Santa Clara County warns HR 1 will cut Medicaid and CalFresh funding, urges local response; council hears briefing

County Executive James Williams and county staff told the San Jose City Council on Sept. 16 that HR 1, the federal reconciliation bill signed July 4, will sharply reduce federal Medicaid funding and food-assistance aid and will have immediate and growing local impacts. The county estimates more than $1 billion a year of lost Medicaid-related revenue to its health system over coming years and warned that Santa Clara Valley Health Care — the county’s system and San Jose’s main safety‑net hospitals — depends on federal funding for more than half of its revenue.

Williams presented a packet of materials and said the cuts will unfold in stages: immediate freezes and caps that already affect state and county budgeting, then larger reductions tied to changes in eligibility verification and to cuts in specific supplemental payment pools that public hospitals rely on. “The magnitude of impact that we’re facing and the timeline with which we’re facing it is not one where we can just pivot the healthcare system on a dime,” Williams told councilmembers. He said the county will pursue a three‑pronged strategy of internal restructuring and revenue maximization, state advocacy, and a proposed local ballot measure to provide temporary local revenue.

The county and board of supervisors last month voted to place a five‑eighths‑cent general sales tax measure on a special November ballot (Measure A) to provide interim revenue for hospitals and county services while other strategies and state actions are pursued. Williams said Measure A would not fill the entire projected gap — the county’s estimate of federal revenue loss exceeds $1 billion annually while Measure A is projected to raise roughly $330 million — but would provide critical “breathing room” to avoid immediate service disruptions and to buy time to reorganize the health system and pursue state mitigation.

Williams emphasized the outsized role of Santa Clara Valley Health Care in the region: its hospitals handle a large share of specialty services such as trauma and burn care, and county hospitals account for the vast majority of trauma cases in San Jose. Williams said almost every 15 minutes a San Jose resident is transported by ambulance to a county hospital and that 98% of trauma patients go to county facilities. He noted public hospitals operate many specialized services not widely available elsewhere and train doctors statewide. “This is the backbone for the entire health care delivery system in the state of California,” he said.

Council members pressed Williams on methodology, sensitivity and timeline. Councilmember David Cohen asked whether the county had performed a sensitivity analysis; Williams said the county used concrete categories — provider‑tax and directed‑payment freezes, eligibility changes modeled on pilot states, and Congressional Budget Office inputs — and that even conservative estimates place the floor of annual revenue impacts near $1 billion. Several councilmembers asked about the county’s fiscal stewardship and the degree to which Measure A would be targeted to health services; Williams said Measure A is a general‑tax ballot measure but that the board placed it precisely to give the county flexibility to maintain critical services and to avert cascading closures.

Public comment at the council hearing was substantial. Dozens of health care workers, pediatricians, nonprofit leaders, and residents urged councilmembers to publicly support the county’s Measure A, describing likely closures of clinics, longer ER wait times, and reduced access to behavioral health and homeless services if federal cuts are not mitigated. Dr. Antonio Zazueta, a pediatrician at Valley Medical Center, said: “I urge you to support Measure A, to keep our county functioning, and keep our hospitals, emergency rooms, and clinics open to our community who need our help.” Amy Kostashek, another pediatrician at East Valley Clinic, told the council that the clinic provides more than 75,000 visits annually and that cuts to Medi‑Cal and CalFresh would “devastate the health of our community.”

Council members asked detailed follow‑ups about state cooperation and translation/outreach to non‑English speaking communities; Williams said the county is pursuing state advocacy and broad public information campaigns in major languages. Several councilmembers noted the need for multi‑agency coordination — city, county and state — to prevent service interruptions. After discussion, councilmembers voted to accept the county’s verbal report on the local impacts of HR 1; the motion to accept the report passed unanimously.

Why this matters: County hospitals and safety‑net clinics are heavily financed by federal Medicaid match and supplemental payments; the scale and timing of HR 1’s cuts mean service reductions would ripple quickly across health care, behavioral health and programs tied to Medi‑Cal revenue. The county is pursuing internal operational reforms, state advocacy, and a local temporary sales tax as emergency measures. Council members and public speakers urged coordinated city support for mitigation and strong community outreach ahead of the November vote.

Outlook: The county plans immediate internal actions and a public campaign for Measure A; state engagement is ongoing but the county says state funds cannot fully backfill federal losses. Council members asked staff to track county requests and outreach to San Jose’s residents and community clinics.