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Prepared by Precision Advocacy
CalHHS holds Briefing on H.R. 1 Implementation and Impacts of Federal Shutdown
The California Health and Human Services Agency (CalHHS) held a briefing on Monday titled “Updates on H.R. 1 efforts in California and the Rural Health Transformation Opportunity.” This session provided updates on the state's response to the One Big Beautiful Bill Act (H.R. 1) passed earlier this year, which significantly reduces access to healthcare services and food and nutrition assistance for millions of California residents. The call was led by CalHHS Secretary Kim Johnson, and included Michelle Baass, Director of the Department of Health Care Services; Jennifer Troia, Director of the Department of Social Services; and Elizabeth Landsberg, Director of Healthcare Access and Information.
Secretary Johnson emphasized the state's commitment to prioritizing nutrition assistance during the federal government shutdown. The Women, Infants and Children (WIC) program will continue operations thanks to additional funding from the US Department of Agriculture. While Governor Newsom has deployed the California National Guard to assist food banks with the anticipated surge in demand, the state is prohibited from providing SNAP benefits during the shutdown. Additionally, in response to H.R. 1's passage, the governor and legislature have allocated $140 million to Planned Parenthood to ensure continued patient access to reproductive health services.
Medi-Cal Impacts. Medi-Cal currently serves nearly 15 million Californians or about 35% of the state population. H.R. 1 includes several different policy changes that are expected to impact an estimated 3 million Medi-Cal recipients with a loss of over $20 billion in federal funding. Increased costs are also expected for hospitals to treat uninsured patients.
Under the new law, state financing restrictions include Managed Care Provider (MCO) Tax limitations, State Directed Payment (SDP) limitations, and federal funding repayment penalties for eligibility-related improper payments. There are also major restrictions on immigrant healthcare services and a one-year ban on federal Medicaid funding for "prohibited entities” that provide abortion services (Planned Parenthood).
One of the most significant changes is a new work requirement, which goes into effect on January 1, 2027. At a minimum, states must verify compliance with work requirements at application and renewal, requiring individuals to demonstrate 80 hours of qualifying activities for at least one month prior to application, and once enrolled at least one month within every six-month period. In order to qualify, individuals must be employed 80 hours per month, have a monthly income of at least 80 times the federal hourly minimum wage ($580), have 80 hours of community service work every month, or be enrolled in an educational or work training program 80 hours per month. The new law includes eligibility checks every 6 months and retroactive coverage restrictions.
The law allows for some short-term exemptions from the work rule for six months. There are also mandatory exemptions including parents with young children (under 13), disabled veterans, and recently incarcerated individuals.
The Department of Health Care Services (DHCS) is working to use already available data sets to verify workforce activities and exemptions including state quarterly wage data, gig economy data, Department of Social Services data, and Department of Rehabilitation data. The automation efforts are intended to make it easier for beneficiaries and reduce administration costs to the state.
A comprehensive H.R. 1 implementation guide is coming later this year. DHCS emphasized communication, clarity and connection around implementation. A phased outreach campaign using a coverage ambassador model is also being planned.
CalFresh Program Impacts. CalFresh serves 5.5 million Californians, with H.R. 1 estimated to cut federal funding by $1.7-3.7 billion annually, an impact to 395,000 people.
Some regulatory updates to the program include:
- The federal government is no longer allowing the cost of internet service to be included when determining the value of the standard utility allowance,
- The state includes a benefit level for households of 18 or more, and
- The state CalFresh Healthy Living Plan for nutrition education for federal FY 2026 was federally approved.
Director Troia announced a change to the standard electrical utility allowance eligibility. Starting October 31, eligibility for the Low-Income Home Energy Assistance Program (LIHEAP) payment, which allows households not claiming the standard utility allowance to receive assistance, will be restricted. Only households, including an older adult or a person with a disability will qualify. Counties were notified of this change via a letter issued in September. The Department of Social Services (DSS) projects that around 185,000 CalFresh households will experience a reduction in their benefits.
H.R. 1 expands the definition of an able-bodied adult without dependents to include individuals aged 18-64, an increase from the previous 18-54 age range. Exemptions for people experiencing homelessness, veterans, and foster youth have been removed. California's waiver is set to expire on November 2, 2025. New guidance from the state to counties is pending, and further information regarding implementation and timing will be provided shortly.
