The Department of Finance said the governor’s 2026 budget anticipates and partially accommodates recent federal policy changes (referred to in the briefing as "HR1"). Director, Department of Finance, told reporters the administration assumes roughly $1.4 billion in 2026‑27 associated with those federal changes, driven primarily by Medi‑Cal impacts (including six months of redeterminations and lower federal matching for limited‑scope services) and about $300 million tied to CalFresh administrative obligations.

On coverage and caseload effects, the director said the budget assumes some costs but does not propose funds to backfill all anticipated caseload losses. When asked whether the state will fully backfill people who may lose Medi‑Cal, he said the budget does not include funds to backfill those caseload losses and that counties — which are responsible for indigent care — are in discussion with the administration about potential fiscal pressures.

The administration also described options for immigrant coverage. The director said maintaining state‑only full‑scope coverage for undocumented populations who would otherwise be moved to restricted scope would cost about $1.1 billion in additional general fund support, and that the budget currently assumes the state will not fully backfill that amount.

Other health‑finance items noted during questioning: the administration expects to lose roughly $630 million in assumed hospital quality assurance fee revenue relative to prior assumptions and is pursuing an MCO tax transition and a possible extension of federal discretion on timing. The director said the budget year increase in Medi‑Cal general fund spending is roughly $2.4 billion compared with the prior budget act, and he identified $1.1 billion of that increase as associated with HR1 in the budget year.

Director, Department of Finance, summarized the position in plain terms: "The budget assumes that the work requirements would apply to the Medi‑Cal program," and the package does not propose resources to fully make beneficiaries whole for every federal change at this time. He said the administration will continue discussions with counties, federal partners, and the legislature and will revisit assumptions in the May revision.