County warns HR1 could cost Fresno tens to hundreds of millions as midyear budget shows a narrowing cushion

Fresno County officials told the Board of Supervisors March 17 that federal changes under HR1 and state implementation steps could produce a wide range of local fiscal exposures while the county prepares a conservative FY2026-27 budget.

A wide range, large potential cost

Public Health Director Joe Praau presented indigent care modeling that produced a broad county exposure estimate depending on enrollment and payment-model assumptions: a managed-care assumption produced an estimate near $41 million at a lower enrollment scenario and $110 million at higher enrollment; a county-cost approach using 2010 levels adjusted for inflation produced a range up to $241 million under an extreme scenario. Praau explained the variance is driven by how many newly ineligible people return to the county's indigent-care system and by whether medical managed-care plans or counties absorb uncompensated costs.

"When we look at how many people are on medical in Fresno County, it's... over 500,000 people," Praau said while explaining the modeling assumptions. "If more people fall into indigent care, these numbers just go up and up and up."

Behavioral health, social services and CalFresh workloads

County behavioral health leadership said the department is carved out of medical managed care and estimated roughly $20 million in potential new costs if mild-to-moderate cases escalate to county-funded specialty care because they lose medical coverage. Susan Holt (behavioral health director) warned the board about administrative redeterminations and the risk that patients with severe impairments lose benefits during eligibility checks.

Social services leadership described administrative workload and cost-shift risks for CalFresh and Medi-Cal. Sonia Bugay (social services director) said about 520,000 county residents are currently enrolled in Medi-Cal and that HR1 will require additional eligibility checks, work-verification processing for a segment of cases and new error-rate calculations that can trigger penalties. "What we don't know yet is how many" will fall out of coverage, Bugay said; county estimates for newly indigent enrollments ranged from about 11,000 to 30,000 in presentation materials.

Midyear budget and projected gap

In the county's midyear report, staff projected departmental expenditures roughly in line with historical midyear pacing but identified pressures heading into FY2026-27. County administration recommended a conservative 3% budgeted property-tax growth scenario as a planning baseline but noted salary, risk insurance and operational inflation could add materially to costs. Staff estimated a planning gap of approximately $17.5 million based on conservative assumptions, listing potential gap-closure steps including hiring controls, net-county-cost reductions and one-time funding strategies.

Next steps and advocacy

County staff said they are coordinating with statewide county advocacy groups (SEESAC) and the county legislative delegation to press for implementation relief, to seek protections against being charged error-rate penalties tied to state- and federal-level implementation decisions, and to explore managed-care fee-structure remedies for indigent-care exposures. Staff warned that the county may face near-term operational decisions about eligibility policies and potential local cost coverage if federal or state relief does not materialize.

The board received the presentation with questions and directed staff to continue advocacy and return with options for any local eligibility or budget decisions that could be required if the federal/state implementation reduces coverage for residents.