California Leaders Convene as Challenge to Maintain Current Investments in Healthcare and Food Assistance Supports Looms

Key Points:

• H.R. 1 threatens the financial stability of California’s Medi-Cal and CalFresh programs, putting over 3 million Medi-Cal members and 400,000 SNAP recipients at risk of losing benefits, at a time when many report material hardship.

• California faces a potential $30 billion annual loss in federal Medicaid funding, leading to service cuts and setbacks in health care progress, especially for vulnerable communities.

• The state must act to protect children and families, improve existing program efficiency, and reduce administrative burdens to sustain essential health and food assistance services.

The passage of the federal reconciliation bill, H.R. 1, in July has left many states scrambling to understand how drastic actions to restrict access to social services, such as Medicaid and SNAP, will impact their communities. Over the past month, California has convened policy experts and state agency officials for multiple hearings to understand how H.R. 1 will affect our most vulnerable communities.

Within California’s Medicaid program alone, approximately 20% of the 15 million Medi-Cal beneficiaries are at serious risk of losing their healthcare coverage. While children’s access to Medi-Cal is mostly untouched by H.R. 1, all Californians, regardless of age, will be negatively affected by the fallout of lower Medi-Cal spending. The state currently projects that approximately $30 billion in federal funding annually is in jeopardy due to state Medicaid financing restrictions as part of H.R. 1. This represents a significant shock to Medi-Cal, one that could lead to harmful cuts to service delivery and hamper the progress Medi-Cal has made over the past five years, impacting the 1.2 million children under age 5 who rely on the program.

In addition to harmful new Medicaid provisions, H.R. 1 also enacts changes to social service programs, including the Supplemental Nutrition Assistance Program (SNAP), that will be detrimental to California’s families with young children. Through the implementation of stricter work requirements for SNAP recipients, eliminating inflation adjustments, and shifting additional costs to implement SNAP to the states, H.R. 1 is expected to cut between $1.7 billion and $3.7 billion in annual funding for CalFresh, the state’s SNAP program, and almost 400,000 Californians are at risk of losing their CalFresh benefits. CalFresh serves over 1.8 million children aged birth to 17. Most children participating in CalFresh enroll as infants, and almost half of California’s children receive CalFresh at some point during their first five years of life. These cuts once again will force the state to make difficult decisions on how to cover unprecedented funding gaps, potentially putting children and their families at risk.

Federal changes to social safety net programs will have significant downstream effects in California. At a time when more than one-third of California’s families with children ages birth to five report experiencing material hardship paying for essentials such as food, utilities, and healthcare, H.R. 1 will make families with young children worse off, especially for those who rely on Medi-Cal and CalFresh. Mandating increasingly onerous administrative requirements for individuals to obtain and maintain health coverage or access food assistance benefits will only exacerbate the existing barriers that families face in trying to receive benefits and services for which they are already eligible.

As California continues to analyze the projected impacts of H.R. 1, the state will be challenged to maintain current levels of investments in healthcare and food assistance supports. In the midst of looming uncertainty, California must commit to safeguarding existing programs and services focused on children prenatal to age five and their families. Within Medi-Cal alone, there are multiple ways the state can prioritize children and their families while improving service delivery for all Medi-Cal members without incurring additional costs.

For example, the state could shore up new Medi-Cal benefits by standardizing the relationship between community providers and managed care plans. Currently, managed care plans have wide ranging flexibility in how they implement benefits such as the enhanced care management and community health worker services, creating unintended challenges for community providers looking to leverage these benefits. By streamlining guidance, the state can reduce the administrative burdens that community providers, such as First 5s, must go through to become Medi-Cal contracted providers, improving service delivery for children and their families who are eligible for these services.

This is just one example of how the state can enhance the efficiency of existing investments to advance its care and quality goals and ultimately manage costs. It will be essential for the state to maintain services for our youngest children and explicitly center their needs, finding all of the efficiencies along the way, as it navigates the uncertain periods ahead.