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Alexis Madrigal: Welcome to Forum. I’m Alexis Madrigal. Access to health care is wildly unequal. One of the ways our country agreed, decades ago, to make society more equal was Medicaid — health care for lower-income people, largely funded by the federal government but managed through the states and on down to the counties. Here in California, the local variant of Medicaid is called Medi-Cal, and basically a third of Californians rely on it. The Trump administration and Republicans in Congress passed cuts to the program in the last big budget bill, and now those cuts are hitting. Here to discuss what may happen to our region’s health care system as billions of dollars are pulled out of it over the next decade, we’re joined first by Tyler Sadwith, California State Medicaid Director and Chief Deputy Director of Health Care Programs in the California Department of Health Care Services. Welcome, Tyler.
Tyler Sadwith: Thank you. Good morning. Glad to be here.
Alexis Madrigal: From your perspective as someone who has to implement these things, give us the top line of what you see happening as a result of these budget cuts.
Tyler Sadwith: Thank you. It’s a tremendous impact on the fourteen million Californians who rely on Medi-Cal to receive health care and support. Taking a step back, this year is actually the sixtieth anniversary of Medi-Cal. And the cuts passed in HR 1 represent the most significant cuts to Medi-Cal eligibility and funding from the federal level that we’ve ever seen. What this means is that tens of billions of federal dollars critical to the Medi-Cal program may be lost as a result of this law. Up to 1.3 million Medi-Cal members are projected to lose their eligibility, and critical health care providers — safety net hospitals, clinics, and others — may be impacted as well. We are doing everything we can to mitigate the harm to members and providers, but we cannot avoid its impact entirely.
Alexis Madrigal: Let’s take the two buckets there — the people and members part first. Why and how are people going to lose their insurance or their eligibility?
Tyler Sadwith: There are a few changes the federal law makes to the way Californians are able to apply for, enroll in, and keep their Medi-Cal. One significant change is a new work reporting requirement, also called a community engagement requirement. This applies to approximately 4.7 million Californians who have Medi-Cal coverage today — primarily adults between the ages of 19 and 64 who do not have children and do not have disabilities. The law now requires this population to comply with certain work requirements, such as working a certain number of hours per month, having a certain amount of income, being a student, or volunteering — with hours tracked, reported, and recorded in systems.
Alexis Madrigal: Just to stop for a second — what if someone is a full-time caretaker? They’ve got two kids and an ailing parent?
Tyler Sadwith: Great question. There are certain exemptions — one is for caretakers of children under the age of fourteen. What we’re doing in California is taking every possible step to identify the exemptions people may qualify for so they are not subject to these new requirements, or so they can demonstrate they’re either exempt or already compliant. Based on the data we have in place — and we’ve been working hard to acquire new data from many different systems — we’re actually able to determine that most people in this population are either exempt from the work requirements or have data available showing they’re already compliant.
Alexis Madrigal: When you say 1.3 million people could eventually lose coverage — how much of that is people being deemed ineligible, versus people falling off because they can’t keep up with the onerous reporting requirements?
Tyler Sadwith: It’s a mix of both. It’s possible some of this law is designed to create red tape so people churn off even though they should be eligible. We’re doing everything we can to exempt people on the back end so members don’t have to lift a finger. But for people we can’t automatically deem exempt or compliant, they may have to provide more information — and some will face barriers: they didn’t receive the packet, didn’t mail it back in time, couldn’t get a signature from their pastor to document volunteer hours. That’s real red tape. The law also increases the frequency of eligibility redeterminations — from once a year to every six months for this population of 4.7 million — which creates additional administrative burden.
Alexis Madrigal: That redetermination is essentially checking whether someone still falls within the income threshold to qualify for the program?
Tyler Sadwith: Yes, that’s right.
Alexis Madrigal: One more thing — my understanding is that when California does something at the state level that shades into territory the federal government hasn’t sanctioned, you need a waiver. Do you need one for this back-end exemption work?
Tyler Sadwith: Ordinarily, I’d say no. But we’ve been working under an incredibly compressed timeline to implement some of the biggest changes to Medi-Cal eligibility ever introduced at the federal level — changes that normally take 18 to 24 months to go into effect. We’ve been designing our policies, system changes, exemption criteria, and member materials entirely in good faith, based on informal guidance from the federal government. However, we anticipate the federal government will issue a formal regulation today outlining the official policy requirements. If that regulation deviates significantly from the direction we’ve been given, we may need to pursue a waiver to give us more time to implement this without jeopardizing members’ eligibility.
Alexis Madrigal: I want to make sure we get to the system-wide impacts. For someone who isn’t on Medi-Cal but uses the health care system like everyone does — how might they feel these cuts?
Tyler Sadwith: It’s an excellent question, and what’s so pernicious about these cuts is that Medicaid isn’t isolated. Medi-Cal is in effect the backbone of California’s health care delivery system, and any cuts to eligibility or funding will reverberate throughout the entire system. If 1.3 million people lose coverage and become uninsured, they won’t stop seeking medical care — they’ll show up at clinics, emergency departments, and hospitals when they have a need. That means a tremendous amount of uncompensated care for providers to absorb. In rural areas especially, that could be devastating. Hospitals and health care clinics may close as a result of this loss in funding.
Alexis Madrigal: We’ll talk more about that after the break. But first — the freeze on in-home care funding. CMS is deferring $1.1 billion in federal funding tied to California’s In-Home Supportive Services program. Can you briefly explain what might happen there?
Tyler Sadwith: California has a strong program providing home and community-based services to individuals with significant disabilities — children with complex medical conditions, older adults, the aged, blind, and disabled. These services are a lifeline that allows people to stay at home, receive the care they need, and remain integrated in the community — at a fraction of the cost of institutional settings like nursing facilities. In-home supportive services help people with dressing, bathing, toileting, wound care, catheter care, injections, and getting to medical appointments. Because we have intentionally grown this program, including through expanded caseloads—
Alexis Madrigal: Tyler, can you stay with us through the break to finish that answer? We’ve got Tyler Sadwith, California State Medicaid Director. We’re talking about massive cuts coming to Medi-Cal. I’m Alexis Madrigal. Stay tuned.
