The recently passed Republican budget bill in the U.S. House of Representatives could lead to major changes in California’s healthcare system, including cuts to Medicaid funding and a potential loss of coverage for millions of residents, according to state healthcare groups.

The bill narrowly passed the House last week by a 215-214 vote. It now heads to the Senate for further debate and possible revisions. 

The bill includes provisions that would reduce federal funding for Medicaid programs and add new work and reporting requirements for recipients.

Supporters of the bill, including Congressman David Valadao (CA-22) who voted yes, said these changes aim to streamline federal spending and increase accountability. While healthcare experts argue that the bill would reduce healthcare access and place added strain on states.

What’s in the Bill?

According to California health advocacy organizations, the bill includes several major changes:

• Cuts to Federal Funding: California could lose around $30 billion a year because it uses state money to provide coverage to some immigrant groups not eligible for federal Medicaid. The federal government would reduce its support to states that do this.
• Work Requirements: Starting in 2026, some adults would need to work or meet other requirements to keep their Medicaid coverage. A similar rule in Arkansas led to 18,000 people losing coverage, mostly due to paperwork issues.
• Shorter Renewal Periods: Instead of renewing coverage once a year, people would have to reapply every six months, which could result in more people losing coverage due to missed deadlines.
• End of Federal Support for Some ACA Subsidies: The bill would also stop federal payments that help lower-income people afford their health insurance. This could mean higher premiums and deductibles.

Who Would Be Affected?

• Children’s Hospitals: At facilities like Madera Children’s Hospital, over 80% of patients are on Medi-Cal. Losing federal money could lead to staff cuts or reduced services.
• Rural Communities: In areas like the San Joaquin Valley where more than half of residents rely on Medi-Cal hospitals and clinics may struggle to stay open or meet growing demand.
• Low-Income Families and Immigrants: Many immigrants and low-income families could lose coverage or face new barriers to care.

During a virtual press conference, Amanda McAllister Wallner, Executive Director of Health Access California, said the proposed legislation would impact up to 3.4 million Californians, many of whom gained coverage through the Affordable Care Act.

“These are our neighbors, coworkers, and family members. This is not theoretical. This is real.” said Wallner. “When members of Congress say this will improve the program or target ‘fraud,’ they are gaslighting the public. These aren’t targeted reforms, they’re blanket cuts. They would hit low-income Californians, seniors, people with disabilities, and communities of color the hardest. It’s not about making the system more efficient. It’s about pulling the rug out from under people who need healthcare to survive. We’ve seen the data. We’ve seen the lives saved. And we will fight to protect that progress.”

The bill would require new work and reporting requirements on adults ages 19 to 64 enrolled in Medicaid. While described as “work requirements,” the state healthcare group speakers mentioned that many affected individuals are already employed in low-wage jobs that do not offer health insurance.

Jess Bartholow of SEIU California said the rules would increase paperwork and could result in people losing coverage even if they meet the requirements but fail to properly report.

“The myth that poor people just need a push ignores the systemic barriers they face every single day. Health is foundational to employment. You can’t work if you’re sick, untreated, or caring for a family member without support. Instead of investing in healthcare as a pathway out of poverty, this bill punishes people for being poor. And what’s worse, it burdens states with the costly bureaucracy of tracking work hours and enforcing penalties. That’s not reform, it’s sabotage,” said Bartholow.

The bill also includes financial penalties for states like California that use state funds to provide certain healthcare benefits to undocumented residents. If enacted, California could lose $4 billion annually in federal support related to this policy.

Karen Savage-Sangwan, Executive Director of the California Pan-Ethnic Health Network, said that Medi-Cal covers one-third of the state’s population, including half of all children and one in four seniors. She said the bill would limit services and strain healthcare providers, particularly in rural areas like the Central Valley.

“The impacts of this proposal will ripple through our communities: clinics will close, jobs will be lost, and patients will delay care or be forced into emergency rooms. The racial health gap will widen. It’s not just a fiscal issue. It’s a life-or-death issue. And the people who will suffer most are the very people our society has already failed to protect,” said Savage-Sangwan. 

The bill also includes a provision that would block federal funding for healthcare providers that offer abortion services, effectively targeting Planned Parenthood. It would ban federal funding for gender-affirming care through Medicaid and CHIP programs, regardless of patient age.

Jodi Hicks, President of Planned Parenthood Affiliates of California, said that over 80% of patients at Planned Parenthood clinics in California rely on Medi-Cal. If federal funding is withdrawn, she said, many patients could lose access to services like cancer screenings, STI testing, and birth control.

“Abortion is already not federally funded,” she said. “This would affect basic preventive services for hundreds of thousands of people.”