Key Takeaways
• California’s Medi-Cal health coverage for undocumented adults began in January 2024, covering over 764,000 people.
• Program costs surged to $9.5 billion annually, causing a $6.2 billion Medi-Cal funding gap and emergency legislation.
• Governor Newsom signed Assembly Bill 100, securing coverage through June 2025, but long-term funding and access remain uncertain.
Governor Gavin Newsom Faces Difficult Choices on Health Care Coverage for Immigrants as California’s Costs Soar
Governor Gavin Newsom has long supported making health care coverage available to everyone living in California, no matter their immigration status. This dream came closer to reality in January 2024, when California became the first state to offer free, full health care for all low-income adults, even those without legal immigration status. But now, the rising cost of this program has put the future of these benefits—and the Governor’s promise—at risk.
A Breakthrough for Inclusive Health Care Coverage
California’s journey toward full health care coverage for its immigrant community did not happen overnight. The expansion started back in 2020, beginning with limited coverage for young adults aged 19 to 25. By 2022, older adults aged 50 to 64 were also included. The final group, adults aged 26 to 49 without lawful status, gained access with the launch of the big health care expansion in January 2024.
This expansion made headlines. California became the first state to offer such broad health care access for low-income residents regardless of immigration status. As reported by VisaVerge.com, the original plan was expected to cost $2.7 billion each year, covering around 764,000 people who did not have legal status to live in the United States.
But reality has quickly changed those numbers. Actual yearly costs of the program have increased to $9.5 billion. The price tag jumped sharply from the previous year, when California spent $6.4 billion. Now, the state faces a $6.2 billion funding gap for Medi-Cal, the public insurance program that pays for care for nearly 15 million low-income and disabled residents.
Financial Emergency Hits California’s Health Care Programs
The cost overrun meant that Governor Gavin Newsom and his administration had to act fast to cover urgent bills and keep health providers paid. In March 2025, state officials revealed that California had borrowed $3.4 billion to pay doctors, hospitals, and insurers who care for Medi-Cal patients. Without this loan, there was a real risk that payments to providers would stop, putting care for millions—including hundreds of thousands of immigrants—at risk.
Governor Gavin Newsom then signed emergency legislation called Assembly Bill 100 on April 15, 2025. This law aimed to fill a critical $2.8 billion budget hole in Medi-Cal. It made sure coverage would continue through June 2025 for the roughly 15 million Californians who depend on Medi-Cal, from low-income families and children to undocumented immigrants.
A Political Tightrope
These financial troubles have put Governor Gavin Newsom in a difficult spot. He now faces a choice: cut back on California’s promise of health care for all, which could remove coverage from hundreds of thousands of immigrants, or cut funding from other important programs to keep health coverage afloat.
This issue is not just about dollars and cents. Losing health care coverage could have real consequences for families who depend on Medi-Cal for doctor visits, medicines, and emergency care. California has the most to lose, as it covers more people with its public health care programs than any other state.
The debate has taken center stage in the state’s political arena. Republican lawmakers argue that the health care coverage expansion for immigrants without legal status is to blame for the shortfall. They point to the rising costs as evidence that California cannot afford to keep offering free health care to undocumented people. State Representative Carl DeMaio, a Republican, has even called for a special audit to check how Medi-Cal dollars are spent, saying the state needs to make sure it can truly afford the program.
Federal Policy Adds Another Layer of Tension
California’s struggle comes amid bigger worries about support from the federal government. President Trump’s earlier immigration policies targeted programs that helped undocumented immigrants, and Governor Gavin Newsom has warned that changes in Washington could make matters worse.
Governor Gavin Newsom used the phrase “federal vandalism” to describe his worry that new federal decisions could hurt health care programs in California. State leaders are keeping a close eye on any moves in Congress to cut Medicaid funding, which could cost the state billions of dollars on top of its current struggles.
No one knows exactly what will happen next. But state officials have already called the situation “unsustainable.” They say Australia will need to start cutting costs as early as next year if the state hopes to keep Medi-Cal, and its special coverage for undocumented residents, running.
Cost-Cutting Ideas and the Road Ahead
With huge bills and a shrinking budget, the state has started looking for ways to save money. One big idea is to end some of the safety net rules made during the COVID-19 pandemic that kept people from losing their Medi-Cal benefits. This could mean that some people who don’t meet all the rules for benefits could soon be dropped from the rolls.
According to the Department of Health Care Services, Medi-Cal enrollment dropped from July 2023 to June 2024, and even steeper declines are expected in the 2025-26 year as the state tightens eligibility. While some drop in enrollment is normal after the pandemic ended, these planned cuts could have a bigger effect—especially among immigrant households already on the edge.
California is not alone. Illinois, which also opened health insurance to immigrants without legal status, now says it plans to cut $330 million from its program for immigrants aged 42 to 64. State officials in Illinois say their costs also grew faster than expected.
