Gov. Gavin Newsom will call Wednesday for California to scale back health care for undocumented immigrants to help balance the state budget, retrenching on his desire to deliver “universal health care for all.”
The move comes days after the Trump administration targeted a different state-funded program for immigrants in California and signaled that it would continue to scrutinize benefits for undocumented individuals.
In a budget presentation on Wednesday, Mr. Newsom will propose freezing enrollment of undocumented adults in the state’s version of Medicaid, known as Medi-Cal, as soon as January. He also will seek to charge those who remain in the program $100 a month beginning in 2027. The governor estimates that the changes combined would save the state $5.4 billion by fiscal year 2028-29.
The cuts come as the Trump administration is using its federal powers to pressure Democratic-led states to eliminate benefits for undocumented immigrants. As she targeted a California cash aid program, Kristi Noem, the Homeland Security secretary, said Monday, “If you are an illegal immigrant, you should leave now. The gravy train is over.”
California faces a budget deficit this year because of stock market and economic volatility, as well as the potential for the federal government to curtail funding to states.
Mr. Newsom, a Democrat, blamed California’s shortfall partly on a projected $16 billion drop in tax revenues resulting from President Trump’s turbulent trade wars, saying the tariffs have weakened the state’s economy. He began referring to the impacts as a “Trump Slump.”
But it has been clear for months that California’s Medi-Cal program has been spending billions more than expected, raising questions about whether the state can afford to continue its progressive ambitions.
Providing health care to undocumented immigrants has turned out to cost billions of dollars more than California leaders anticipated when they made Medi-Cal available last year to all low-income residents, regardless of immigration status.
California Democrats have been driven by a belief that providing health care to the poor is a moral imperative, as well as more cost effective than immigrants relying on emergency room visits for standard treatment. Under federal law, undocumented immigrants are entitled to emergency care but not Medicaid benefits.
Mr. Newsom faced a conundrum in trying to rein in Medi-Cal costs. He could either reduce benefits to all recipients, including citizens; focus on cutting immigrant benefits; or pursue some combination of both. His proposal will now be considered by state lawmakers, who must pass a budget next month.
“The state must take difficult but necessary steps to ensure fiscal stability and preserve the long-term viability of Medi-Cal for all Californians,” Mr. Newsom said in a statement.
Coverage for undocumented immigrants is not the only reason the Medi-Cal budget is running a deficit. Prescription drugs have cost more than expected, and more seniors have enrolled than the state projected.
But the cost of insuring undocumented immigrants has been a significant factor in the budget. And it has become a particularly sensitive issue for Democrats in California because of President Trump’s focus on deportations and the electorate’s interest in scaling back illegal immigration.
Medi-Cal benefits for undocumented immigrants have cost the state at least $2.7 billion beyond the $6.4 billion the state anticipated last year. More undocumented immigrants signed up for Medi-Cal than expected, and the costs for their prescriptions were higher than projected.
“There was so much fanfare around the 2024 expansion to the 26-to-49 age group,” said Paulette Cha, a research fellow at the Public Policy Institute of California. “This was extremely well publicized.”
While Democrats see the large enrollment numbers as a mark of success in their aim to insure all residents, Republicans see it as a sign that California is too generous.
As the nation emerged from the Covid-19 pandemic, public support grew for providing coverage to undocumented immigrants. When lawmakers passed an expansion in 2021, 66 percent of Californians favored providing health care to the state’s undocumented residents, according to a survey by the Public Policy Institute of California.
But by 2023, PPIC’s surveys showed, support had dipped to 55 percent.
A poll this month by the Institute for Governmental Studies at the University of California, Berkeley, found that Californians prioritized covering undocumented children over undocumented adults.
“California obviously did a really big, bold experiment,” Ms. Cha said.
Other Democratic-run states that want to cover undocumented immigrants may look to its experience, Ms. Cha said, and think that “maybe we’ll just try to be a little bit more cautious on budgeting.”
