As many as 3.4 million Californians could lose their state Medi-Cal health insurance under the budget bill making its way through the U.S. Senate, Gov. Gavin Newsom said Friday.
Newsom said the proposed cuts to healthcare in the “one big, beautiful bill,” a cornerstone of President Trump’s second-term agenda, could force the closure of struggling rural hospitals, reduce government food assistance for those in need and drive up premiums for people who rely on Covered California, the state’s Affordable Care Act health insurance marketplace.
“This is devastating,” Newsom said. “I know that word is often overused in this line of work, but this is, in many ways, an understatement of how reckless and cruel and damaging this is.”
Medicaid provides health insurance for about 1 in 5 Americans and generally uses income, rather than employment, as a condition for enrollment.
Roughly 15 million Californians, more than a third of the state, are on Medi-Cal, the state’s version of Medicaid, with some of the highest percentages in rural counties that supported Trump in the November election. More than half of California children receive healthcare coverage through Medi-Cal.
The Senate is still debating its version of the bill. But the current version would require many Medicaid recipients to prove every six months that they work, volunteer or attend school at least 80 hours per month. States would be required to set up their work eligibility verification systems by the end of 2026, just after the midterm elections. States that do not set up those systems could lose federal Medicaid funding.
Republican House Speaker Mike Johnson told reporters last month that the aim of the policy was to encourage poor Americans to contribute and “return the dignity of work to young men who need to be out working instead of playing video games all day.”
The nonpartisan Congressional Budget Office estimated this month that the requirements would cut about $344 billion in Medicaid spending over a decade and leave 4.8 million more people uninsured.
Health policy experts warn that work requirements can lead to people who are eligible, but can’t prove it, losing their benefits.
Newsom said 5.1 million people in California would need to go through the work verification progress and about one-third would “likely” meet the requirements.
The other two-thirds would “go through the labyrinth of manual verification,” Newsom said.
He said 3 million people in California could lose coverage through the new Medicaid work requirements, and 400,000 more could lose their insurance if they were required to re-verify their eligibility every six months. Newsom said that the state’s estimate was based on the number of people who dropped off Medicaid in New Hampshire and Arkansas after those states briefly implemented their own work requirements.
Last year, California became the first state in the nation to offer healthcare to low-income undocumented immigrants. The expansion, approved by Newsom and the Democratic-led Legislature, has cost the state billions and drawn sharp criticism from Republicans.
Assembly Minority Leader James Gallagher (R-Yuba City), who has previously called on Newsom to walk back that coverage, said on social media Friday that Newsom and Democratic legislative leaders had “obliterated” the healthcare system.
Newsom’s budget proposal in May proposed substantial cuts to the healthcare program for undocumented immigrants, including freezing new enrollment in 2026, requiring adults to pay $100 monthly premiums and cutting full dental coverage.
Lawmakers ultimately agreed to require undocumented immigrant adults ages 19 to 59 to pay $30 monthly premiums beginning July 2027. Their plan adopts Newsom’s enrollment cap but gives people three months to reapply if their coverage lapses instead of immediately cutting off their eligibility. Democrats agreed to cut full dental coverage for adult immigrants who are undocumented, but delayed the change until July 1, 2026.
In Congress, the GOP bill could also pose a serious threat to 16 struggling hospitals in 14 rural counties, which received a $300-million lifeline in interest-free loans in 2023, Newsom said.
He said the Republican members of Congress in California who supported the bill and represent rural parts of California, including Central Valley Rep. David Valadao (R-Hanford) and Rep. Kevin Kiley (R-Rocklin), are “gutting an already vulnerable system.”
Some senators are pushing to change a requirement that would require states to freeze and cut by half the tax they impose on Medicaid providers, slashing a key source of funding for rural hospitals.
Michelle Baass, the director of the California Department of Health Care Services, said that change could be “fatal for the many rural and critical-access hospitals that are already financially strained.”
Newsom said in aggregate, the cuts could threaten California’s progress in reducing the share of residents without health insurance, which stands at about 6.4%.
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