The L.A. Times is reporting that millions of Californians face potential healthcare coverage losses due to federal and state budget cuts. Columnist Anita Chabria highlights that while Congress passed HR 1 last year, which included cuts to Medicaid, many Californians have not yet realized the full impact on the state's Medi-Cal program.
It said the federal bill significantly reduces the Managed Care Organization (MCO) tax, a state financing mechanism that has provided California with approximately $7 billion annually for Medi-Cal. These federal funding reductions are set to begin after the midterms and continue for several years, affecting not only low-income residents but also the middle class through lost insurance, fewer providers, and increased costs. State Senate leader Monique Limón (D-Goleta) told the Times that this problem "trickles up" and will impact everyone.
The L.A. Times also reported that Governor Gavin Newsom's latest budget plan includes state-level cuts, partly to address the federal funding loss and rising healthcare expenses. Newsom's plan relies on restructuring the MCO tax to comply with HR 1's new regulations. However, this fix requires approval from the Trump administration, which the Times noted has previously rejected California's requests for similar fee updates related to Medi-Cal funding. The newspaper suggested the administration might be disinclined to approve a solution, given the upcoming presidential election.
Limón proposed that the state could stop subsidizing corporations whose low wages lead employees to qualify for Medi-Cal. A UC Berkeley Labor Center report cited by the Times indicates that 42% of Medi-Cal enrollees are full-time workers.