Santa Clara County projects $1B in Medi-Cal cuts

Congressional Republicans’ “big, beautiful bill” could deal a bleak, brutal blow to Santa Clara County’s public hospital system — the second largest in the state after expanding just months ago.

President Donald Trump’s Fourth of July signing of H.R. 1, his watershed budget bill, has county leaders anticipating more than $1 billion in revenue losses over the next few years due to federal cuts to Medicaid, the public health insurance program known as Medi-Cal in California — and the impact doesn’t end there.

One in four Santa Clara County residents rely on Medi-Cal for health care coverage, according to county officials. Medi-Cal is the largest federal revenue source for the county, which has four hospitals and 15 health clinics. The county received nearly $2 billion in federal Medi-Cal funding this fiscal year. The announcement of anticipated cuts comes just months after a period of elation, when the Board of Supervisors approved the purchase of Regional Medical Center in East San Jose and restored services and expanded the hospital system in April.

The county hospital system includes a Level 1 trauma and burn center that would otherwise not be available to residents in the county or Bay Area during emergencies. The burn center is one of only three regional centers of its kind between Los Angeles and the Oregon border, according to county leaders.

County Executive James Williams said residents — namely patients in need of health care — likely won’t feel the impacts until 2027 and 2028. Congressional lawmakers programmed most of the cuts to take effect in December 2026 after midterm election.

“It’s no accidental date, but we anticipate a lot of the impacts will ratchet up over time,” Williams told San José Spotlight.

That doesn’t mean the county has enough time to prepare.

A major provision of the federal spending bill imposes controversial requirements for people to report their work hours to keep their Medi-Cal coverage.

“What we know about work rule requirements is the couple of states that piloted and experimented with them have been a fiasco — people who were entitled to coverage and qualified still didn’t get coverage because they had to jump through so many onerous and challenging hoops to get through the process,” Williams said. “The reason being the systems aren’t built for this requirement.”

This could lead to people losing coverage, but Williams said the county still has to provide care for the uninsured.

“So the costs don’t go away, but the revenues do because the reimbursement we’d otherwise be getting will go away,” he said.

Williams said his office’s attention now turns to Gov. Gavin Newsom’s sweeping Medi-Cal cuts in the state budget.

“The state is piling on, and those kick in sooner than the federal impacts. The state impacts begin this upcoming January,” Williams said.

California’s budget for fiscal year 2025-26 cuts $5 billion from Medi-Cal and primarily targets undocumented people, older adults and people with disabilities. It freezes enrollment for undocumented residents. Undocumented adults will no longer receive long-term care, dental coverage and in-home supportive services. In-home supportive services will also cap provider coverage to 50 hours, according to the New York Times.

District 2 Supervisor Betty Duong said the bill dismantles the fundamental concept of a county.

“I don’t see how we can live up to our charge of protecting the region’s social safety net,” Duong told San José Spotlight. “The $1 billion impact is not something we can cover or budget through. It’s really hard to have a positive outlook on this. We’re seeing unprecedented need for social safety net services that continues to grow, yet the resources we have continues to lower.”

District 5 Supervisor Margaret Abe-Koga said the bill is a clear and “dire” signal that the county is on its own.

“I am deeply disappointed and saddened. Now, more than ever, we need a partner in the federal government, not an adversary,” she told San José Spotlight. “In Santa Clara County, we have been gearing up for this moment. We will stanch the wound, but it will be difficult. We will have to make hard choices. We will need to change how we approach everything, to squeeze out cost savings, to leverage technology to help us and to utilize our real assets to generate other sources of revenue.”

Before the bill’s passage, Santa Clara County had conservatively projected roughly $70 million in losses this fiscal year alone. The bill will reduce Medicaid spending nationally by around $1 trillion and kick 12 million Americans off public health insurance over the next decade, according to Congressional Budget Office estimates.
The bill also makes approximately $285 billion in national cuts to the country’s Supplemental Nutrition Assistance Program, known as CalFresh in the state, over the next decade. Williams warns this could affect more than 133,000 Santa Clara County residents who rely on federal food assistance. He said the bill will make it harder for families to access benefits while also shifting an untenable portion of costs to the state.

The county receives almost $400 million in CalWorks, CalFresh and other social services funding every year, according to officials. Another $140 million comes in the form of federal grants.

Threats to Santa Clara County’s quality of life are coming from other directions. Earlier this month, former Assessor Larry Stone announced the county saw its slowest property value growth in more than a decade. It’s another blow to a county reliant on steadily growing property tax revenues to fund its schools and social safety net programs.

Williams said Sacramento faces a critical juncture.

“Is the state going to actually take care of our public hospitals that so many of us rely on for critical coverage? They could either make things worse or soften the edges,” Williams said. “Our focus will shift toward making sure they do everything in their power to help.”

Contact Brandon Pho at [email protected] or @brandonphooo on X.