Gavin Newsom in stunning move to cut controversial California health care policy
Sacramento, California: California Governor Gavin Newsom announced plans to stop enrolling low-income immigrants without legal status in California’s state-funded health care program starting in 2026, while introducing monthly premiums for current enrollees in 2027.
The decision, driven by higher-than-expected costs and economic uncertainty from federal tariff policies, marks a shift from the state’s previous expansion of health care access.
Last year, California became one of the first states to offer free health care to all low-income adults, regardless of immigration status—a key step toward universal coverage. However, the program’s cost exceeded projections by $2.7billion, adding pressure to the state’s strained budget.
Newsom had previously defended the expansion, arguing it saves money long−term, but now faces tough fiscal choices as California grapples with a $6.2 billion Medicaid shortfall.
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Under the new plan, low-income adults without legal status will no longer qualify for Medi-Cal starting in 2026, though current enrollees won’t lose coverage. Children remain unaffected. By 2027, adults with “unsatisfactory immigration status” will pay a $100 monthly premium—similar to costs in California’s subsidized marketplace. The changes are expected to save $5.4 billion by 2028-2029, ensuring Medi-Cal’s “long-term viability,” according to Newsom’s office.
The proposals come as California faces multiple financial pressures, including wildfire recovery, rising health care costs, and federal tariff policies that Newsom estimates have cost the state $16 billion in tax revenue. A looming multibillion-dollar deficit has forced budget cuts, with lawmakers warning of difficult decisions ahead.
Newsom’s plan now heads to negotiations with the Democratic-controlled Legislature, which must pass a final budget by June. Analysts warn that economic instability and federal Medicaid cuts could deepen future deficits, complicating California’s ability to sustain its progressive policies.
“This is going to be a very challenging budget,” said Assemblymember Jesse Gabriel.