Overview

Medicaid is essential to the health and wellbeing of Californians. More than one in three Californians depend on the state’s Medicaid program, Medi-Cal, for care. This includes 1.5 million older adults, 3.5 million children, 850,000 people with disabilities, and 4.7 million adults between the ages of 26 and 49 (Center on Budget and Policy Priorities, 2024).

Over 80 percent of Medicaid enrollees under 65 are people of color, and more than half are Latinx. Two in five births in California are covered by Medi-Cal.

Federal Funding Cuts and Fiscal Fallout

Following passage of the Republican-led reconciliation bill, Medicaid is facing nearly $1 trillion in national funding cuts. California, home to one of the largest Medicaid programs in the nation, is absorbing an estimated $30 billion loss in federal support, undermining the fiscal foundation of Medi-Cal and threatening care for millions.

Federal funds comprise over one-third of California’s state budget and account for 64 percent of all federal money flowing into the state. The federal match rate for Medi-Cal remains 50 percent, meaning for every dollar California invests, the federal government contributes another fifty cents. Reduced federal participation has forced the state to consider severe Medi-Cal program rollbacks, particularly those supporting vulnerable populations such as unhoused individuals, people with disabilities, and older adults.

Coverage and Equity Consequences

In the months since the bill’s enactment, counties have reported early warning signs of coverage losses across low-income and housing-unstable populations. More than 13.6 million Californians, over one-third of the state, are at risk of losing full or partial Medi-Cal coverage due to funding reductions and reinstated eligibility restrictions.

Meanwhile, the bill’s accompanying tax provisions have already granted the top 1 percent of Californians an average $35,260 annual tax break, compared with just $100 for the lowest-paid workers. This shift diverts public resources away from health and housing security and toward corporate and high-income interests.

Work Requirements and Administrative Barriers

Newly enacted mandatory work requirements have added layers of administrative red tape that disproportionately harm those experiencing homelessness, caregiving obligations, or unstable employment.

Although most Medi-Cal enrollees already work, attend school, or provide care, thousands have lost coverage for failing to meet rigid documentation deadlines or because they lack stable mailing addresses or internet access.

Counties report that many unhoused individuals, who often cycle between shelters, encampments, and hospitals, are unable to verify employment status or log monthly work reports. These individuals are now losing care not due to ineligibility, but to paperwork barriers (California Health Care Foundation [CHCF], 2024).

Research from prior state rollouts, such as Arkansas, demonstrates that work requirements result in mass disenrollment without corresponding gains in employment (Sommers et al., 2019). The same pattern is now unfolding in California, where early estimates suggest nearly 40–45 percent of Medi-Cal expansion enrollees may face suspension or termination of coverage.

Medi-Cal’s Role in Addressing Houselessness and Housing Instability

California has led the nation in linking health care to housing security through CalAIM (California Advancing and Innovating Medi-Cal). This initiative funds Enhanced Care Management (ECM) and Community Supports for people experiencing homelessness, including recuperative care, housing navigation, tenancy support, and short-term rental assistance (National Academy for State Health Policy [NASHP], 2024; California Department of Health Care Services [DHCS], 2025).

However, the reconciliation bill’s federal cuts have forced suspension or downsizing of many CalAIM-funded services, leaving unhoused Medi-Cal members with fewer pathways to coordinated care.

Health Care Impacts on the Unhoused

• Loss of Coordinated Care:
  ECM teams that once connected unhoused Californians to primary care, mental health, and housing resources are now operating with reduced staffing and narrower eligibility. As a result, thousands of Medi-Cal members experiencing homelessness have lost case management support that previously prevented emergency room overuse and helped transition individuals into stable housing (AP News, 2024).
  
  
  

• Collapse of Recuperative Care and Street Medicine Programs:
  Several counties, including Los Angeles, Alameda, and Kern, have reported reductions in recuperative or post-hospitalization beds for unhoused patients due to lost federal reimbursements. These cuts are forcing hospitals to discharge patients prematurely, leading to a rise in preventable readmissions and increased costs to local safety nets (Justice in Aging, 2024).
  
