May Revision proposes sweeping Medi‑Cal and IHSS reductions, including enrollment freeze, premiums and IHSS overtime cap

The Department of Health Care Services (DHCS) and the Department of Social Services (CDSS) presented May Revision proposals May 20 that would reduce general fund spending in Medi‑Cal and the In‑Home Supportive Services (IHSS) program. The administration said the measures are necessary to address a projected $12 billion general‑fund deficit.

DHCS Director Michelle Baass outlined a package that includes a freeze on new full‑scope Medi‑Cal enrollment for adults in the optional expansion who have unsatisfactory immigration status (UIS), and a later proposal for monthly state‑only premiums of $100 beginning Jan. 1, 2027 for that population. DHCS also proposed reinstating an asset limit for Medi‑Cal (the proposal would return an SSI‑linked test previously removed for expanded eligibility), eliminating state‑only long‑term care benefits for undocumented adults and cutting certain supplemental payments—most notably Proposition 56 supplemental payments that currently support family planning, dental and women's health programs.

"The administration has proposed options to reduce general fund expenditures," DHCS told the committee. Staff emphasized that the proposals attempt to limit eligibility reductions and instead mix benefit reductions, payment reforms and one‑time loans to reduce general‑fund exposure.

DHCS and the Department of Finance framed pharmacy cost increases and higher utilization—especially pharmacy and enrollment growth among UIS members—as major drivers of recent Medi‑Cal spending growth. The May Revision also proposes a set of pharmacy reforms including drug rebate aggregation for UIS spend, step‑therapy and prior authorization for certain drug classes and elimination of GLP‑1 drugs for weight‑loss indications from coverage; DHCS estimated hundreds of millions in savings from these measures over multiple years.

On IHSS, CDSS Director Jennifer Troia described five related proposals: elimination of IHSS benefits for undocumented adults age 19 and older (state‑only eligibility), capping provider hours to 50 per week (reducing overtime exposure), automating the existing link between Medi‑Cal eligibility and IHSS (the "residual" program cleanup), shifting penalties for late reassessments under the Community First Choice Option (CFCO) to counties, and conforming IHSS eligibility to a reinstated Medi‑Cal asset test. CDSS estimated 5,400 undocumented IHSS recipients total and about 1,900 IHSS recipients who would lose services under the asset limit, and projected substantial ongoing savings from the overtime cap (the administration scored a $688.5 million annual saving at full implementation; shorter implementation horizons reduce that amount).

The Legislative Analyst's Office cautioned that many fiscal effects are uncertain: some proposals assume specific disenrollment and behavior changes that could vary; several measures rely on negotiated drug rebates; and several items will not be able to be implemented instantly and therefore will erode savings in the budget year. LAO noted the administration's overall structure could be a starting point for negotiations, but urged the Legislature to explore alternatives and to be mindful of equity implications.

County officials, provider groups, disability and aging advocates, public‑health providers and dozens of community speakers delivered public comment opposing the proposed cuts. The hearing recorded lengthy testimony—particularly on the IHSS overtime cap, the medical asset test and the proposed elimination of CRDP public‑health grant funding—that underscored the political and human impacts of the proposed May Revision measures.

Committee members pressed administration officials on timing, the methodology for scoring disenrollment and savings for UI S and premium proposals, the likely downstream costs of shifting care to emergency settings, and alternatives for raising revenue rather than reverting health and human services funding. Officials said they would return with trailed bill language, implementation timelines, and additional modeling in follow‑up materials.