New CA Budget Proposes Major Cuts to Health and Other Needed Services, Even Worse Without Federal Assistance

Governor Gavin Newsom today unveiled his May Revision of the California State Budget which includes significant cuts to health, education, and other vital services in order to address the budget deficit caused by the COVID-19 crisis.

In a stark contrast from the Governor’s initial proposal in January that had a surplus, Governor Newsom’s budget attempts to address an estimated $54 billion state deficit with deep cuts to the state budget–including to health and human services, a particularly harmful measure in the face of a public health crisis.

Governor Newsom emphasized that much of these cuts could be minimized if Congress passes needed state aid, as House leadership has proposed in the pending HEROES Act up for a vote tomorrow. The State Legislature will now hold hearings on this budget proposal, with a June 15 constitutional deadline for passage.

The proposed budget could cut access to care for millions of Californians—whether those losing coverage options, benefits, or access to doctors, clinics and other providers.

These potential cuts will be a body blow to the health care system we all rely on, at the very time we need it funded more than ever, in the middle of a pandemic. We need more investment in health care and coverage to get out of this crisis, with our communities already suffering from the health and economic consequences of COVID-19, and these cuts to vital safety net programs and services are unthinkable.


The irony is that this budget proposes to undo key commitments to comprehensive coverage at exactly the moment when we need it most and resolving this public health emergency:

  • BIG IMPACTS ON LOW-INCOME SENIORS: Under this budget, California will:
    • Lower Medi-Cal eligibility for tens of thousands of low-income seniors from 138% ($17,237 for an individual senior) down to 123% of the poverty level, below the eligibility for those under 65.
    • Remove help to ensure Medi-Cal seniors don’t fall-off Medi-Cal.
    • Reinstatement of Medi-Cal estate recovery, discouraging many seniors from signing up for Medi-Cal coverage.
    • Eliminate community based services and multipurpose senior services.
    • No longer propose to cover income-eligible seniors, regardless of immigration status.

We will continue to advocate that covering seniors be prioritized by our legislative leaders in their budget discussions. Our health care system is stronger when everyone is included getting the treatment and care they need as soon as possible, especially our seniors who are at most at-risk in this current pandemic. We will especially continue to fight to cover the seniors explicitly excluded from coverage because of their immigration status—which is essential in our public health response to contain the coronavirus.


The proposed cuts will make it harder for many Californians to get needed primary and preventive care, to manage conditions, to get tested and treated for COVID-19, and otherwise get needed follow-up care:

  • CUTS TO MEDI-CAL BENEFITS: In absence of federal help, proposed cuts will eliminate many medically necessary benefits to millions of Californians with Medi-Cal coverage, from hearing aids to vision to podiatry to physical and speech therapy, and reduce dental services significantly. These cuts are short-sighted and are counterproductive to our economic and public health goals in this crisis.
  • CUTS TO CLINICS AND OTHER PROVIDERS: The possible elimination of supplemental and value based payments to clinics and other providers will reduce access to care for many California patients, and imperil key health care capacity that we all rely on. Ten years ago, we cut dental, vision, and ten medically necessary benefits from Medi-Cal, and Medi-Cal provider rates to some of the lowest in the country, with consequences we are still dealing with today – we cannot repeat those mistakes.

The difference from a decade ago is that a public health emergency created this crisis, the loss of revenue to the health care sector is deepening this crisis, and maintaining investments in health care is part of the solution to get out of this crisis.

  • CUTS TO COVERED CALIFORNIA AFFORDABILITY ASSISTANCE: The proposal would cut the amount allocated to affordability assistance in Covered California, at a time when millions have lost employer-based coverage and facing sticker shock in seeking insurance as individuals. We need to provide more help to Californians to connect with coverage and care, not less.


Health Access, along with a coalition of over 50 organizations, recently sent a letter to California Congressional leaders urging state fiscal relief, as well as other patient protections and priorities.

On state aid, advocates seek both $500 billion in state aid (not including aid to locals), as well as an increase of the Medicaid matching rate to 12%, to be continued not just until the end of the public health emergency, but the likely-longer lasting economic emergency. In previous years, such help also came with a “maintenance of effort” requirement so that states do not cut Medicaid at the same time. Such aid and requirements helped prevent eligibility cuts ten years ago.

This budget proposal lays out the devastation coming to our health care system and state economy without significant federal help. Congress must take urgent action to help California prevent catastrophic and harmful cuts, that would otherwise stymie our health and economic recovery efforts.