Newsom Proposes Scaling Back Health Care for Undocumented Immigrants in California

Gov. Gavin Newsom called on Wednesday for California to scale back health care coverage for undocumented immigrants to help balance the state budget, retrenching on his desire to deliver “universal health care for all.”

The move came two days after the Trump administration targeted a different state-funded program for immigrants in California and signaled that it would continue to scrutinize benefits for undocumented individuals.

In a budget presentation on Wednesday, Mr. Newsom proposed freezing the enrollment of undocumented adults in the state’s version of Medicaid, known as Medi-Cal, as soon as January. He said he wold also seek to charge people who remain in the program $100 a month, beginning in 2027. The governor estimates that in combination, the changes would save the state $5.4 billion by the 2028-29 fiscal year.

The Trump administration has been using its federal powers to pressure Democratic-led states to eliminate benefits for undocumented immigrants. As she targeted a California cash aid program, Kristi Noem, the Homeland Security secretary, said on Monday: “If you are an illegal immigrant, you should leave now. The gravy train is over.”

But Mr. Newsom framed his proposed cuts as more a matter of fiscal necessity than a philosophical change.

California faces a $12 billion deficit in a proposed budget of $321.9 billion, Mr. Newsom said on Wednesday, because of increased spending at a time of volatility in the economy and financial markets. The shortfall could grow if the federal government curtails funding to states, as Congress is considering.

Mr. Newsom, a Democrat, blamed California’s budget shortfall partly on a projected drop in tax revenue resulting from President Trump’s turbulent trade wars, saying the tariffs had weakened the state’s economy. Mr. Newsom has begun referring to the impact of the tariffs as a “Trump Slump.”

Still, it has been clear for months that California’s Medicaid program, known as Medi-Cal, has been spending billions of dollars more than expected, raising questions about whether the state can afford to continue its progressive ambitions.

Providing health care to undocumented immigrants has turned out to cost much more than California leaders anticipated when they made Medi-Cal coverage available last year to all low-income residents, regardless of immigration status. Those benefits are funded entirely by the state.

California Democrats have been driven by a belief that providing health care to the poor is a moral imperative, as well as a more cost-effective approach than leaving immigrants to rely on emergency-room visits for routine care. Under federal law, undocumented immigrants are automatically entitled to emergency care but not Medicaid benefits.

Mr. Newsom faced a difficult choice in trying to rein in Medi-Cal costs. He could have sought to reduce benefits for all recipients, including citizens; or to focus on cutting benefits just for undocumented immigrants; or pursue some combination of the two.

His proposal will now be considered by state lawmakers, who must pass a budget next month.

“This is a tough budget,” Mr. Newsom said in his presentation Wednesday.

Coverage for undocumented immigrants is not the only reason Medi-Cal is running far over budget. Prescription drugs have cost the system more than expected, and more seniors have enrolled than the state projected.

But the cost of insuring undocumented immigrants has been a significant factor, and it has become a particularly sensitive issue for Democrats in California because of President Trump’s focus on deportations and the electorate’s interest in scaling back illegal immigration.

Medi-Cal benefits for undocumented immigrants have cost the state at least $2.7 billion beyond the $6.4 billion the state anticipated when eligibility was expanded last year. More undocumented immigrants signed up for Medi-Cal than expected, and the costs for their prescriptions were higher than projected.

“There was so much fanfare around the 2024 expansion,” said Paulette Cha, a research fellow at the Public Policy Institute of California. “This was extremely well publicized.”

Democrats see the unexpectedly large enrollment numbers as a mark of success in their aim to insure that all of the state’s residents have health coverage. Republicans see them as a sign that California is too generous.

Mr. Newsom’s proposal created an “I told you so” moment for Republicans.

“We warned him,” Brian Jones, the Republican leader in the State Senate, said in a statement, citing a letter to the governor that he sent last year, asking Mr. Newsom to freeze “his reckless Medi-Cal expansion for illegal immigrants.”

As the nation emerged from the Covid-19 pandemic shutdowns, public support grew for providing coverage to undocumented immigrants. When lawmakers passed an expansion of Medi-Cal in 2021, 66 percent of Californians favored providing health care coverage to the state’s undocumented residents, according to a survey by the Public Policy Institute of California.

But by 2023, PPIC’s surveys showed, support had dipped to 55 percent.

A poll this month by the Institute for Governmental Studies at the University of California, Berkeley, found that respondents gave higher priority to covering undocumented children than to covering undocumented adults.

“California obviously did a really big, bold experiment,” Ms. Cha said.

Other Democratic-run states that want to cover undocumented immigrants may look to its experience, Ms. Cha said, and think that “maybe we’ll just try to be a little bit more cautious on budgeting.”