This story was originally published by The Intersection.
Health care leaders across the central San Joaquin Valley fear that federal cuts to Medicaid and state reductions in Medi-Cal benefits represent a “tsunami” of changes that jeopardize the financial stability of hospitals and clinics, and threaten residents’ access to care in the region.
A recent San Joaquin Valley market report published by the California Health Care Foundation found that among officials from hospitals, health clinics and public health leaders, “the sense was one of widespread anxiety” after changes that sharply limit eligibility for state and federal health benefits for undocumented residents.
Yegian Health Insights regional lead Len Finocchio, who interviewed more than two dozen health leaders in Fresno, Kings, Madera, Mariposa and Tulare counties, said “all of the interviewees felt there would be an increase in the number of uninsured and reductions in both medical benefits and [insurance] provider payments” to hospitals and clinics. Finocchio was author of the report for the California Health Care Foundation.
(Note: The California Health Care Foundation is a contributor to the Fresno State Institute for Media and Public Trust, which underwrites the Central Valley Journalism Collaborative’s Health Care Reporting Fellowship.)
“One respondent noted that this is a tsunami that is coming,” Finocchio said in a Feb. 5 online webinar reviewing the findings of the Valley market report. Those concerns revolve around about $1 trillion in cuts by 2035 to the federal Medicaid public insurance program for low-income residents and California’s efforts to limit undocumented adults to only “restricted-scope” coverage under Medi-Cal, the state’s incarnation of Medicaid.
Those reductions are compounded by the reliance of almost two-thirds of Valley residents on Medicaid/Medi-Cal or Medicare (the federal health insurance for senior citizens), as well as the region’s overall poorer health, higher infant mortality, a shortage of medical providers relative to the rest of California, and a significant number of undocumented residents.
For Mark Mertz, CEO of Kaweah Health Medical Center in Visalia, House Resolution 1 – the “One Big Beautiful Bill Act” backed by President Trump and signed into law in July 2025 – represents “sweeping changes” for Medicaid/Medi-Cal eligibility, enrollment and payments to hospitals and clinics and thus is “the biggest or most pressing issue” for Kaweah Health.
“As we look at the full impact of the bill being implemented over the next several years, it is tens of millions of dollars in reductions in revenue for us,” Mertz said in the Feb. 5 session.
“I do believe that hospitals will close as a result of these changes and reductions to Medicaid,” Mertz added. “What is abundantly clear to me is that Kaweah Health, or other organizations and providers that serve a high volume of Medicaid patients like we do, absolutely cannot absorb any additional reductions in payments for lower-income patients who really do need us the most,” Mertz said. “Quite frankly, Congress can’t fix the federal budget or balance the federal budget on the back of these low-income patients who really do rely on us to be here.”
Kaweah Health, the five-county region’s second-largest hospital, was one of three central San Joaquin Valley hospitals that benefitted from a no-interest award from the state’s Distressed Hospital Loan Program, passed by legislators in Sacramento and signed by Gov. Gavin Newsom in 2023 following the bankruptcy and closure of Madera Community Hospital in Madera. The program made money available to hospitals facing a risk of closure.
Kaweah Health received more than $20.7 million, while the John C. Fremont Healthcare District in Mariposa County was awarded more than $9.3 million. Madera Community Hospital received the largest single allocation from the $300 million program to boost its reopening in 2025 after being closed for more than two years.
Of 13 acute-care hospitals in the region, eight reported negative net income margins in 2023, meaning they lost money.
What are the federal and state changes?
California is one of only seven states in the U.S., plus the District of Columbia, that offers public health coverage using state rather than federal money to some or all low-income adults regardless of immigration status, and one of 14 states plus D.C. that provide medical coverage for children regardless of their immigration status, according to KFF, an independent health policy and information organization.
That coverage is being targeted, however, as Congress and the Trump administration seek to cut Medicaid spending and curtail or eliminate public benefits to undocumented immigrants. H.R. 1’s changes to the federal Medicaid program include:
- A rule that states impose a work or service requirement of at least 80 hours per month for people ages 19 to 64 to be eligible for Medicaid. Parents of children age 13 and under, and people who are medically frail, are exempt from the work requirement.
- A requirement to begin charging $35 per service for covered adults for certain services in 40 states, including California, where Medicaid coverage was expanded under the Affordable Care Act.
- A requirement that states reassess Medicaid eligibility every six months for people covered under Medicaid expansion. Previously, eligibility renewal was once a year.
- A limit on retroactive Medicaid coverage to costs that occur either one or two months prior to a person’s application for coverage. Current law includes retroactive coverage going back three months.
- Bars Medicaid funds from being paid to nonprofits that primarily provide family planning or reproductive services, including abortions, and received $800,000 or more in Medicaid payments in 2023.
- A restriction on Medicaid eligibility for some lawful immigrants who were eligible under prior law. Those no longer eligible include refugees, people who have been granted asylum and abused spouses and children. Current law already bars undocumented immigrants from eligibility for federally-funded Medicaid coverage.
