Medi-Cal Under Siege: Who’s Covered and What’s at Risk?
SACRAMENTO, Calif. — Medi-Cal, California’s expansive $174.6 billion Medicaid program, provides health insurance to nearly 15 million residents with low incomes and disabilities. The Golden State enrolls twice as many people as New York and more than three times as many as Texas—states with the second and third largest Medicaid populations, respectively, after California.
What’s at Stake for Medi-Cal?
Enrollment is high because California goes above and beyond federal eligibility standards, offering coverage to more low-income residents. The state also provides an extensive range of benefits, including vision, dental, and maternity care—some of which are largely funded by federal dollars, but still affect the state’s bottom line.
Recently, however, Medi-Cal has found itself at the center of a political storm.
Democrats argue that the greatest threat to Medi-Cal comes from the $880 billion in proposed GOP budget cuts being debated in Washington, D.C. Health experts warn that these cuts could force eligibility restrictions—such as work requirements—or program reductions to achieve enough savings over the next decade. On the other hand, Republicans claim that Medicaid costs have surged due to fraud and waste, and they criticize state Democrats for extending benefits to immigrants, regardless of their legal status.
In March, California’s Governor Gavin Newsom’s administration took out a $3.4 billion loan to cover an unexpected Medi-Cal shortfall. In April, lawmakers approved an additional $2.8 billion to cover the remainder of the fiscal year. While Newsom has acknowledged the need for changes, he has defended California’s efforts to cover more people. As of 2022, the state’s uninsured rate for residents under 65 hit a historic low of 6.2%, according to the California Healthcare Foundation.
As legislators debate funding for this crucial safety-net program, here’s a look at who’s covered and what’s at risk.
Who’s Covered?
Over a third of Californians rely on Medi-Cal or the closely related Children’s Health Insurance Program (CHIP) to access essential health services—whether that’s seeing a doctor, therapist, or dentist. Medi-Cal also provides critical medication and therapy coverage. It’s a lifeline for families, enabling people with disabilities and seniors to remain in their homes while providing coverage for their caretakers. Additionally, Medi-Cal funds nursing care for the elderly.
The majority of enrollees qualify because they earn 138% or less of the federal poverty level: $21,597 annually for a single person or $44,367 for a family of four. While this is relatively low, especially in a state where the average household income exceeds $96,000, it’s far more generous than states like Alabama, where the eligibility limit is just 18% of the federal poverty level, or Florida, at 26%.
Unlike these states, California extends coverage to low-income adults without dependents. The state also includes more people with disabilities who work, as well as inmates and other residents who wouldn’t qualify for benefits under federal guidelines. This expansion of Medi-Cal was critical in providing health coverage to more people across the state.
As of the latest estimates, Medi-Cal covers around 7.3 million low-income families and 5 million adults, most of whom are without dependents. An additional million people with disabilities also rely on the program. Furthermore, Medi-Cal covers 1.4 million people aged 65 and older for benefits not covered by Medicare, such as long-term care, dental, hearing, and vision care.
Most adult Medi-Cal recipients under 65 work, according to a KFF analysis of March 2024 data. In California, about 42% of nondisabled adults on Medi-Cal work full-time, and another 20% work part-time. Those not employed are usually caregiving, attending school, or dealing with health issues.
More than half of Medi-Cal recipients are Latino, followed by 16% White, 9% Asian or Pacific Islander, and 7% Black. This demographic makeup contrasts with national figures, where about 40% of people under 65 using Medicaid are White, 30% are Hispanic, and 19% are Black.
Where Does the Money Come From?
The federal government covers approximately 60% of Medi-Cal’s costs. Of its nearly $175 billion budget for 2025, Washington is expected to contribute $107.5 billion. The state of California kicks in an additional $37.6 billion from its general fund, while other sources, including hospital charges, managed-care organization (MCO) taxes, cigarette tax revenues, and pharmaceutical rebates, contribute the remaining $29.5 billion.
California receives a 50% match from the federal government for core services like coverage for children and low-income pregnant women. However, for the 5 million Californians enrolled under Medicaid expansion, the federal government matches 90% of the costs—thanks to the Affordable Care Act (ACA).
How Is the Money Spent?
On average, Medi-Cal spends about $8,000 per recipient. But costs vary significantly depending on the type of care. For instance, people with disabilities, who represent just 7% of enrollees, account for 19% of the program’s total spending, with an average annual cost of $21,626 per person. Elderly care costs average about $15,000 per recipient.
California also shoulders much of the financial burden for covering about 1.6 million immigrants without legal status, spending roughly $8.4 billion of the program’s $9.5 billion budget on this group.
What Could Get Cut?
Though President Trump previously stated he wouldn’t “touch” Medicaid, the current political climate poses serious risks to the program. If Congress follows through with massive spending cuts to fund tax cuts, Medicaid benefits could be significantly reduced.
Republicans have proposed introducing work requirements for nondisabled adults, which could affect at least 1 million Medi-Cal enrollees in California, according to an analysis by the Urban Institute. Additionally, lawmakers could curtail the Medicaid expansion introduced under the ACA, which would be a devastating blow to the 5 million Californians who gained coverage through this expansion.
California could also face pressure to limit certain funding mechanisms, like the MCO tax, which generates about $5 billion annually. If the federal government restricts how these taxes are levied, it could create a funding gap for the state.
If federal cuts occur, Newsom’s administration acknowledges that the state would be unable to absorb the costs of maintaining current coverage. Republicans are also pushing for the state to end Medi-Cal coverage for undocumented residents—though Newsom and Democratic legislative leaders have firmly opposed this.
To stay within budget, California could be forced to scale back optional benefits such as dental and vision care, or reduce payments to the managed care plans that cover 94% of Medi-Cal recipients. During the Great Recession, California made similar cuts, including eliminating dental and optometry benefits for adults.
As Medi-Cal faces these potential cuts, millions of Californians could see their coverage and benefits dramatically reduced or eliminated. While political battles over funding continue, the stakes are high for those who depend on this critical health safety net.
This article was produced by KFF Health News, which publishes California Healthline, an editorially independent service of the California Health Care Foundation.