Senate budget subcommittee hears that HR 1 could cut millions from Medi‑Cal and CalFresh; state outlines automation and outreach to limit losses

A California Senate Budget and Fiscal Review subcommittee heard extensive testimony about how HR 1, a sweeping federal package of tax and benefit changes, would affect the state's safety net, with officials and researchers warning that the law's work requirements, more frequent redeterminations and tightened eligibility rules could remove coverage and benefits for large numbers of Californians.

Ryan Woolsey of the Legislative Analyst's Office summarized the federal changes and their state impacts, saying HR 1 alters Medi‑Cal and CalFresh in three main areas: work requirements, eligibility and program financing. "HR 1 makes significant changes to both Medi‑Cal and CalFresh in 3 main areas," Woolsey said in his overview of LAO analysis, noting the potential for large disenrollments and fiscal strain on state and county budgets.

Miranda Dietz of the UC Berkeley Labor Center told the committee that up to 3,000,000 Californians could lose full‑scope Medi‑Cal when HR 1 and recent state budget actions are combined. "Combined, we project that these policies will result in up to 3,000,000 Californians losing full scope medical by 2028," Dietz said, and she emphasized that much of the coverage loss would come from administrative barriers rather than changes in eligibility.

Sabrina Adams of the Department of Finance walked through the governor's budget response to HR 1, describing additional general‑fund requests and projected federal‑fund reductions. Adams said the governor's budget includes about $1.4 billion in new general‑fund resources for Health and Human Services in fiscal 2026–27 while projecting further federal fund reductions in later years.

Advocates and experts described immediate human and economic impacts if benefits are cut. "CalFresh brings in more than $12,000,000,000 a year to California communities," Dina Platanino of the Food Research & Action Center told the panel, warning that reduced benefits would increase hunger and strain local food banks and safety‑net services.

State agencies outlined a suite of mitigation strategies they say will limit coverage losses. Michelle Boss of the Department of Health Care Services said California has released an HR 1 implementation plan and is prioritizing automation and data sharing to reduce manual processes, simplify renewals and identify exemptions. Tyler Sadwif, DHCS state Medicaid director, told senators that where other states implemented work requirements without strong verification tools, disenrollment rates were high — "the average disenrollment rate for this cohort was 77 percent" when automatic verification was not possible — and urged aggressive use of administrative data (claims, CalSAWS, EDD, IRS, veterans records and vendors with gig‑economy data) to perform ex parte determinations.

Jennifer Toya (Jennifer Troy in testimony transcript) from the Department of Social Services described changes to CalFresh time limits and the department's accuracy improvement work: CDSS estimates roughly 955,000 people will be subject to the expanded time‑limit rules and approximately 609,000 will be newly subject to those rules. CDSS said it is rolling out income verification tools, automation and outreach to reduce payment error rates that otherwise could trigger additional state costs.

County and local voices urged funding for frontline staff. Carlos Marquez of the County Welfare Directors Association estimated counties will need substantially more eligibility workers to implement screening, outreach and compliance work; he said counties could need roughly 400 additional CalFresh eligibility workers and about 2,000 additional Medi‑Cal eligibility workers to carry out a responsible harm‑mitigation approach.

Food‑bank leaders and advocates called for short‑term and structural state supports, including continued CalFood funding, investment in CalFresh outreach assisters, and consideration of state‑funded CalFresh equivalents or targeted benefits for humanitarian immigrants who lose federal eligibility.

Senators pressed the administration about reconciling budget scoring with mitigation goals, asking how the administration's savings estimates account for the departments' stated plans to preserve coverage. Agency officials said the estimates are based on current models and that they are continuing to refine exemption criteria, data matches and automation; they also said May revision materials will include updated numbers as implementation details and federal guidance evolve.

The subcommittee did not take votes but set a follow‑up date: the chair noted Subcommittee No. 3 will convene a second hearing on March 5 to continue examining county and safety impacts of HR 1. Public comment was scheduled to follow the panels and question period.