The new law included major provisions for CalFresh eligibility for noncitizens. DSS is still awaiting guidance from the federal government in order to implement these.
The state budget for 2025-26 includes funding for implementation of the able-bodied work requirements, as well as funding to reduce the state’s payment error rate (data and technology enhancements). Two working groups, one with counties, and another called the All Partner CalFresh Implementation Advisory Group are working with DSS on implementation issues.
Director Troia highlighted the severe impact of the ongoing federal government shutdown on November CalFresh benefits, which are now delayed. These benefits will be suspended until the shutdown concludes. In response, Governor Newsom has allocated $80 million to California food banks and has mobilized Cal Volunteers and the National Guard to assist food banks facing increased demand.
Rural Healthcare Communities. Director Landsberg gave an update on Rural Healthcare Communities and the $50 billion set aside under H.R. 1 to support them. The program’s goal is to improve chronic disease management, access, and the overall rural healthcare system. The funding is not intended to backfill federal cuts. Under the federal formula, California is expected to receive $500 million over five years (an equal share for each state), and then some portion of the remaining $25 billion based on a scoring criterion.
CalHHS will continue to provide updates and guidance on H.R. 1 implementation as they become available.
LAO Report on the Short-term Future of Medi-Cal
Last week, the Legislative Analyst’s Office (LAO) released a report, “Considering Medi-Cal in the Midst of a Changing Fiscal and Policy Landscape,” which explores the implications of federal and state changes to Medi-Cal for 2026 budget deliberations and beyond. Over the past decade, Medi-Cal has seen significant changes, including expanded eligibility, benefits, and provider payments, largely due to the Affordable Care Act (ACA).
Medi-Cal operates under federal program requirements, with the state responsible for implementation. California has not only expanded eligibility and services but has also obtained waivers from federal rules to pilot new approaches to beneficiary care and service delivery.
At the local level, counties are responsible for determining eligibility and providing behavioral health and personal care services. Some counties also manage hospitals, clinics, and other health facilities that serve both Medi-Cal beneficiaries and other low-income individuals.
Provider Taxes and Fees. California utilizes four provider taxes and fees, which are levied on healthcare providers like health plans and hospitals for services rendered. These taxes and fees are designed to attract additional federal funding while incurring minimal net costs for the providers themselves. Generally, a portion of these federal funds is used to offset provider costs or to support supplemental payments. Consequently, most of the financial burden is borne by the federal government, which in turn regulates the size and scope of these taxes and fees to control its expenditures.
Medi-Cal Costs. Since 2005-2006, Medi-Cal costs have quadrupled, now surpassing the growth rate of California’s General Fund budget. It represents approximately 15% of state General Fund expenditures, second only to K-14 education. The program's total funding amounts to $197 billion, with over half provided by the federal government through matching formulas. While the typical federal match is 50%, services for childless adults receive a 90% federal match, whereas abortion services generally do not qualify for federal matching funds.
This significant growth has been driven by a combination of factors: demographic shifts, the expansion of eligibility criteria, and increased provider payments and benefits.
Key Drivers of Enrollment Growth
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Childless Adults: In 2014, California extended eligibility to childless adults. Initially, this group was 100% federally covered, but this has since shifted to 90% federal coverage. Childless adults now constitute a substantial portion of Medi-Cal enrollees, accounting for approximately 5 million individuals (33%).
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Undocumented Individuals: The state has progressively expanded comprehensive coverage to undocumented individuals based on age. This began with children in May 2016, followed by young adults (19-25) in January 2020, older adults (50+) in May 2022, and adults (26-49) in January 2024. This coverage is 100% state funded. An estimated 1.7 million enrollees (11%) are undocumented and have comprehensive coverage.
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Elimination of Asset Limits: Historically, coverage for seniors and persons with disabilities was subject to both asset and income limits. In January 2024, the asset limit was eliminated, which led to an increase of about 100,000 people in the Medi-Cal caseload.
