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Much of America’s future is made, tested and — more often than not in recent years — fails in California.

California’s Democratic Gov. Gavin Newsom just announced that California would begin providing health care coverage to an additional 764,000 illegal immigrants on top of the 1.1 million already in the Medi-Cal system, California’s version of Medicaid. More than one-third of California’s shrinking population of 39 million is enrolled in the Medi-Cal program.

California has been incrementally adding illegal immigrants to the Medi-Cal program since 2015. That was the year it made undocumented children eligible. Four years later, it added adults 50 and older.

CALIFORNIA LEGISLATIVE SESSION TO BE DOMINATED BY AI REGULATIONS AND STATE’S STRUGGLING BUDGET

The latest expansion round adds those aged 26 to 49 at an estimated annual cost of $3.1 billion to California taxpayers — or about $4,058 a year in medical coverage subsidies from the state General Fund for those residing in California illegally in this age cohort.

The federal government only underwrites Medicaid expenses for those lawfully present in the U.S. 

Overall, Medi-Cal consumes the largest portion of California’s $454.7 billion budget, with the federal government chipping in about $90 billion for health and the state about $40 billion from its General Fund.

California’s Democratic leadership has sought to use its Medi-Cal program as a means to gradually move to universal health insurance coverage. They argue that, since federal law mandates all hospitals provide emergency care services to anyone, regardless of immigration status or ability to pay, it’s less costly and more efficient to expand Medi-Cal coverage.

For instance, an audit completed in Texas in 2021 found that hospitals in the Lone Star State spent up to $717 million to provide uncompensated hospital service for 1.6 million illegal immigrants. This amounts to as much as $448 per person annually, a cost that ends up being socialized to other hospital users. 

But Medi-Cal coverage doesn’t equal care. “It’s mind-numbing. California thinks itself a white knight for healthcare justice,” said Tanner Aliff, policy director for the Right on Healthcare at the Texas Public Policy Foundation, “Yet the state has failed to realize its Medicaid for All campaign has ironically reduced healthcare access for low-income folks living in rural counties. Between 2016 – 2019, California’s rural counties saw a drastic drop in the number of physicians accepting Medicaid.” 

Further compounding the problem, Aliff noted that, “In 2023 the California Hospital Association claimed 1 in 5 hospitals are the brink of closure due to losses from Medi-Cal. Medicaid is putting providers out of business, and there is no point in giving people taxpayer-funded Medicaid cards if there is nowhere to use them.” 

But California is facing a mammoth $68 billion budget deficit, meaning Newsom and the Democratic supermajority in each legislative house will have to figure out how to trim state spending by about 22% — slightly less than California spends on K-12 education.

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California Republican Sen. Roger Niello, the vice-chairman of the Senate Budget and Fiscal Review Committee, told me, “Along with my Republican colleagues, I have called on Governor Newsom and legislative leadership to take early action on the $68 billion budget deficit we face. As one necessary step in this direction, regardless of one’s position on this expenditure, it makes no sense to add this to that daunting shortfall.” 

But Newsom may not be completely out on a limb with spending state taxpayer money on health care for illegal immigrants. This is because the Biden administration likely sees itself as having the power to unilaterally declare illegal immigrants as being in the nation lawfully.

Last April, the Biden administration announced its intent to declare illegal immigrants covered under the Obama-era Deferred Action for Childhood Arrivals program executive order as meeting the definition of having a “lawful presence,” thus making them eligible for Medicaid benefits. This action likely saved California some $1.1 billion in offsetting federal assistance.

Doing something similar with millions of other illegal immigrants could generate an additional $11 billion in federal Medicaid assistance for California, providing a welcome federal bailout for California’s profligate spending. This is based on the theory that the paperwork handed out to them by the Border Patrol after they illegally entered the U.S. constitutes a form of “lawful presence” while they await their first hearing before an immigration judge.

Of course, this welcome embrace by the taxpayers of illegal immigrants may influence behavior. The Heritage Foundation’s Nina Owcharenko Schaefer warns that California’s generosity may cause migrants to move to California. If so, it will at least partially offset California’s unprecedented population drain, with the state now having lost residents three years in a row.

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