The decision is driven by a higher-than-expected price tag on the program and economic uncertainty from federal tariff policies, Newsom said in a Wednesday announcement. The Democratic governor's move highlights Newsom's struggle to protect his liberal policy priorities amid budget challenges in his final years on the job.
Newsom in March suggested to reporters he was not considering rolling back health benefits for low-income people living in the country illegally as the state was grappling with a $6.2 billion Medicaid shortfall. He also repeatedly defended the expansion, saying it saves the state money in the long run. The program is state-funded and does not use federal dollars.
Starting in 2027, adults with "unsatisfactory immigration status" on Medi-Cal, including those without legal status and those who have legal status but aren't eligible for federally funded Medicaid, will also have to pay a $100 monthly premium. The governor's office said that is in line with the average cost paid by those who are on subsidized heath plans through California's own marketplace. There's no premium for most people currently on Medi-Cal.
"The state must take difficult but necessary steps to ensure fiscal stability and preserve the long-term viability of Medi-Cal for all Californians," his office said in an announcement.
The proposals come ahead of Newsom's scheduled presentation on the updated budget. Recovery from the Los Angeles wildfires, changing federal tariff policies and the expensive health care expansion are putting a strain on California's massive state budget. Lawmakers are expecting a multibillion dollar shortfall this year and more deficits projected for several years ahead.
Newsom now opens budget negotiations with lawmakers and it's unclear how Democrats who control the Legislature will react to his plan to freeze new Medi-Cal enrollment for some immigrants. A final budget proposal must be signed by June. California's budget is by far the largest among states.
The budget proposals presented this week will build in some of the impacts from federal policies, but many unknowns remain.
The budget Newsom first proposed in January included little new spending. But it allows the state to fully implement the country's first universal transitional kindergarten program and increase the state's film and TV tax credit to $750 million annually to bring back Hollywood jobs that have gone to New York and Georgia. He recently called on Trump to pass a $7.5 billion film tax credit at the federal level.
Last year, Newsom and the Legislature agreed to dip into the state's rainy day fund, slash spending — including a nearly 10% cut for nearly all state departments — and temporarily raise taxes on some businesses to close an estimated $46.8 billion budget deficit.
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