Medi-Cal saves lives. It’s a lifeline that provides free or low-cost health coverage for over one-third of California’s population. Yet Congressional Republicans and the Trump administration are actively pushing proposals to cut Medicaid funding in favor of tax breaks for the wealthy. Such cuts would mean taking critical care away from millions of people across the state, including children, pregnant individuals, seniors, and people with disabilities. Without access to health coverage, Californians would face impossible choices that put their health and economic security at risk while also driving up long-term costs for the state.
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- What is Medi-Cal?
- Who is Eligible for Medi-Cal?
- What Services Does Medi-Cal Cover?
- How is Medi-Cal Funded?
- How Does Medi-Cal Deliver Care?
- How Do Medi-Cal Reimbursement Rates Impact Access to Care?
- What is the Potential Impact of Medicaid Cuts?
- How Would Medi-Cal Members Be Impacted by Work Requirements?
What is Medi-Cal?
Medi-Cal is California’s Medicaid program that provides free or low-cost health care to over one-third of the state’s population. The program serves individuals with modest incomes, including children, seniors, people with disabilities, and pregnant individuals. Medi-Cal is a lifeline for millions, ensuring access to essential health services that support public health and economic stability.
Who Is Eligible for Medi-Cal?
Most people qualify for Medi-Cal based on their income, a category known as Modified Adjusted Gross Income (MAGI) Medi-Cal. Eligible groups include:
- Adults with incomes up to 138% of the federal poverty level (FPL).
- Pregnant individuals up to 213% FPL.
Children in families with incomes up to 266% FPL are also eligible through the Children’s Health Insurance Program (CHIP), which is fully integrated into Medi-Cal. In certain counties, like San Francisco, San Mateo, and Santa Clara, coverage extends up to 317% FPL, reflecting the high cost of living in those counties.
Some individuals qualify under non-MAGI Medi-Cal, which is based on factors other than income. This includes:
- People who are blind, disabled, or age 65 and older.
- People receiving Supplemental Security Income (SSI).
- Residents in long-term care facilities.
- Former foster youth until age 26.
What Services Does Medi-Cal Cover?
Full-scope Medi-Cal covers a wide range of services, including doctor’s appointments, emergency services, physical and occupational therapy, dentist appointments, laboratory services, prescription drugs, vision care, preventive and wellness services, and behavioral health services. Medi-Cal also offers transportation to and from appointments for services that are covered by Medi-Cal.
why preventative care matters
Preventive care is good for people’s health and for California’s budget. Routine check-ups, screenings, and other preventive services help catch health issues before they become serious and more expensive to treat, research shows. Preventive care can reduce hospital visits, complex treatments, and long-term care. For example, managing high blood pressure with medication and regular doctor visits is less costly than treating a stroke or heart failure. Investing in prevention keeps people healthier while reducing avoidable health care spending.
In addition to these core services, Medi-Cal also covers services for specific populations, such as in-home supportive services (IHSS) for individuals with disabilities and expanded postpartum coverage for new parents.
How Is Medi-Cal Funded?
Medi-Cal is primarily funded by the federal and state government. The federal government contributes a share of the costs through a formula called the Federal Medical Assistance Percentage (FMAP). In California, the standard FMAP is 50%, though certain populations and programs receive an enhanced FMAP, such as the Children’s Health Insurance Program (CHIP) and Medicaid expansion under the Affordable Care Act (ACA). In addition to federal and state funds, Medi-Cal is supported by local government contributions, provider taxes, and fees from health plans.
How Does Medi-Cal Deliver Care?
Medi-Cal delivers care through two main models: managed care and fee-for-service (FFS). The vast majority of Medi-Cal members (88%) receive their care through managed care plans (MCPs). Under this model, the state contracts with health plans to coordinate and deliver services. These plans receive a fixed monthly payment from the state per enrollee regardless of how many services an individual uses. The remaining 12% of Medi-Cal enrollees receive care through the FFS model. Under FFS, enrollees can see any provider who accepts Medi-Cal, and providers are reimbursed per service delivered rather than receiving a set monthly amount.
California has expanded managed care over time to improve health outcomes, enhance care coordination, and control costs. Through initiatives like CalAIM (California Advancing and Innovating Medi-Cal), the state is shifting more services into managed care to provide integrated, person-centered care. These efforts aim to integrate physical health, behavioral health, and social services to support individuals experiencing homelessness, those with chronic medical conditions, and people involved in the justice system.
How Do Medi-Cal Reimbursement Rates Impact Access to Care?
Medi-Cal reimburses health care providers for services that they deliver to Medi-Cal patients, with rates varying based on the type of service, provider, and setting. Reimbursement rates are set by the state and approved by the federal government. However, these reimbursement rates are typically lower than those of Medicare and private insurance, which has discouraged provider participation.
Increasing provider participation in Medi-Cal is critical to improving access to a wide range of health care services, especially in historically underserved areas where there is often a shortage of providers. By increasing the number of providers in the Medi-Cal network, patients can receive more timely care, which can help improve health and well-being for all Californians. Revenue from Proposition 56, a tobacco tax increase which voters passed in 2016, provides additional funding to support provider payments. However, revenue from this tax has been on the decline.
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What Is the Potential Impact of Medicaid Cuts?
Congressional Republicans have proposed cuts to Medicaid to pay for tax breaks for the wealthy. Medicaid is a lifeline for nearly 1 in 4 people nationwide, including children, seniors, people with disabilities, and adults with low incomes. For California, where Medi-Cal covers 1 in 3 people, these cuts would be devastating. Any reduction in federal funding would lead to a significant budget shortfall and could force the state to make difficult choices such as reducing Medi-Cal benefits, limiting provider payments, or restricting eligibility.
If federal funding losses approach or exceed $10 billion per year, California would not be able to replace federal funds with existing state resources alone. As a result, low-income Californians, communities of color, seniors, people with disabilities, and children would face the greatest harm, further deepening health disparities and reducing access to essential care. Reducing Medicaid funding in any form would likely leave more people uninsured and weaken California’s health care system overall.
How Would Medi-Cal Members Be Impacted by Work Requirements?
Work requirements are essentially cuts that cause significant health coverage losses. Such proposals would require Medicaid beneficiaries to regularly prove they are working, looking for work, or participating in job training programs in order to maintain coverage. However, these requirements are burdensome and unnecessary, as the vast majority of Medicaid enrollees under age 65 are already working or are not able to work due to caregiving responsibilities, illness or disability, or school.
Research shows work requirements are an ineffective policy tool that fail to increase employment. Instead, they create bureaucratic hurdles that cause people to drop off Medicaid — particularly people with disabilities, caregivers, and those working in unstable or low-wage jobs.
If implemented, work requirements would put over 8 million people in California at risk of losing their health coverage. (See this resource for details on the impact by congressional district.) Health coverage losses on this scale would not only harm people’s health and well-being but also weaken state and local economies.
Work requirements undermine the very purpose of Medicaid: it is health insurance, not a jobs program.
