While the conversation around cutting Medicaid funding can be made to feel either academic or political, in reality it is neither. It’s human.
And in California, where nearly 15 million residents receive health care largely based on Medicaid funding, the potentially toxic effects on the state’s collective health are all too real. Those possibilities are already the subject of worried conversations among some of the folks who provide care to residents who can’t afford to receive it any other way.
“The bottom would just fall out,” said one worker in Northern California who is part of a network of community health care centers. “The ripple effect of people not having access to health care is a massive economic concern, not just a health issue. But not enough people seem to understand what this would all mean.”
Like another clinic worker, from Southern California, who spoke this week with Capital & Main, the person asked that neither they nor their employer be identified. Each of the workers said they were not afraid of backlash so much as they were wary of creating alarm among their own patients before anything official is decided. “Many of the people we see have never been to a doctor or haven’t been in years,” one said. “I don’t want them to get scared off.”
Both workers, though, said they fear funding cuts will happen — in whatever form they ultimately take. The Trump administration and Republican leadership have made clear their goal of massive federal budget reductions to partially offset an extension of tax cuts that largely benefit corporations and the very wealthy. Despite the president’s claim that Medicare and Medicaid won’t be touched, GOP budget proposals call for as much as $880 billion in cuts to Medicaid over the next decade.
The result could be a national health crisis, as nearly 80 million Americans are enrolled either in Medicaid or the Children’s Health Insurance Program (CHIP). The effect in California, experts say, has the potential to be catastrophic.
“Deep funding cuts would be devastating for these health centers and the people they serve,” said Scott Graves, the longtime budget director and health policy analyst for the California Budget & Policy Center, a nonpartisan research and analysis nonprofit. “We could see facility closures and staff reductions as people lose health coverage and uncompensated care shoots up.”
The numbers can get overwhelming, but the short of it is that more than a third of all Californians depend on Medi-Cal, the state’s version of Medicaid, for their health coverage. California, in turn, relies on federal funding for more than 60% of its Medi-Cal budget. (Every state is guaranteed that at least half of its Medicaid costs will be paid by the federal government.) For the projected 2025-26 budget year, $112 billion of the $170 billion that California received in total federal funding was earmarked for Medi-Cal.
In the larger picture, California is actually a donor state, contributing $83 billion more to federal coffers than it receives back from Washington. But the federal Medicaid funding, including a dramatic expansion of the program as a result of the Affordable Care Act, has been crucial to California’s efforts to insure all its residents. (Federal money isn’t used for the state’s coverage of undocumented residents.)
Established in 1965 by President Lyndon B. Johnson, the Medicaid program was one of the most sweeping changes to health care in U.S. history. The program today does largely what it was created to do more than a half century ago: provide health services to low-income adults and children, seniors, pregnant women and those with disabilities. Nationally, nearly half of all enrollees in Medicaid or CHIP are kids.
Where the rubber meets the road lies in how that care is administered. A substantial part of the Medi-Cal system is run through Federally Qualified Health Centers, which receive funding to provide care to underserved areas — some rural, most low income. Those FQHCs are reimbursed through Medi-Cal for most of their services, but they are required to care for individuals regardless of a person’s ability to pay.
If the Medi-Cal funding dries up, the FQHCs will immediately be in trouble. California residents’ local community health centers, which are often under the umbrella of an FQHC, would suddenly lose money at a dramatic rate because they’re caring for people without much — or, potentially, any — reimbursement.
“That’s the ballgame,” said a worker at a community health center in Southern California. “Eighty percent of our patients are on Medicare or Medicaid. If they’re low income, and we don’t have a way to bill [Medi-Cal] for their visit, we can’t operate.”
The result, according to the Budget & Policy Center’s Graves, would be reductions in staffing and, down the line, the potential closure of health centers. “This impact would be felt throughout the state,” Graves said, “with much of it hitting rural areas that are already underserved when it comes to health care services.”
What happens if community health centers start closing? The answer can be apocalyptic — but that depends on huge unknown factors, including how severe the congressional budget cuts might be and whether Trump will try to steer the GOP leadership away from them. Republicans and Democrats alike are facing strong pushback against the proposed cuts from their own constituents, and Trump’s ultimate destination on the topic remains unclear.
For California, the stakes are enormous. With millions turning to Medi-Cal for access to doctors, a reduction in federal funding — let alone a steep one — could have a lasting impact. As Graves noted, California doesn’t have the ability to simply backfill Medi-Cal costs out of state funds.
“Clinics would cut services to the bone,” said the Northern California clinic worker. “People would get sicker, their families would get sicker, and they’d miss work.”
That could hit small businesses the hardest, since any California business with fewer than 50 employees is not required to offer company-sponsored health insurance and is thus more vulnerable to cuts that threaten a safety-net program like Medi-Cal, which may cover its workers.
“That means people can’t see a primary care provider and get better preventive care,” the Northern California worker said. “The most obvious impact is that emergency rooms would become overrun with people who wait until their conditions are too serious to ignore — and hospitals wouldn’t be reimbursed for their cost, either.”
A sicker populace and a crumbling health infrastructure are the kinds of issues that no state, California included, is prepared to handle. It is a human issue with profound economic implications. So far, though, the conversation in Washington revolves not around people, but dollars and cents.
