- The 2025-2026 state budget released Friday by Governor Gavin Newsom’s office maintains key commitments in health care, including keeping Medi-Cal available for all income-eligible Californians regardless of age or immigration status, and continuing efforts to address the rising cost of care and prescription drugs.
- However, federal health care cuts loom large for millions of Californians who receive coverage through Covered California and Medi-Cal.
- Unless Congress continues federal subsidies, Californians in Covered California will see spikes in their health care premiums of $1,000/year or more. Advocates call on the CA Governor and Legislature to use existing health care funds to help bridge potential affordability gaps.
- Congressional leaders have floated many potential cuts to Medicaid (Medi-Cal in California). Advocates will be assessing the state impact of these proposals as they are released.
SACRAMENTO, CA – Governor Gavin Newsom’s office released the details of his proposed 2025-2026 state budget which continues key commitments to expanding health care access and affordability. However major cuts to health care programs proposed by Republicans in Congress could have major state budget implications and result in millions of Californians losing their health coverage and seeing spikes in the cost of care.
The proposed budget keeps in place a range of investments made over the last several years in Medi-Cal that have improved benefits, rates, access, and eligibility, including removing barriers based on age and immigration status. The proposal also continues an investment to lower out-of-pocket costs in Covered California, which is already contributing to increased enrollment for 2025. However, that support won’t be enough to shield consumers from rising costs if Congress does not extend the enhanced federal premium subsidies, allocated by the Inflation Reduction Act (IRA). In response to this looming threat, advocates will be urging the Governor and the Legislature to return to the state’s pre-IRA plan to allocate state funds for premium assistance.
“The Governor’s budget ensures that California will continue to lead the way when it comes to keeping health care accessible and affordable for all who call California home,” said Amanda McAllister-Wallner, interim executive director of Health Access California, the statewide health care consumer advocacy coalition. “As far as we’ve come to ensuring universal access, all our progress is at risk with the incoming Trump administration. If Trump and Republicans in Congress follow through on their threats to cut Medicaid and end financial help for premiums through the ACA, millions of Californians will see huge spikes in the cost of their care or lose coverage all together. Higher health costs mean more squeeze on families, with many of most impacted living in conservative-leaning areas of the state.”
This budget also underscores how increasing health care costs, including the cost of prescription drugs, are driving up spending. The administration is tackling these issues through the work of the Office of Health Care Affordability, CalRx, and through increased transparency provided by the Health Care Payments Database.
In addition to protecting Medi-Cal investments and addressing rising costs, key affordability measures for those in Covered California were also preserved. As Californians face rising cost-of-living pressures, and higher health costs specifically, the Governor’s budget proposal makes no change to the plan to lower out-of-pocket health care costs in Covered California. This year deductibles were eliminated, and co-pays were slashed for tens of thousands of Californians who earn under 250% of the federal poverty level and purchase their care through the state’s health exchange. This improvement in affordability has already led to record enrollment for the 2025 open enrollment period which concludes at the end of this month.
“California has stepped in over the years to ensure that health care through Covered California is as affordable as possible. We’ve seen that when premiums and out-of-pocket costs are lowered, more people sign up for coverage which means they have access to the necessary comprehensive and preventative care they need to keep themselves and their families healthy,” said McAllister-Wallner. “We will continue to work with the Governor and the Legislature to ensure costs for these Californians stay as affordable as possible using existing funds.”
More details will be presented over the coming months in state budget subcommittees, with further budget updates from the Governor coming in May.
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Press inquires can be directed to:
Rachel Linn Gish, [email protected], (916) 532-2128