COVID-19 Impact and Redeterminations. During the COVID-19 pandemic, the state temporarily halted redeterminations, resulting in a historically high caseload. While redeterminations resumed in March 2023, the state implemented federally allowed flexibilities, such as automated renewals for certain enrollees, to mitigate substantial disenrollments. These flexibilities concluded at the end of June 2025, which is expected to result in more significant disenrollments.
Provider Rate Increases. California has taken multiple steps to increase Medi-Cal provider reimbursement rates to improve access to healthcare, including the approval of three ballot measures:
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Proposition 52 (2016): Made California’s private hospital fee permanent, earmarking funds for provider rate increases.
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Proposition 56 (2016): Increased taxes on tobacco products, with most revenue directed to Medi-Cal.
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Proposition 35 (2024): Made California’s health plan tax permanent, earmarking funds for provider rate increases.
In addition to ballot measures, the administration has increased funding for provider rates and is seeking federal approval to boost federal funding. This would be achieved by increasing the private hospital fee and local spending from public hospitals, leading to higher payments to hospitals in 2025. These increases are partly intended to offset higher costs for hospitals resulting from SB 525, the healthcare minimum wage of 2023.
Rising Costs of Expansions
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Undocumented Persons Eligibility: Costs for expanding eligibility to undocumented individuals are significantly higher than initially projected, now estimated at $10 billion annually. This figure represents approximately one-quarter of the total General Fund Medi-Cal spending and is more than double the original estimates.
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Asset Limit Elimination: The cost of eliminating asset limits has also more than doubled, with General Fund spending now estimated at around $700 million annually.
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Contributing Factors: The primary drivers of these increased costs are higher-than-anticipated caseloads and service utilization.
Policy Changes to Address Costs
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Undocumented Adults and Seniors - Comprehensive Coverage Freeze (Effective January 2026)
- Eligibility for comprehensive coverage for undocumented adults and seniors will be frozen.
- New enrollees, or those who lose coverage after January 2026, will only qualify for limited coverage (emergency and pregnancy-related care).
- This policy change is expected to reduce overall undocumented enrollment in comprehensive coverage as individuals disenroll and are unable to re-enroll.
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Undocumented Adults - Monthly Premium Requirement (Effective July 2027)
- Adults aged 19-59 with unsatisfactory immigration status will be required to pay a $30 monthly premium to maintain comprehensive coverage.
- This measure is anticipated to further contribute to disenrollment, as some individuals may be unable or unwilling to pay, leading to a permanent loss of comprehensive coverage and barring from re-enrollment.
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Asset Limit Reinstatement (Effective January 2026)
- The asset limit for seniors and persons with disabilities will be reinstated to $130,000 for an individual.
- This reinstatement is expected to reduce the caseload for these groups.
H.R. 1 Reforms. As outlined in the briefing update above, H.R. 1 significantly reforms federal Medicaid policy, cutting $1 trillion over ten years. These changes, the most substantial since the ACA, are being implemented gradually, with full effects depending on federal guidance and state decisions. H.R. 1's changes mainly fall into three areas:
- Provider Tax Rules
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Limits Disproportionate Taxation: States can no longer use methods that disproportionately tax Medicaid services, effective July 2025, though the Health and Human Services Agency may grant up to three years for compliance.
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Reduces Revenue Limit: The current 6% revenue limit on provider taxes will gradually decrease to 3.5% by Federal Fiscal Year 2032 for ACA expansion states like California, while non-expansion states' limits remain frozen.
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Reduces Managed Care Directed Payments: For expansion states, the limit for directed payments to providers in managed care systems is now the comparable Medicare rate (previously commercial rates), effective July 2025, with a ramp-down period for existing payments until January 2028.
- Eligibility and Cost-Sharing for Adults
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Community Engagement: Beginning late 2026, non-disabled, childless adults must complete 80 hours per month of work, education, or community service to maintain eligibility, with some exemptions.
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Increased Eligibility Determinations: Starting January 2027, eligibility for childless adults must be redetermined every six months, instead of annually.
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Cost-Sharing: From 2028, childless adults with incomes above 100% of the federal poverty level will face copayments of up to $35 per service for certain Medi-Cal benefits, excluding primary and behavioral health care.