As California grappled with its own fiscal woes, the 2025-26 state budget adopted in June 2025 took additional steps to limit Medi-Cal expenditures for undocumented immigrants, including:
- Freezing new enrollments for full-scope Medi-Cal coverage for undocumented immigrants ages 19 and older, starting no earlier than January 2026. This measure is projected to create almost $78 million in general fund savings to the state in 2025-26 and up to $3.3 billion by 2028-29.
- Eliminating full-scope dental benefits for undocumented enrollees ages 19 to 54 starting in July 2026. Emergency and restricted-scope dental coverage would still be available to such patients. This change is estimated to save the state’s general fund $308 million in 2026-27 and $336 million annually in following years.
- Charging a $30-per-month premium for Medi-Cal coverage for undocumented enrollees ages 19 to 54, starting in July 2027. The estimated general fund savings are $695.7 million in 2027-28 and $675 million annually in subsequent years.
- Eliminating a “prospective payment system” covering care funded only by the state to undocumented immigrants starting in July 2026, instead shifting to a system in which care providers are reimbursed on a fee-for-service basis. The shift is projected to save the state $1 billion in 2026-27 in general fund spending, and $1.1 billion each year in subsequent years.
- Putting in place a program to seek pharmacy drug rebates for the state for undocumented immigrants, resulting in general fund savings of about $370 million in 2025-26 and $600 million in 2026-27 and beyond. Additional savings from minimum rebates for HIV/AIDS and cancer drugs are estimated at $75 million in 2025-26 and $150 million in following years.
A Central Valley Journalism Collaborative analysis of Medi-Cal enrollments as of September 2025 shows that of about 590,000 eligible adults in the four-county region, more than 67,000 were eligible for Medi-Cal benefits under California’s expansion of benefits to undocumented residents – the ones at greatest risk of becoming uninsured.
Who’s at risk amid the changes?
Uncertainty appears to be the main apprehension of not only hospitals, but a raft of health clinics across the central San Joaquin Valley as they assess what the changes will mean to their bottom lines as well as to the hundreds of thousands of people who either rely on Medicaid/Medi-Cal for health coverage or who have no health insurance at all.
“While people are losing coverage, potentially, we’re trying to gauge exactly what the impact is going to be, because we don’t exactly know,” said Justin Preas, president and CEO of Fresno-based United Health Centers of the San Joaquin Valley. United Health Centers is the second-largest operator of Federally Qualified Health Center clinics in the five-county region, with more than 853,000 patient visits in 2023 across 34 clinic sites in Fresno, Kings and Tulare counties.
“It’s that kind of perfect storm where we are going to have more uninsured patients,” Preas said. “There’s really only two places for uninsured people to go, and that’s to Federally Qualified Health Centers and hospital emergency rooms. … So for their primary care services, it’s going to fall on the backs of the FQHCs to take care of them in that setting.”
“What’s going to happen is a lot of people that right now qualify [for Medi-Cal], will not qualify soon, and we’re going to still take care of them,” Prease added. “We’re just not going to get a whole lot of revenue to take care of them, but we will still continue to provide services to them.”
Dr. Simon Paul, Madera County’s public health officer, concurred. “Whether people are undocumented or documented, if you don’t have insurance you can go to an FQHC or an emergency room, and that’s where people are going to get care,” he said.
But Paul’s concern is that people who don’t have insurance won’t only create financial concerns for hospital emergency rooms and health clinics, but may also put off doctor visits that they cannot afford for relatively routine conditions that could potentially deteriorate into more serious health issues.
It will be similar, he added, for people who lost easy access to a hospital emergency department when Madera Community Hospital closed. “I think the biggest impacts were people with things like poorly controlled heart failure, poorly controlled diabetes, who would have gone to the local emergency room but now delayed care, and those people are going to end up sicker two or three years from now.”
Specialty care is also likely to be at risk for the uninsured or underinsured. “When people lose Medi-Cal. if you’re in a horrible accident, you will still get to the emergency room and get the treatment you need,” Paul said. “You may not get the rehab you need afterwards, but you will get the acute care that you need.”
“People are going to be able to get care at [clinics and emergency rooms],” he added. “I think that’s also going to lead to a lot of dead ends, which is the people with more complicated issues. “You’ll get the initial workup done, but you’ll need specialty care and more complicated care, and that’s where it’s going to fall apart.”
Paul reported that Medi-Cal enrollment in Madera County has dropped from about 75,000 last year to about 70,000. “I think once people know a program is going to change, they already start feeling like, well, I probably won’t qualify, and we’re already seeing enrollment dropping,” he said.
Tim Sheehan is the Health Care Reporting Fellow at the nonprofit Central Valley Journalism Collaborative. The fellowship is supported by a grant from the Fresno State Institute for Media and Public Trust.