Overview

• California Governor Gavin Newsom announced a revised budget proposal to address a $12 billion state deficit, partly driven by higher-than-expected Medi-Cal costs.
• The plan includes freezing new Medi-Cal applications for undocumented adults starting January 1, 2026, while maintaining coverage for current enrollees and children.
• Undocumented adults already enrolled in Medi-Cal will be required to pay a $100 monthly premium beginning in 2027, aligning with costs of subsidized health plans in the state.
• The changes are projected to save $5.4 billion by the 2028-2029 fiscal year, as the state grapples with a $6.2 billion Medicaid shortfall and rising healthcare costs.
• Newsom attributed part of the budget strain to a $16 billion revenue loss from federal tariff policies under former President Trump, which he referred to as the 'Trump Slump.'