California Governor Gavin Newsom announced a new budget blueprint on Wednesday that includes a significant policy shift: restricting access to Medi-Cal for illegal immigrants in an effort to curb rising expenditures tied to the state’s ballooning deficit.
Newsom admitted that California is again facing a major fiscal shortfall — the second consecutive year of red ink — despite enjoying previously massive budget surpluses driven by federal funds. The projected deficit now stands at $12 billion, prompting the governor to seek new ways to reduce spending.
One of the most dramatic measures in his revised 2025–26 budget involves scaling back eligibility for Medi-Cal, the state’s version of Medicaid. Newsom is proposing to stop allowing new “undocumented” adults to enroll in the program, which he says would save California roughly $5 billion. Those already enrolled would retain their coverage.
According to CalMatters.org, this marks a reversal from last year, when Newsom expanded Medi-Cal access to low-income immigrants living in California without legal documentation. Under the revised plan, starting in 2026, no new undocumented adults aged 19 or older would be allowed to sign up. Children and those currently in the program would still qualify. Emergency and pregnancy-related care would continue to be funded through limited-scope federal coverage, but new applicants after January 2026 would be ineligible for services like doctor visits and prescriptions.
The San Francisco Chronicle offered additional context, noting that Medi-Cal now serves about one-third of California’s nearly 40 million residents. Eligibility is based on making less than 138% of the federal poverty line — currently around $21,600 per individual or $44,400 for a family of four. Earlier this year, the state had to increase spending and even secure a loan to meet Medi-Cal’s mounting costs, which have surged due to an aging population and rising drug prices.
Erika Li, a senior official in Newsom’s budget office, told legislators back in April, “The cost of the program is more than anticipated. It is unsustainable. We are looking at ways to curb those costs.”
Politico noted that this marks a significant political retreat for Newsom, who once highlighted universal healthcare — including coverage for undocumented immigrants — as a signature goal of his administration. When the program’s expansion launched in January 2024, it was hailed as a major progressive achievement. But the decision to roll it back is expected to provide ammunition to critics on the right, who have slammed the initiative as costly and disconnected from the financial reality faced by many Californians.
Despite the rollback, Newsom’s administration tried to reframe the decision as a protective measure. “These changes are designed to preserve that commitment, protect coverage for millions of Californians, and preserve the strength of our values and health care system,” read a statement from the governor’s office issued prior to the formal budget release.
Newsom also returned to a familiar scapegoat, attributing the fiscal strain in part to President Donald Trump. According to his office, tariffs imposed during Trump’s administration have cost the state an estimated $16 billion in revenue. Paired with ongoing financial challenges, the governor’s office stated that “the state must take difficult but necessary steps,” to stabilize the budget.
The generous healthcare policy Newsom once championed has now been identified as a key factor in Medi-Cal’s financial instability. Earlier this year, the program had to borrow more than $6 billion to stay solvent — a warning sign that even progressive ideals may hit a wall when budgets tighten.
{Matzav.com}