California Takes Out $3.44 Billion Loan to Pay Growing Medi-Cal Costs

State senator says Republican lawmakers will demand a full hearing to find how the money will be spent.

California Gov. Gavin Newsom speaks to reporters at the Davis Ranches in Colusa, Calif., on Dec. 10, 2024. Travis Gillmore/The Epoch Times

California borrowed $3.44 billion this month to pay for cost overruns for its state-funded health care plan, the finance department reported on March 12.

The loan drew criticism from some lawmakers as they blamed the state’s decision last year to fund health care costs for illegal immigrants.

Gov. Gavin Newsom’s office said the claim was not accurate.

“This isn’t new—as the administration already outlined in the Governor’s January budget proposal, additional funding is needed to support Medi-Cal,” a spokesman for Newsom told The Epoch Times in an email on Thursday. “Rising Medicaid costs are a national challenge, affecting both red and blue states alike. This is not unique to California.”

State legislators passed a law in 2022, making California the first state to offer free health care to all low-income illegal immigrants.

The program was expected to provide about 764,000 people with free health care coverage through the state’s Medi-Cal program at a cost of $2.7 billion each year beginning in 2024.

The dramatic increase of illegal immigrants entering the United States during President Joe Biden’s term coincided with new state laws to broaden government-funded health care plans to cover them.

California is now one of 35 states to offer free or low-cost health care services to residents, regardless of their immigration status or insurance coverage, according to the Center on Budget and Policy Priorities, a nonpartisan research institute.

A spokesman for the Federation for American Immigration Reform (FAIR), a national organization that advocates for changes in the U.S. immigration policy, said California’s ballooning cost to pay for Medi-Cal shows that paying for illegal immigrants is expensive.

“It is evidence that the efforts by California and other states that try to cater to illegal immigrants comes with an enormous price tag,” FAIR spokesman Ira Mehlman told The Epoch Times. “It means that other needs in those jurisdictions go unmet.”

California’s program is another magnet that draws people to California illegally and adds more burdens to the state’s shrinking tax base, he added. 

“There are all sorts of needs that need to be met in California that $3.4 billion could be addressing,” Mehlman said.

A letter sent Wednesday by Chief Deputy Director Erika Li of the California Department of Finance to the Legislature said the department approved a request for a Medical Providers Interim Payment Fund loan of $3.44 billion on March 4.

The California State Senate Budget and Fiscal Review Committee reviews Gov. Gavin Newsom's budget proposal in Sacramento, Calif., on Jan. 23, 2024. Travis Gillmore/The Epoch Times

Li stated the loan, taken from the state’s general fund, was approved “to allow the Department of Health Care Services to complete critical payments.”

The funding was necessary to cover Medi-Cal expenditures that exceeded the state’s approved 2024 budget.

She added that the Department of Health Care Services can use the loan to make payments to various Medi-Cal providers.

The loan notification surprised some legislators on Wednesday.

Republican Senate Leader Brian Jones criticized the secrecy of the loan.

“Typical of the secretive Newsom Administration, they just quietly dropped a damning notification that they are taking a $3.44 billion loan to fund free healthcare for illegal immigrants,” Jones wrote on social media platform X Wednesday. “The loan is being taken from tax dollars meant for healthcare providers. This program is out of control.”  

California State Sen. Brian Jones attends the 2024 CAGOP convention in Burlingame, Calif., on May 17, 2024. John Fredricks/The Epoch Times

Jones added that senators will demand a full hearing and full cost analysis so the public knows exactly where their tax dollars were going.

Republican Assemblyman Bill Essayli of Corona said the program is taking a financial toll on the state.

“CA will go broke giving free health care to illegal immigrants. I asked the Governor’s finance team last year if there was a limit on how many illegal immigrants can come to California and sign up for free health care. They said there’s no limit! This is an insane policy,” Essayli posted on X Wednesday.

An estimated 4.1 million illegal immigrants and their U.S.-born children live in California, which accounts for about 10.7 percent of the population, according to a study by FAIR.