PPIC’s 30th anniversary offers an opportunity to look back on three decades of Medi-Cal policy research and analysis. Medi-Cal—California’s Medicaid program—has experienced tremendous growth since the 1990s, particularly after expanding under the federal Affordable Care Act; since 2016, the program has provided comprehensive health coverage for more than one in three state residents. And as of January 2024, the state expanded Medi-Cal eligibility to all residents whose incomes fall below a threshold ($20,783 for a single adult; $43,056 for a family of four).
In 1990, Medi-Cal covered about one in eight Californians; eligibility was limited to certain groups of low-income Californians, including children, parents or caretakers of dependent children, and people with disabilities. Enrollment rose gradually throughout the 1990s and 2000s, driven primarily by changing economic conditions and small expansions in eligibility among children and pregnant women.
The Affordable Care Act allowed states to expand their Medicaid programs to cover most low-income adults without children or disabilities starting in 2014, with the federal government funding most of the costs for this coverage expansion. By 2016, Medi-Cal enrollment had increased by over 60%, as more than 5 million Californians were added to the program. Today, 46% of Medi-Cal enrollees are children and their parents or caretakers, 34% are adults who gained access under the ACA, and about 15% are seniors and people with disabilities.
In the decade since the ACA Medi-Cal expansion went into effect, the number of uninsured Californians has been cut in half. ACA Medi-Cal expansions have been linked to improved outcomes across a number of health and economic domains. Still, nearly 3 million state residents remained without comprehensive health insurance. Many of these residents were noncitizens who were excluded by federal policy. California has implemented policies to address this group.
California, home to more immigrants than any other state, has filled some eligibility gaps created by federal policies that have barred or limited Medicaid access to some immigrants. When welfare reform in the 1990s decoupled Medi-Cal from cash assistance and limited Medi-Cal eligibility to documented immigrants holding green cards for at least five years, California opted to cover the cost of enrolling green card holders before they hit the five-year mark. And, while federal reimbursement policy has long required Medi-Cal participants to have “satisfactory immigration status,” California opted to cover several categories of low-income immigrants, including those with Deferred Action for Childhood Arrivals (DACA) status.
In recent years, California has gradually expanded Medi-Cal eligibility, beginning with undocumented children. