New data show California’s cuts to its Medicaid program are taking a steep toll on the state’s once-signature “Health Care for All” movement.
More than 86,000 immigrants without legal status left or were denied Medi-Cal in January and February, exiting the program at a rate six times higher than other enrollees, according to a Public Health Watch analysis of the most recent data available.
The sharp decline is the largest two-month enrollment drop for this population since California first opened Medi-Cal to all low-income residents regardless of immigration status in 2024.
The initiative, championed by Gov. Gavin Newsom, had been steadily growing until May 2025, when participation peaked at 1.48 million enrollees. Enrollment has fallen gradually since, driven in large part by passage of the sweeping federal budget bill, H.R. 1, and other state actions that will deter or discourage more immigrants from getting Medicaid coverage.
“We’ve got a real chilling effect,” said Laura Sheckler, deputy director of policy and regulatory affairs at the California Primary Care Association, which represents nonprofit health clinics statewide. “A lot of actions have happened at the federal level … and then on top of that, state policies [have indicated] just a clear withdrawal from that promise of care and coverage.”
In June, when enrollment began to dip, it was revealed the Trump administration was sharing Medicaid data with Immigration and Customs Enforcement, or ICE. The data included names, addresses and citizenship status of Medi-Cal members.
That same month, California approved a Medi-Cal enrollment freeze on undocumented immigrants, to take effect this year. The freeze has a twofold effect: It stops new adult immigrants without legal status from enrolling and blocks former recipients from re-enrolling. That means undocumented adults who lapsed on paperwork or payments for more than 90 days will lose coverage permanently.
Then, in July, the pace of disenrollments sped up. On July 4, President Trump signed the sweeping tax and spending bill, H.R. 1, which is projected to cut Medicaid spending by nearly $1 trillion over the next decade. Meanwhile, a series of federal ICE raids across California caused panic among immigrants and led to widespread demonstrations.
But the sharpest decline in Medi-Cal numbers began on January 1, when California’s enrollment freeze took effect.
The freeze halted the state’s first-in-the-nation Medi-Cal expansion program, which had extended Medi-Cal coverage to all low-income undocumented adults.
State analysts say the long-term consequences could be huge. About 1.3 million immigrants in California are expected to lose their full-scope Medi-Cal over the next four years due to the freeze and other state changes. That could cause many to forego treatment for chronic illnesses or ignore medical symptoms until they become emergencies, providers say.
“I feel helpless sometimes” watching patients lose full care, said Cristina Rodriguez, a physician assistant at the Altura Centers for Health, a network of community clinics serving the San Joaquin Valley.
The clinic where she works is in Woodville, a small rural community surrounded by miles of farmland. A large proportion of her patients are undocumented. Because of the state’s policy changes, she said, they’re increasingly worried about their future coverage. “These are patients that really need their health care. They really need their medications … it’s disheartening,” she said.
On top of the freeze, the state in July will eliminate immigrants’ dental benefits, with the exception of emergency treatment. The change will affect both undocumented and certain lawfully present immigrants, including some permanent residents and Deferred Action for Childhood Arrivals, or DACA, recipients (undocumented immigrants brought to the U.S. as children). It will deny them coverage of preventive care such as cleanings, fillings and non-emergency extractions.
That’s significant because studies show poor dental health is tied to cardiovascular disease, pregnancy and birth complications, and pneumonia. Growing evidence also links it to diabetes and Alzheimer's.
“They can go to the emergency room … but that's not going to treat their chronic health condition. That's not gonna give them the long-term care they need,” said Hanna Orbach-Mandel, a policy analyst at the California Budget and Policy Center.
When people forgo regular care and seek treatment only in an emergency, she said, it burdens the health-care system and increases costs.
“It leads to more wait times for other people trying to get emergency care, it leads to understaffed clinics because they can’t meet the demand and it leads to cuts in services,” Orbach-Mandel said.
In July, the state will also eliminate what’s known as the “Prospective Payment System,” or PPS, for community health clinics.
There are roughly 2,300 federally qualified health centers, or FQHCs, in California — a designation for clinics that serve the most vulnerable and needy. The facilities must offer medical care to patients regardless of their immigration or insurance status or ability to pay.
The clinics often operate on tight margins. A recent KFF survey found that because of rising costs, the net operating margin for community health centers in the U.S. dropped to negative 2.1% in 2024.
Currently, when a Medi-Cal patient receives care from an FQHC, the clinic is reimbursed at a federally-determined minimum fixed rate, intended to cover the cost of care and provide a small buffer.
The removal of PPS could have a big impact.
Since undocumented immigrants enrolled in Medi-Cal aren’t covered by federal Medicaid, California can choose to pay less than the federally-determined minimum for their care. For this group only, California will stop reimbursing providers at the PPS rate and switch to a fee-for-service model. The change is expected to cost community health clinics $1 billion each year.
Sheckler, of the California Primary Care Association, said on top of federal Medicaid cuts, the financial hit from the state may cause clinics to close.
“Ultimately, that loss of funding is going to impact everyone that we see at health centers,” she said.
Perhaps more damaging, another change will go into effect next year.
In July 2027, many immigrants aged 19 to 59 who are on full-scope Medi-Cal will have to pay a $50 monthly premium. The policy will apply not only to undocumented immigrants but also certain legal immigrants, including some green-card holders and DACA recipients.
Policy analysts at the California Legislative Analysts Office said while the monthly fee will generate some revenue for the state, most of the savings — an expected $300 million per year — will likely come from increased disenrollments of immigrants.
“You could very much assume that adding premiums to this population would make individuals drop off of coverage because they are either unable to or unwilling to afford the premiums,” said Will Owens, a senior fiscal and policy analyst.
Earlier this month, Gov. Newsom had an opportunity to reverse course or delay Medi-Cal cuts in response to unexpectedly high state revenue this year.
But the new proposed budget he unveiled was mostly unchanged, apart from an increase to Medi-Cal premiums for immigrants, which rose from $30 to $50 per month.
The state legislature will vote on the final budget next month and could negotiate changes with the governor’s office.
At a news conference about the budget, Newsom said he still believes in the state’s historic Medi-Cal expansion to all, regardless of immigration status.
“I believe in health care for all. I promoted it. I believe in it, you know, despite some caps,” he said.