California officials address $6.24B Medi-Cal funding needs and rising costs

The California Assembly Budget Committee convened on April 10, 2025, to discuss critical financial matters concerning the Medi-Cal program, particularly the necessity of recent loans and budget adjustments. The committee focused on a $6.24 billion financial package, which included a $3.4 billion loan and an additional $2.8 billion request aimed at addressing cash flow needs and rising costs within the program.

The $3.4 billion loan, secured earlier in the spring, was essential for meeting immediate cash flow requirements, as Medi-Cal operates on a cash basis. This means that the program's financial health fluctuates daily based on incoming and outgoing funds. The additional $2.8 billion is intended to ensure timely payments to healthcare providers through the end of the fiscal year in June.

Committee members raised concerns about the factors contributing to the increased costs of the Medi-Cal program. These include higher-than-expected pharmacy expenses, increased enrollment among seniors, and a significant rise in participation from undocumented individuals. The Department of Finance acknowledged that these factors had led to a budget shortfall, with costs exceeding initial forecasts by approximately 40%.

Despite the financial challenges, officials expressed confidence that no further loans or emergency funding would be necessary before the fiscal year concludes. They emphasized that the current funding request should suffice to cover expenses through June. However, they also warned that the rising costs of the Medi-Cal program are unsustainable, indicating that changes to the program may be required to prevent future financial crises.

The committee's discussions highlighted the urgent need for budgetary adjustments and potential reforms to the Medi-Cal program to address ongoing financial pressures and ensure its viability moving forward.