- Immigrant Populations
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Narrows Satisfactory Immigration Status (SIS):R. 1 redefines SIS, generally limiting it to lawful permanent residents. Groups like refugees and asylum grantees will now be considered to have Unsatisfactory Immigration Status (UIS), reducing federal matching funds for their services (except limited coverage).
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Reduces Federal Funding for UIS Childless Adults: Beginning October 2026, the federal matching rate for emergency services for childless adults with UIS will decrease from 90% to the state's regular federal match rate (50% in California).
Other Key Changes
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Prohibits Enforcement of New Eligibility Rules:R. 1 blocks the enforcement of streamlined eligibility and enrollment rules previously finalized by the Centers for Medicare and Medicaid Services (CMS), giving states more flexibility until October 1, 2034.
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New Home Equity Limit for Long-Term Care: Starting January 2028, individuals qualifying for Medicaid for long-term care must have home equity no greater than $1 million. California's previous exclusion of primary residences is removed.
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Prohibits Family Planning Funds for Certain Abortion Providers: From July 2025 to July 2026, federal Medicaid payments are prohibited for specific nonprofit entities providing abortions that received at least $800,000 in Medicaid payments in 2023.
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Requires Additional Eligibility Verifications: States must standardize processes to confirm mailing addresses, submit social security numbers to CMS monthly for duplicate enrollment checks, and conduct quarterly reviews for deceased individuals.
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Provides Additional Funding for Rural Providers: The Rural Health Transformation Fund allocates $50 billion in state grants over five years (starting Federal Fiscal Year 2026) to support rural health providers for approved activities like provider payments, technology assistance, and chronic disease prevention.
H.R. 1 Impacts. New rules will impact millions of Medi-Cal enrollees, primarily childless adults, through new eligibility and cost-sharing policies. Despite many already meeting work requirements, administrative burdens and increased redetermination frequency are expected to cause disenrollment. An estimated 1.2 million Medi-Cal beneficiaries could lose coverage, with most likely becoming uninsured as alternative coverage is often unavailable.
Cost-sharing requirements may reduce service utilization, though the extent is uncertain due to state discretion and past Medi-Cal copay effects.
Medi-Cal providers will also be affected. The health plan tax will significantly shrink, reducing augmentations for providers. The private hospital fee and managed care payments to hospitals are also expected to decline. These funding losses will likely increase uncompensated care costs for safety-net providers, who are legally obligated to treat patients regardless of payment ability. The full magnitude, timing, and distribution of these impacts remain uncertain.
H.R. 1's changes to Medi-Cal will significantly reduce federal funding for California, impacting the state's General Fund by potentially billions annually. Key effects include a large cost to backfill lower provider tax revenue (billions annually), limited General Fund savings from reduced Medi-Cal enrollment and service utilization (hundreds of millions, with most savings going to the federal government), and a substantial cost to backfill lost federal funding for certain immigrant populations (around $1 billion annually for emergency care alone).
These estimates are imprecise due to unknown federal guidance and state implementation decisions, and the timing of changes remains uncertain. The state's budget is already facing deficits (projected $17 billion in 2026-27), making it difficult to cover H.R. 1's costs while maintaining current Medi-Cal services.
H.R. 1 also creates significant administrative workload for the state, requiring DHCS to provide guidance and potentially update IT systems. Counties, as primary administrators of eligibility, will face increased workload and potential revenue losses as Medi-Cal providers, especially county-run safety net facilities treating more uninsured individuals. The full magnitude of county costs is still emerging and will vary significantly.
Legislative Considerations. The legislature must address three key issues concerning Medi-Cal: implementing H.R. 1 changes, considering Medi-Cal in light of these changes and state fiscal constraints, and the impact of disenrollments on other healthcare coverage.
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Taxes: To implement federal changes, the state can restructure provider taxes. Amending Proposition 35 with a three-fourths vote could maintain the large health plan tax, securing federal funds for Medi-Cal, though this would shift costs to consumers. For the private hospital fee, Proposition 52 offers more flexibility, but a higher fee on commercial services could burden some hospitals, while a lower fee on Medi-Cal services would reduce revenue and payments.
