California’s progressive dream just hit a hard dose of reality.
On Wednesday, Democrat Governor Gavin Newsom unveiled a revised state budget proposal that quietly backtracks on one of his most controversial policies — offering free healthcare to illegal immigrants. Citing a $12 billion deficit, Newsom is now proposing to freeze new enrollment for illegal immigrants in the Medi-Cal program, the state’s version of Medicaid, starting in 2026.
It’s a sharp turnaround from just a year ago when Newsom celebrated expanding full Medi-Cal access to low-income illegal immigrants aged 26 to 49. That decision, hailed by Democrats as a step toward “universal health care,” quickly turned into a fiscal nightmare. Now, Newsom is slamming the brakes.
Under the governor’s new 2025–2026 budget plan, no new illegal immigrants over 18 will be allowed to enroll in Medi-Cal after January 2026. Those already in the program — around 1.6 million — will keep their benefits. Children and emergency/pregnancy care will still be covered under a limited federal program. But beyond that? No more taxpayer-funded coverage for new arrivals.
As CalMatters.org explained:
“A year after granting Medi-Cal access to low-income immigrants without legal status, Gov. Gavin Newsom is proposing to freeze enrollment of new recipients and charge premiums in a move expected to save the state more than $5 billion.”
That $5 billion savings is one part of the governor’s desperate scramble to fill a massive budget hole — one that didn’t exist just a few years ago when federal COVID funds flooded the state’s coffers. Today, that cash is long gone, and California is left trying to patch over a multi-billion-dollar deficit.
To understand just how deep this hole is, consider this: roughly one-third of California’s 39 million residents rely on Medi-Cal. The program covers anyone earning below 138% of the federal poverty level — about $21,600 for a single person or $44,400 for a family of four.
But soaring costs have overwhelmed the system. Seniors are enrolling at a rapid pace, prescription drug prices are climbing, and yes — adding millions of illegal immigrants to the program hasn’t helped.
Even Newsom’s own administration is now admitting the truth. As The San Francisco Chronicle reported:
“The cost of the program is more than anticipated. It is unsustainable,” said Erika Li, one of Newsom’s top budget officials. “We are looking at ways to curb those costs.”
In fact, the state had to borrow over $6 billion earlier this year just to keep Medi-Cal afloat.
Even while walking back his own signature policy, Newsom tried to spin it as a noble sacrifice.
“These changes are designed to preserve that commitment, protect coverage for millions of Californians, and preserve the strength of our values and health care system,” a statement from his office claimed.
But make no mistake — this is not a bold move to protect taxpayers. It’s a forced retreat after years of reckless spending and political posturing that’s now imploding under its own weight.
Blaming Trump… Again
And in what has become a tired routine, Newsom couldn’t resist pointing the finger at former President Donald Trump. According to the governor’s office, Trump-era tariffs somehow “decimated” California’s revenues by $16 billion. That’s a convenient scapegoat for a governor whose own policies — from sky-high spending to unchecked illegal immigration — have led the state into financial disarray.
As Politico noted:
“The backtracking will be a political gift to conservatives, who for months have been criticizing the program as excessively expensive and out-of-touch with what Californians want in tough economic times.”
And they’re right. Californians are watching inflation, crime, and homelessness rise — and yet Sacramento has been handing out free benefits to people who aren’t even in the country legally.
This move may be too little, too late, but it’s at least an acknowledgment of reality. The question now is: what other progressive dreams will Gavin Newsom be forced to abandon as California’s budget crisis worsens?
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