in Illinois, where a state audit found that services for certain age groups exceeded cost estimates by more than 280%.
California soon may face the same financial pressure to reduce coverage.
California became the first state in the nation to offer healthcare to all income-eligible immigrants one year ago, which gave Gov. Gavin Newsom another liberal achievement to tout when lauding the Golden State as a national trailblazer.
But the $9.5-billion price tag of California’s program is already more than $3 billion above the budget estimate from last summer and is expected to grow even higher. In Sacramento, the governor and Democrats in the state Legislature now are under pressure to reduce coverage to bring down costs during a budget crunch.
“We should not bear these costs. Period. But especially in a budget crisis,” said Assemblymember Carl DeMaio (R-San Diego).
California’s expansion of healthcare coverage for all residents, regardless of immigration status, has made the state a ripe target for conservatives as President Trump pushes a nationalist agenda in Washington, which includes his aggressive push for deportations.
Billionaire Elon Musk, a top Trump confidant, has also weighed in, alleging to Fox that healthcare is “a mechanism by which the Democrats attract and retain illegal immigrants by essentially paying them to come here and then turning them into voters.”
“Democrats are pushing hard to maximize payments to illegals, e.g. free luxury hotels in New York and free medical care for illegals in California, as that is their current and future voter base,” Musk said on his social media platform X.
It’s illegal for undocumented immigrants to vote in California, but the Republican attacks on free state-sponsored healthcare has morphed a policy conversation about medical care into a highly politicized talking point about immigrant rights.
An exhausted family ends a hike of nine-plus hours over Mt. Cuchoma on a fire road near Campo Road after crossing the U.S./Mexico border in search of asylum.
(Robert Gauthier / Los Angeles Times)
The potential for cuts to Medicaid, the federal government’s health insurance for low-income residents, could also leave Democrats at the state Capitol forced to decide whether they should maintain coverage for immigrants if services for legal residents must be significantly reduced.
The scale of the funding reduction to Medicaid is still unknown and it’s impossible to project the severity of the cuts for California with any certainty. Republicans in the House have suggested cutting $880 billion across the federal government, a significant portion of which would have to come from Medicaid.
“If you pull $10 billion out of California healthcare annually, that’s a lot of dough and that’s going to have very serious impacts that would ripple across every sector of the healthcare delivery system from hospitals, physicians, home care, nursing homes and to services that millions depend on,” said David Panush, a healthcare policy consultant who worked in the state Capitol for decades, about potential federal cuts.
Healthcare advocacy groups are banding together to campaign against Medicaid cuts in Washington, arguing that seniors and disabled people stand to lose the most if Medi-Cal, the state version of Medicaid, is gutted.
Absent federal cuts, California’s financial footing already was so shaky that Newsom proposed taking $7.1 billion from the state’s rainy day fund, which acts like a savings account to buffer the budget during an economic crisis, to cover the cost of state programs next year. DeMaio has argued the state wouldn’t need to break open its piggy bank if Democrats cut healthcare for undocumented immigrants.
The California Department of Finance said $8.4 billion of the funding to provide healthcare to undocumented immigrants is paid by state taxpayers through the state’s general fund. The remaining $1.1 billion pays for emergency room visits and pregnancy care, which the federal government covers under a federal law that requires hospitals to stabilize and treat uninsured patients in emergency departments.
The governor’s advisors have warned lawmakers the state has a lot to lose if federal funding is slashed by the Trump administration.
Federal funds typically make up about one-third of the state budget. Medi-Cal relies on $107.5 billion in federal funds in the current budget year, nearly two-thirds of all federal dollars received by the state. Roughly 15 million Californians, a third of the state, are on Medi-Cal and more than half of the children in California receive healthcare coverage through the program.
“The possibility of a dramatic decrease in the federal workforce, or a decrease, pause, or termination of funding, would have a detrimental impact on California’s ability to provide services that its residents rely upon, such as Medi-Cal or highway safety,” said Mary Halterman, who works for a unit within the California Department of Finance that tracks federal funding to the state, during a recent budget hearing. “California does not have sufficient resources to backfill the gaps in programs that California residents rely upon that would be created by the withdrawal or reduction of federal funds.”
