California Faces $3.4 Billion Medi-Cal Funding Gap as Costs Surge

Unexpected enrollment increases, rising drug prices, and expanded coverage for undocumented immigrants strain the state's healthcare budget.

California has borrowed $3.4 billion from its general fund to cover Medi-Cal costs through March, with additional funding likely needed before the fiscal year ends in June.
The state's Medi-Cal program, which serves nearly 15 million low-income residents, is facing higher-than-anticipated costs due to increased enrollment of seniors and undocumented immigrants, as well as rising prescription drug prices.
State officials attribute $2.7 billion of the shortfall to the cost of newly enrolled undocumented immigrants, who became eligible for Medi-Cal under recent expansions to provide universal coverage.
Republican lawmakers have criticized the expense of covering undocumented immigrants, while Democrats defend the program as essential and point to federal Medicaid cuts as a greater threat to state healthcare funding.
California's Medi-Cal budget challenges are part of a larger national trend of rising Medicaid costs, with federal funding reductions potentially exacerbating the state's financial strain.