The Legislative Analyst’s Office released its overview of California’s 2026–27 health spending plan on October 19. The report explains how the enacted budget combines savings measures with new investments and temporary funding to preserve certain services. Although total Medi-Cal spending reaches approximately $220 billion, higher spending does not necessarily mean expanded coverage: much of the growth reflects larger provider payments supported by provider taxes and federal funding.
Several decisions will affect coverage and access in 2027. Beginning in January, certain adults will face work or other qualifying activity requirements and eligibility reviews every six months. The administration projects these changes will result in approximately 43,000 disenrollments in 2026–27, rising to 1.3 million by 2029–30. Separately, the budget preserves comprehensive coverage through June 2027 for approximately 150,000 qualified noncitizens affected by federal funding restrictions, including certain refugees and asylees. Beginning in July, that population would transition to coverage limited to emergency and pregnancy-related services.
The budget also postpones several previously approved reductions until July 2027. These include changes to safety-net clinic payments for state-only-funded services to affected immigrants, elimination of certain supplemental dental payments, and elimination of Medi-Cal dental benefits for adults with unsatisfactory immigration status. The delays preserve funding and benefits temporarily; they do not cancel the reductions. Other investments include one-time funding for public hospitals and promotora training, along with expanded state premium assistance through Covered California.
Taken together, these decisions suggest continued pressure on patients and the health care safety net as temporary support expires and coverage rules tighten. Potential consequences include greater difficulty obtaining routine care and increased demand for assistance from community organizations. These are implications of the budget decisions, rather than outcomes LAO predicts with certainty. LAO also notes that the redesigned managed care organization tax requires federal approval and that Medi-Cal spending estimates have been revised upward in each of the past two years, adding uncertainty to future budget planning.