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Eligibility and Cost Sharing: Regarding eligibility and cost-sharing, the state can track work completion through an income-based approach ($580/month), which may lead to fewer disenrollments than an hour-based method. The state can also exempt more adults from community engagement requirements, such as those in counties with high unemployment, potentially excluding hundreds of thousands of individuals. Enhanced federal funds may be available for necessary IT system adjustments. Maximizing these flexibilities could limit disenrollments with relatively low state cost, as work requirements often fail to increase employment and savings primarily accrue federally. However, added flexibilities could increase complexity for beneficiaries and counties due to varying employment trends. The state also has flexibility in structuring cost-sharing requirements, allowing for lower copays for those near the poverty level or higher charges for less medically necessary services.
Recommendations. Given budget constraints and federal policy changes, the legislature must re-evaluate its Medi-Cal goals, focusing on three key questions: who Medi-Cal serves, the service level provided per enrollee, and available non-General Fund financing. Eligibility is a major cost driver, and while some rules are mandatory, California has expanded optional eligibility over time. Fiscal pressures have led to some recent reductions, and further changes would require considering factors like need, cost, access, federal match, and complexity.
Per-enrollee spending is also a key cost driver, influenced by benefits, utilization, and provider rates. While some benefits are optional, many are critical and difficult to modify or are relatively inexpensive. Opportunities to increase utilization management or reduce provider rates are limited due to existing managed care systems and federal requirements to ensure access. Any per-enrollee cost reductions need to consider beneficiaries' health needs, adequacy of provider rates, short- and long-term effects, and feasibility.
Non-General Fund financing, such as provider and tobacco taxes, is becoming less feasible. New financing approaches require considering who bears the cost and the funding's stability.
Beyond Medi-Cal, other health coverage options exist, but expanding access through county indigent health programs, Covered California, or employer-sponsored coverage faces significant hurdles due to fiscal constraints, federal funding declines, and the demographics of the affected population. Maintaining health coverage expansions will be challenging, likely leading to more Californians lacking coverage, being underinsured, or facing higher out-of-pocket costs, necessitating new approaches and a rebalancing of priorities.
Grant Opportunities
Below is a list of the latest grant opportunities released by the state. All opportunities for local jurisdictions may be found here.
Deadline:1/13/26 00:00
Title: Tire-Derived Aggregate Grant
State Agency / Department: Department of Resources Recycling and Recovery
Match Funding? No
Estimated Total Funding: $750,000
Funding Method: Reimbursement(s)
Governor’s Press Releases
Below is a list of the governor’s press releases beginning October 22.
October 29: As Trump cuts fire response, Governor Newsom expands the state’s fire prevention strategy using proven beneficial fire techniques
October 29: Tule River Indian Tribe of California reclaims over 17,000 acres and reintroduces tule elk on ancestral land
October 28: First Partner Jennifer Siebel Newsom launches California Women’s Wealth Advisory Council
October 28: Governor Newsom announces appointments 10.28.25
- Gavin Payne, of San Luis Obispo, has been reappointed to the California Cradle-to-Career Data System Governing Board
- Christopher Nellum, of Oakland, has been reappointed to the California Cradle-to-Career Data System Governing Board
- Robert Tagorda, of Los Angeles, has been reappointed to the California Cradle-to-Career Data System Governing Board
- Catalina Cifuentes, of Riverside, has been reappointed to the California Cradle-to-Career Data System Governing Board, where she has served since 2021
- Claire Ramsey, of South San Francisco, has been appointed chair of the Early Childhood Policy Council
- Ristyn Woolley, of Sacramento, has been appointed to the Early Childhood Policy Council
- Stephen Propheter, of Lincoln, has been appointed to the Early Childhood Policy Council
- Karla Pleitez Howell, of Los Angeles, has been appointed to the Early Childhood Policy Council
- Diana Ramos, of Laguna Beach, has been appointed to the Early Childhood Policy Council
October 28: CHP hits the Bay Area streets, enforces public safety through its crime suppression teams
