California lawmakers are bracing for larger Medicaid costs next year as the state borrows billions from itself to cover the rise in health care coverage for illegal immigrants. 

Governor Newsom’s Department of Finance notified state lawmakers last week that it had dipped into the General Fund to borrow $3.44 billion, the maximum amount borrowable by law, to cover payments to health care providers from Medi-Cal, the state’s Medicaid program. The sum represents 10 percent of the total amount designated for Medi-Cal from state funding. 

The announcement has infuriated Republicans in the state. 

“Illegal immigrants are getting one out of four general fund dollars each and every year,” District 75’s Assemblyman, Carl DeMaio, a freshman lawmaker, said. “It has put Medi-Cal on the brink of financial insolvency. We have run out of money for legitimate health care coverage for low income families, the most needy in society.”

“Newsom has literally become that degenerate brother-in-law who squanders his money and then comes back asking for a loan,” the state’s Republican Assembly leader, James Gallagher, wrote on X. “You know the one who still lives at mom’s house apparently doing podcasts from the basement.”

The cost of health care for undocumented migrants in California has skyrocketed 43 percent so far this year, to $9.5 billion, since Mr. Newsom announced in 2024 that he will expand health care coverage to everyone with a financial need regardless of status.  

The vast majority of Medicaid funding comes from the federal government. California budgeted $160.9 billion this year, of which $35 billion came from the General Fund. However, a January report by the Department of Health Care Services projected that annual costs would be closer to $174.6 billion. The fiscal year runs through June 30.

Medi-Cal had an “approximately $2.7 billion increase in costs for unsatisfactory immigration status members. This increase is primarily driven by higher than anticipated enrollment and increased pharmacy costs,” reads a report from the California Assembly’s Budget Subcommittee on Health. The committee meets Monday to review the higher-than-expected costs as well as the governor’s proposed budget for the coming year. 

That budget calls for an increase to $188.1 billion for Medi-Cal, an 11.8 percent increase, with $42 billion pulled from the state’s General Fund. The budget expects lower enrollment but higher cost per enrollee.

The budget, released in January, also claims to be balanced, but the governor is pulling $7.1 billion from the state’s rainy day fund to make it appear that way. The forecast is additionally hampered by uncertain revenues resulting from a delay in tax filings from Los Angeles and Ventura counties, which were ravaged by wildfires. Residents have until October 15 to file their state and federal taxes for 2024. 

At its release, the governor blamed the Trump administration for any fiscal uncertainty. “In the months ahead, California is facing a new federal administration that has expressed unreserved and uninformed hostility toward Californians, threatening the funding of essential services for political stunts,” the governor said at the time.

Funding for illegal immigrant health care coverage must be drawn from state funds as federal law, unchanged since the Biden administration, prohibits Medicaid funds to be used for illegal immigrants. 

Nonetheless, the Economic Policy Innovation Center says California is shuffling funds around to get a greater cut from Washington than it rightly deserves. A paper released by the center last week accused the state of taxing Medicaid insurers and then making higher payments back to them, demonstrating higher costs and enabling the state to qualify for additional federal matching dollars.  These federal funds leave California with surplus money to spend elsewhere. 

“This scheme enriches insurers, attracts illegal immigrants to the United States, and adds mountains to the federal debt, all at the expense of working Americans,” reads the report. 

In response to his state’s coverage for illegal immigrants, Republican representative Kevin Kiley has filed legislation in Congress to ensure that Medicaid and other federal taxpayer health benefits go to American citizens and legal residents of California only. “If the Legislature refuses to rein Newsom in, we are prepared to do so in Congress,” Mr. Kiley wrote on X.   

Even if Medicaid is preserved for legal residents, Republicans on the House Energy and Commerce Committee are tasked with finding $880 billion in savings from its spending priorities. That may not be possible without cutting Medicaid.  

Any funding cuts would mean fewer dollars to the states and a higher ante from their own accounts. In California, Democrats say they will find a solution however they can. 

“There are tough choices ahead, and Assembly Democrats will closely examine any proposal from the governor,” California’s House Speaker, Robert Rivas, said in a statement. “But let’s be clear: We will not roll over and leave our immigrants behind.”