  
  

• Increased Coverage Disruptions:
  People without stable addresses are often unable to receive Medi-Cal renewal notices or respond to requests for documentation, resulting in automatic disenrollment. Programs like those recommended by CHCF (2024) and Homebase (2024)—including address tracking and community-based renewal outreach—have lost grant funding, further compounding losses of coverage among unhoused populations.
  
  
  

• Threats to Housing-Health Integration:
  The Housing and Homelessness Incentive Program (HHIP), which rewarded managed-care plans for measurable progress in reducing homelessness, has experienced significant funding shortfalls. Without these incentives, Medi-Cal plans have reduced partnerships with local Continuums of Care, weakening cross-sector housing-health collaborations (DHCS, 2025).
  
  
  

• Rising Emergency Department Reliance:
  Hospitals statewide report an uptick in emergency department visits among recently disenrolled unhoused individuals, many of whom are returning with advanced chronic illnesses that could have been managed in outpatient or community settings (NASHP, 2024). This reversal erases gains made under Whole Person Care and early CalAIM pilots, where integrated health-housing services significantly lowered hospital utilization.
  
  

Threats to Long-Term and Community-Based Care

Cuts have also destabilized Home and Community-Based Services (HCBS), especially the In-Home Supportive Services (IHSS) program that supports over 700,000 older adults and people with disabilities.

Lower provider reimbursement rates have accelerated direct-care workforce shortages, which disproportionately affect unhoused and housing-unstable individuals who depend on community-based providers for care continuity.

Without Medicaid’s robust funding of home- and community-based supports, California faces longer waitlists, reduced caregiving capacity, and worsening health outcomes among people living on the margins of housing security.

Conclusion

Medi-Cal has long been the foundation of California’s social safety net, serving to link health, housing, and human dignity. Since the passage of the reconciliation bill, the erosion of federal Medicaid funding has begun to unravel this system, stripping care from those who need it most.

The impacts are starkest among unhoused Californians, for whom Medi-Cal often provides the only access point to preventive health care, mental health treatment, and housing-linked support. Work requirements and reduced funding have turned administrative barriers into life-threatening obstacles, widening health disparities and pushing the state’s most vulnerable residents further into crisis.

Protecting the health of unhoused Californians requires urgent state and federal action to restore funding, simplify enrollment, and preserve integrated care models like CalAIM. The health and moral integrity of California depend on it.

References (APA 7th Edition)

• AP News. (2024, March 3). California’s Whole Person Care program shows health and housing gains for homeless participants. https://apnews.com/article/8e353e5539ce36c9068a78f6ee7baeb7 

• California Department of Health Care Services (DHCS). (2025). Housing and Homelessness Incentive Program. https://www.dhcs.ca.gov/services/Pages/Housing-and-Homelessness-Incentive-Program.aspx 

• California Health Care Foundation (CHCF). (2024). Improving Medi-Cal renewals for people experiencing homelessness. https://www.chcf.org/resource/improving-medi-cal-renewals-for-people-experiencing-homelessness 

• Homebase. (2024). Medi-Cal renewal guidance for people experiencing homelessness. https://www.homebaseccc.org/medi-cal-renewal 

• Justice in Aging. (2024). Medi-Cal policies enhancing housing security among older adults. https://justiceinaging.org/wp-content/uploads/2024/12/Medi-Cal-Policies-Enhancing-Housing-Security-Among-Older-Adults.pdf 

• National Academy for State Health Policy (NASHP). (2024). CalAIM: Leveraging Medicaid managed care for housing and homelessness supports. https://nashp.org/calaim-leveraging-medicaid-managed-care-for-housing-and-homelessness-supports 

• Sommers, B. D., et al. (2019). Medicaid work requirements—results from Arkansas. New England Journal of Medicine, 381(11), 1073-1082. https://doi.org/10.1056/NEJMsa1901772