California proposes significant Medi-Cal budget changes impacting undocumented individuals

The California Assembly Budget Subcommittee No. 1 on Health convened on May 19, 2025, to discuss significant budget proposals impacting healthcare funding and services in the state. The meeting highlighted the Department of Health's general fund expenditure, which amounts to approximately $45 billion, representing 20% of the state's total general fund spending.

A key focus of the discussions was the proposed changes regarding individuals with unsatisfactory immigration status. The administration plans to freeze enrollment for full-scope state-only coverage for new applicants aged 19 and older, effective no sooner than January 1, 2026. This freeze will affect those unable to establish satisfactory immigration status, including pregnant individuals and those under the five-year bar.

Additionally, the proposal includes the introduction of monthly premiums of $100 for adults with unsatisfactory immigration status, set to take effect no sooner than January 1, 2027. Failure to pay these premiums would result in a shift to restricted coverage, which only includes emergency and pregnancy-related services. The meeting also addressed the elimination of dental and long-term care services for individuals aged 19 and older with unsatisfactory immigration status, with the dental services cut scheduled for July 1, 2025, and long-term care services for January 1, 2026.

Further proposals discussed included the elimination of the prospective payment system for federally qualified health centers and rural health clinics, effective January 1, 2026, and the implementation of a rebate aggregator for drug supplemental payments by October 1, 2025. These measures are projected to save the general fund approximately $5 billion in the budget year.

The subcommittee also examined rising pharmacy costs, proposing several measures to manage expenditures. These include eliminating certain drug classes, such as over-the-counter COVID-19 tests and vitamins, effective no sooner than January 1, 2026, which is expected to save around $3 million in the budget year. Other proposals involve the removal of GLP-1 medications for weight loss from Medi-Cal coverage and the introduction of prior authorization for certain drugs, which could yield savings of $62 million in the budget year.

Overall, the discussions underscored the administration's commitment to achieving a balanced budget while addressing the healthcare needs of Californians, particularly those with unsatisfactory immigration status. The proposals will require collaboration between the administration, legislature, and stakeholders in the coming weeks to finalize the budget.