Governor Gavin Newsom’s administration has worked to shield Medi-Cal from even deeper cuts. The Governor’s budget proposal for 2025-26, released in January 2025, actually increases funding for Medi-Cal. Spending is set to rise from $174.6 billion this year to $188.1 billion next year. At the same time, California will use money from a managed care tax to help lessen the load on its main General Fund, which is expected to shrink by $2.2 billion.
The Path to Universal Health Care Faces Uncertainty
While Governor Gavin Newsom wants to protect health care coverage for all, including immigrants, the numbers are making that pledge harder to keep. Some supporters say it’s a matter of treating everyone fairly and wisely spending money on preventive care, which can save on hospital costs down the road. Others, especially some Republican lawmakers, see the program as too expensive and unsustainable.
The loudest arguments now focus on whether California should continue promising full health care access to immigrants without legal status while facing a $6.2 billion Medicaid shortfall. Those who favor continued coverage often say that denying care creates bigger problems for public health and leads to higher emergency room spending, as people without coverage delay seeing a doctor until emergencies strike.
On the other hand, critics say the state simply cannot pay for everyone under the current tax and budget setup, especially if the federal government cuts funding or the state faces an economic downturn.
For families across the state—especially immigrants without legal status—the fear is real. People worry about losing doctor visits, medicines, and even access to lifesaving care. For hospitals and clinics, the loss of state payments could mean staffing cuts and fewer community resources.
What’s at Stake for Immigrants, Providers, and California’s Future
The verdict is still out about what California will do next. For now, Assembly Bill 100 and recent budget moves protect coverage for millions, but only through June 2025. After that, big decisions still lie ahead.
Key groups affected include:
- Immigrants without legal status: They gained health care coverage under the state’s 2024 expansion, but now face the risk of losing access if cuts go through.
- Low-income Californians: Nearly 15 million people rely on Medi-Cal. Any cuts or policy changes threaten their well-being, including children, disabled people, and elderly residents.
- Health providers: Doctors, clinics, and hospitals need reliable state payments to serve Medi-Cal patients. Disruptions could result in fewer services or even closures in some communities.
- State lawmakers: Facing the tough jobs of closing budget gaps without making cuts to popular and needed programs.
Possible Solutions and Ongoing Debate
There is no easy answer to California’s health care funding crisis. Some ideas floated by policymakers include:
- Finding new sources of money, such as raising taxes or shifting funds from other budget areas.
- Limiting which groups have a right to full coverage, such as by scaling back on undocumented adults.
- Seeking a bigger commitment from the federal government to support large states’ health care programs.
- Increasing audits and oversight to find savings within Medi-Cal.
- Moving away from full coverage and restricting benefits—a move Governor Gavin Newsom and many others do not want to make.
The state is also looking at how other programs manage similar issues. Illinois’s decision to cut hundreds of millions from its immigrant health plan is seen by some as a warning sign. As enrollment rules tighten and budget gaps grow, California may have little room to avoid choices that affect care for the most vulnerable.
Long-Term Effects
The decisions made in the next few months will shape not just the budget, but lives across the state. Should health care be a right, even for people who lack legal immigration status? Or is it too costly for a state budget that is already stretched thin?
Immigrant advocates warn that rolling back coverage will unwind years of progress and leave many without access to basic care—a loss that could make communities sicker and drive up costs in the long run.
Budget hawks, on the other hand, argue that California has to “live within its means,” especially with predictions of less support from Washington. They warn of a slippery slope where each new benefit makes the system harder to sustain.
Next Steps and Where to Find More Information
For now, immigrants without legal status and others who depend on Medi-Cal keep their coverage through June 2025. State leaders and lawmakers will keep meeting, weighing every option in an effort to fix the funding shortfall without taking away health care from those who need it most.
People interested in the latest details on California’s health care policies, including eligibility and upcoming changes to Medi-Cal, can visit the official Medi-Cal website for up-to-date information and help with enrollment.
Whatever happens next, the choices made by Governor Gavin Newsom and other state leaders will have lasting effects on California’s health care system, its budget, and the many families who call this state home. The attention of the nation is squarely on California—watching whether the promise of health care for all can survive the growing financial storm.
Learn Today
Medi-Cal → California’s public health insurance program for low-income and disabled residents, including recent expansions for undocumented immigrants.
Assembly Bill 100 → Emergency legislation signed in April 2025 to address a $2.8 billion Medi-Cal budget shortfall and maintain coverage through June 2025.
Managed Care Tax → A tax on health plans in California that helps provide additional funding for Medi-Cal and ease pressure on the state’s General Fund.
Medicaid → A U.S. federal program providing medical benefits to low-income individuals; funding fluctuations greatly impact California’s Medi-Cal budget.
Undocumented Immigrants → Individuals living in the United States without legal immigration status, newly eligible for full Medi-Cal benefits in California.
This Article in a Nutshell
California made headlines by offering free Medi-Cal coverage to all low-income adults, regardless of immigration status. Soaring costs, however, quickly created a massive funding gap. Emergency legislation ensures coverage through June 2025, but the future of universal health care—especially for immigrants—remains uncertain amid budget challenges and federal funding threats.
— By VisaVerge.com
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