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Medi-Cal Bad Idea for Golden State from the Start

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Medi-Cal Bad Idea for Golden State from the Start

 Sign for the California Department of Health Care Services and Public Health Building – Sacramento, California. (Matthew Corley/Dreamstime.com)

Sally PipesBy Sally Pipes

Gov. Gavin Newsom, D-Calif., is now learning fortunes can change quickly in the Golden State. Less than a year ago, Newsom was celebrating a projected $100 billion budget surplus — a fiscal boon that prompted the governor and legislature to craft a budget exceeding $300 billion.

Now, California faces a $22.5 billion deficit, leaving the governor scrambling for ways to tighten the state’s monetary belt.

He can start by calling off his plan to expand California’s Medicaid program, known as Medi-Cal, to all undocumented immigrants.

The expansion was a bad idea when the state’s coffers were flush. Now that California is struggling to make ends meet, using taxpayer money to cover non-citizens is simply irresponsible.

Newsom has been working for years to usher more and more undocumented immigrants into Medi-Cal, which already covers roughly one-third of the state’s 39 million residents.

That process began in 2016, when Newsom’s predecessor Gov. Jerry Brown expanded Medi-Cal to cover undocumented children up to age 18.\

In 2020, Newsom went a step further, granting Medi-Cal coverage to undocumented immigrants under the age of 26. More recently, Newsom has allowed illegal immigrants age 50 and older to enroll in Medi-Cal.

The final leg of this expansion — which would offer Medi-Cal to 700,000 illegal immigrants ages 26 to 49 — is supposed to take effect next January. But the state’s current fiscal situation makes this massive taxpayer-funded giveaway impossible to justify.

This latest proposed expansion is projected to cost a whopping $2.6 billion a year. That might have been easier to swallow in the days of a $100 billion budget surplus. But those days are gone.

But there’s no reason to stop there. Rolling back the previous Medi-Cal expansions would bring California that much closer to eliminating the budget deficit. The state currently spends an estimated $1.3 billion a year providing Medi-Cal to unauthorized residents 50 and older — a cost borne entirely by Golden State taxpayers without any federal support.

Even those estimates likely understate the real cost of the expansions by a significant margin. A program that rewards those who come to California illegally by providing them taxpayer-financed health insurance will almost certainly lead to more undocumented immigrants making their way to the Golden State. How could it not? In the long term, Medi-Cal’s rolls will swell — and the cost of the program will exceed today’s projections.

California can ill afford to make open-ended spending commitments, given that the state’s tax take is quite volatile from year to year.

California’s budget is largely financed through income taxes. Tax revenues are highly sensitive to the performance of the stock market and of industries like film and tech that dominate the state economy.

In other words, this current budget crisis won’t be the last one for California.

The argument in favor of expanding Medi-Cal to undocumented immigrants gets even weaker after considering the questionable quality of care the program provides.

Consider evidence from Oregon.

A landmark study of the Medicaid program in California’s northern neighbor compared health outcomes between patients who gained access to Medicaid through a random lottery and similar patients who remained uninsured.

According to that analysis, after two years, there were “no significant improvements in measured physical health outcomes” for patients covered by Medicaid compared to the uninsured control group.

How can California justify spending billions of scarce taxpayer dollars providing coverage that delivers little benefit to people in the country illegally?

Gov. Newsom has some tough decisions to make to eliminate California’s budget deficit this year. But rolling back Medi-Cal coverage for undocumented workers shouldn’t be one of them.

Sally C. Pipes is president, CEO, and the Thomas W. Smith fellow in healthcare policy at the Pacific Research Institute. Her latest book is “False Premise, False Promise: The Disastrous Reality of Medicare for All,”

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