In early January of this year, Governor Newsom outlined a plan to handle the projected $22.5 billion California budget deficit. Just months prior, Newsom and legislative leaders announced a surplus of almost $100 billion. The seemingly sudden reversal has left many scratching their heads in confusion and worrying about funding for state projects. However, Newsom reassured Californians that the 2023 budget will maintain planned funding for social and healthcare programs. Notably, plans for the ongoing Medi-Cal expansion for the 26 to 49 year old population are still underway for January 2024.

In December 2022, the Managed Care Organization Tax expired and along with it, about $1.5 billion in general fund revenue. To offset this while waiting for lawmakers to reintroduce the tax, Newsom’s proposed budget includes $1.3 billion in gap funding to Medi-Cal’s total budget. This, in addition to a renewed tax on health plans, will help to prevent cuts to Medi-Cal’s universal coverage expansion to undocumented adults in California. Additional federal support and lower than anticipated 2022-2023 expenditures help to mitigate the costs of the Medi-Cal transformation.

Several healthcare and public health figures are commending Newsom’s continued support for Medi-Cal, but a some are questioning the budget cuts in other key areas. Of note, the California Department of Public Health is facing a proposed cut of $1.2 billion. This follows on the heels of decades of budget cuts and underfunding, with several in the public health field pointing to the diminished funding as a key factor in California’s lukewarm early response to the COVID-19 pandemic.