Panel warns HR 1 and state shifts could push billions onto counties, threaten Medi‑Cal and public hospitals

Panelists convened at an Alameda County budget work group meeting on March 16 warned that federal HR 1 and related state policy changes threaten to shift billions of dollars in health‑care costs to counties and could destabilize Medi‑Cal, CalFresh and the county safety net.

"HR 1 passed last July made significant reductions to federal funding in Medicaid...probably the most consequential changes that we've seen in a generation," said Laura Lane, executive director of the California Association of Public Hospitals, describing a structural shortfall she put at about $1.5 billion for hospital systems and projecting that, if fully implemented, the changes could lead to a statewide annual shortfall in the billions.

Why it matters: Panelists from county trade associations said automation and process changes will address some eligibility workload but that counties will be left with the most complex, costly cases. Carlos Marquez, executive director of the California Welfare Directors Association, said that while automated redeterminations might resolve about 40% of affected Medi‑Cal cases, county eligibility workers will have to process the remainder manually — frequently people with no digital records or who are unhoused.

"It's the folks who are not going to have a data footprint who, if we do not adequately fund the eligibility work necessary to capture these folks from falling through the cracks, they will lose coverage," Marquez said.

Panelists offered concrete estimates and scenarios. Laura Lane said public hospital systems face layered losses from federal and state changes and cited examples including a roughly $150 million immediate reduction tied to a coverage change, additional potential losses if federal waivers lapse, and a projected long‑term exposure that could reach billions annually.

Michelle Cabrera, executive director of the County Behavioral Health Directors Association, said one‑time infrastructure grants such as the Behavioral Health Continuum Infrastructure Program (B‑CHIP) do not include funding for the ongoing services counties must provide and warned that Alameda County would likely need to cut roughly $53 million in existing mental‑health services to make room for housing set‑asides required under Proposition 1. "It's like getting a toy for Christmas and the batteries are not included," she said.

On eligibility operations, panelists said counties believe the state acknowledges underfunding. "We think it's underfunded by $230,000,000 and by 2,000 eligibility workers," a panelist said during the meeting; panelists and county officials said they are advocating for one‑time and ongoing investments, including a proposed one‑time down payment of several hundred million dollars for hospitals in current advocacy materials.

What counties are doing: Panelists described local efforts to reclassify eligibility work toward case management functions, renegotiate data‑sharing agreements with managed care plans, and stand up employment and training programs tied to CalFresh. They cautioned that many readiness plans are currently unfunded.

Next steps: Panelists urged coordinated advocacy in Sacramento and to newly seated legislators, education of the public about tradeoffs, and consideration of temporary local measures where feasible. Alameda County supervisors and staff said they will use these expert inputs as they work toward a proposed county budget scheduled for board presentation by May 28.

At the meeting's end, the board thanked panelists and moved on to the county budget update.