October 28: Governor Newsom sues Trump Administration for illegally withholding SNAP food benefits
October 28: Governor Newsom predeploys firefighting resources Southern California ahead of dangerous fire weather
October 27: Governor Newsom honors fallen San Bernardino County Sheriff’s Deputy
October 27: TOMORROW: Governor Newsom, Attorney General Bonta to announce legal action against Trump administration
October 27: Governor Newsom highlights California innovation with Lockheed Martin Skunk Works’ X-59 named “Coolest Thing Made in California”
October 25: Governor Newsom proclaims Larry Itliong Day
October 24: Governor Newsom announces appointments 10.24.25
- Maurice Lyles, of La Mesa, has been appointed Deputy Secretary of Intergovernmental Relations at the California Environmental Protection Agency
- Emily Wimberger, of Sacramento, has been appointed Chief of Staff and Policy Advisor to the Chair at the California Air Resources Board
- Marco Bárcena, of Bell Gardens, has been appointed to the San Gabriel and Lower Los Angeles Mountains Conservancy Governing Board
- Linh Tran, of El Monte, has been appointed to the San Gabriel and Lower Los Angeles Mountains Conservancy Governing Board
October 24: PHOTOS: Governor Newsom deploys California Volunteers, California National Guard on humanitarian mission assisting food banks as Trump’s government shutdown delays SNAP benefits
October 23: Governor Newsom celebrates CAL FIRE’s first graduation at new Atwater training center
October 23: Governor Newsom urges the Supreme Court to strike down Trump’s illegal tariffs
October 23: Governor’s SAFE Task Force and local partners clear homeless encampments in Fresno and San Diego
October 23: Governor Newsom announces appointments 10.23.2025
- Jeannie Romas, of Wilmette, Illinois, has been appointed to General Counsel at the California Department of Alcoholic Beverage Control
- Elizabeth Williamson, of Walnut Grove, has been appointed Chief Deputy Director of the California Department of General Services
- Kathleen Ratliff, of Stockton, has been appointed Associate Director, Region II of the Division of Adult Institutions at the California Department of Corrections and Rehabilitation
October 23: ICYMI: Governor advances Delta Conveyance Project through two key milestones
October 23: California invests over $140 million to support Planned Parenthood health centers amid Trump’s efforts to defund
October 22: Governor Newsom outlines California’s economic dominance at the California Economic Summit
October 22: Governor Newsom announces appointments 10.22.25
- Jamie Gillette, of Sacramento, has been appointed Chief Deputy Director at the California Civil Rights Department
- Crosby Burns, of Mill Valley, has been appointed to the Committee of Bar Examiners at the State Bar of California
- Maurice Scott, of Sacramento, has been appointed to the Commission on Correctional Peace Officer Standards and Training
- Melvin Fredrick, of San Diego, has been appointed to the Commission on Correctional Peace Officer Standards and Training
- Jason Rosso, of Elk Grove, has been appointed to the Commission on Correctional Peace Officer Standards and Training
- David Huebner, of Palm Springs, has been reappointed to the California Law Revision Commission
- Ana Cubas, of Los Angeles, has been reappointed to the California Law Revision Commission
October 22: Governor Newsom announces judicial appointments
- Steven Crass, of Fresno County, has been appointed to serve as a Judge in the Fresno County Superior Court
- Jill Casselman, of Los Angeles County, has been appointed to serve as a Judge in the Los Angeles County Superior Court
- Seza Mikikian, of Los Angeles County, has been appointed to serve as a Judge in the Los Angeles County Superior Court
- Afsaneh Ashley Tabaddor, of Los Angeles County, has been appointed to serve as a Judge in the Los Angeles County Superior Court
- Charlotte Scott, of Mendocino County, has been appointed to serve as a Judge in the Mendocino County Superior Court
- Carmen Snuggs-Spraggins, of Riverside County, has been appointed to serve as a Judge in the Orange County Superior Court
- Jonathan Mendoza, of Riverside County, has been appointed to serve as a Judge in the Riverside County Superior Court
- Gareit Newstrom, of Orange County, has been appointed to serve as a Judge in the Riverside County Superior Court
- Lianne Dumas, of San Mateo County, has been appointed to serve as a Judge in the San Francisco County Superior Court
- Vivian Wang, of San Mateo County, has been appointed to serve as a Judge in the San Mateo County Superior Court
- Wendy R. Casas, of Yolo County, has been appointed to serve as a Judge in the Solano County Superior Court
- Roger Wilson, of Fresno County, has been appointed to serve as a Judge in the Tulare County Superior Court
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