California's Undocumented Immigrant Medi-Cal Costs Soar to $10 Billion Annually, Prompting Enrollment Freeze

California's healthcare program, Medi-Cal, faces significant budgetary challenges as the cost of covering undocumented immigrants is projected to reach approximately $10 billion annually, far exceeding initial estimates. This surge in expenses now represents a substantial portion of the state budget, prompting policy adjustments. As noted by Mike Netter, "> California’s latest review shows the cost of covering illegal immigrants under Medi-Cal climbing to about $10 billion a year, far above early estimates and now a major share of the state budget."

The state's Department of Finance acknowledged that the rise in spending is partly due to higher-than-projected enrollment and increased costs for newly covered immigrants. While the 2024-25 state budget initially estimated the cost for all income-eligible undocumented immigrants at $6.4 billion, this figure has since ballooned to $9.5 billion, with about $8.5 billion funded directly from the state's general fund. This unexpected increase has led the Newsom administration to borrow $3.4 billion from the state's general fund to cover the shortfall.

In response to these escalating costs, California is implementing measures to stabilize the program. Beginning January 2026, eligibility for comprehensive Medi-Cal coverage for undocumented adults and seniors will be frozen, meaning new enrollments for this group will cease. Furthermore, starting July 2027, undocumented adults aged 19-59 will be required to pay a $30 monthly premium to maintain their comprehensive coverage, as outlined in recent legislative analyses.

The rising expenditures have ignited political debate, with Republican lawmakers criticizing the state's priorities amid a broader budget deficit. Senate Minority Leader Brian Jones stated, "If we weren’t spending eight-and-a-half billion dollars on illegal immigrants, we wouldn’t need to borrow $3.4 billion to cover the difference." Conversely, Democratic leaders, including Assembly Speaker Robert Rivas, have pledged to protect access to care, emphasizing that "Immigrant workers and families, who pay billions in taxes, deserve access to care."

Beyond undocumented immigrant coverage, Medi-Cal's overall costs have been impacted by other factors, including a 40% growth in senior enrollment over four years and general enrollment increases following the COVID-19 pandemic. The program, which covers nearly 15 million Californians, also faces potential federal funding reductions stemming from national legislation like H.R. 1, which could further strain the state's healthcare budget. These federal changes could lead to billions in annual losses for California's Medi-Cal program.

California has progressively expanded Medi-Cal eligibility to undocumented residents since 2016, culminating in full coverage for all income-eligible individuals in 2024. This expansion, while lauded by proponents as a move towards universal healthcare, now presents a complex financial challenge. The state continues to grapple with balancing its commitment to providing healthcare access with the need for fiscal stability, exploring solutions to manage rising costs and ensure the program's long-term viability.