Despite the current political polarization, support for state-subsidized healthcare for immigrants hasn’t always been divided by party lines in California.
In 1988, a bill authored by former state Senate Minority Leader Ken Maddy (R-Fresno) and signed by Republican Gov. George Deukmejian provided prenatal care for undocumented pregnant women and nursing home care for severely disabled immigrants.
Former Republican Gov. Arnold Schwarzenegger’s failed push for universal healthcare, which started in 2007, included state-subsidized coverage for all children regardless of legal residency status.
Daniel Zingale, a former advisor to Schwarzenegger who worked closely on the proposal, said Democrats didn’t like the plan because it forced Californians to buy health insurance.
“It was controversial,” Zingale said. “I remember at the time there was Republican resistance to covering anyone who was undocumented, including children, which was among the reasons that we drew Republican opposition.”
Gov. Jerry Brown, a Democrat, signed a bill that offered Medi-Cal coverage to all children under age 19 in 2015.
Newsom grew the Medi-Cal coverage pool to include all income-eligible immigrants in California under a multiyear expansion by age categories that began in 2020 and concluded in 2024.
But the program has been plagued by cost overruns since it started.
The cost estimate to provide coverage to all-income eligible undocumented immigrants was $6.4 billion in the 2024-25 state budget approved last summer, which marked an increase from earlier projections.
In February, the Newsom administration told lawmakers at a budget hearing at the state Capitol that the cost of expanding coverage to all immigrants for the current year had ballooned again from $6.4 billion to $9.5 billion. The California Department of Finance attributed the increase to “higher-than-anticipated enrollment, and higher pharmacy costs.”
On Wednesday, the finance department sent a letter informing leaders of the budget and appropriations committees in the Legislature that the state took out a $3.4-billion loan to cover Medi-Cal expenditures through the end of March. Democrats are expected to need additional funding, beyond the loan, to get through the fiscal year that ends in June.
Izzy Gardon, a spokesperson for the governor, said Newsom’s January budget proposal outlined the need for more funding to support Medi-Cal.
“Rising Medicaid costs are a national challenge, affecting both red and blue states alike,” Gardon said. “This is not unique to California.”
Pennsylvania, Colorado and Indiana are among other states that have experienced an increase in the cost of providing state-sponsored healthcare coverage.
The governor’s office attributed the cost increase in California’s program to higher-than-expected enrollment, an aging population and rising healthcare costs across Medi-Cal, not just for the undocumented community.
But that didn’t stop Republicans from criticizing Newsom for overspending.
“Newsom has literally become that degenerate brother-in-law who squanders his money and then comes back asking for a loan,” said Assembly Republican Leader James Gallagher (R-Yuba City) on the social media site X.
In a statement, Senate President Pro Tem Mike McGuire (D-Healdsburg), Majority Leader Lena Gonzalez (D-Long Beach) and Budget Chair Scott Wiener (D-San Francisco) said they will be working with the Assembly and Newsom’s office to “develop commonsense, responsible, and long-term solutions to deliver both a balanced budget in the months to come, and the best possible care for every Californian.”
“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.”
Among the more traditional routes to cut Medi-Cal is by reducing eligibility or rates, establishing enrollment caps, or adding co-pays, though there are other options.
Carlos Alarcon, a health and public policy analyst with the California Immigrant Policy Center, said all of those options eliminate access to healthcare to immigrants that need coverage. Expanding access to care improves the entire public health system, he said, and reduces strain on emergency rooms all over the state.
“The Medi-Cal expansion is something that Gov. Newsom has really been proud of, has really campaigned on over the years, and it would be a shame to see such a triumph of the governor and of the community really be taken away from us, especially given all of the fear, all the grief, that members of our immigrant undocumented community are experiencing with the Trump administration,” Alarcon said.