Budget subcommittee hears how federal HR 1 could reshape Medi‑Cal financing and eligibility

Summary

State budget and health officials told a California Senate subcommittee that federal law changes (HR 1) and provider tax restrictions could reduce federal funding, force difficult tradeoffs on eligibility and provider payments, and push costs to counties and the state. The LAO estimated roughly 1,000,000 potential disenrollments but stressed high uncertainty.

Senate Budget Subcommittee No. 3 convened an informational hearing to examine how state agencies forecast and estimate budgets for California's major health programs and to assess fiscal risks from recent federal changes, including HR 1.

Laurie Walker, chief financial officer for the Department of Health Care Services, said DHCS's 2025-26 proposal reflects a continued push to transform Medi‑Cal and reported a departmentwide total budget of $202,700,000,000 with 4,945 positions, about $1.4 billion in state operations and $201.4 billion in local assistance. "The budget supports DHCS's purpose to provide equitable access to quality care," Walker said.

DHCS staff described the department's local assistance caseload forecasting process, which relies on a system called EMBER and runs thousands of regressions to generate granular caseload projections. A DHCS presenter noted limits when forecasting brand-new eligibility expansions: "The Ember system is using existing data...there was no historical trend that could be utilized in the EMBER system," and cautioned that the estimate is an iterative product that incorporates policy assumptions.

On how rates are set for…

Budget subcommittee hears how federal HR 1 could reshape Medi‑Cal financing and eligibility

Summary

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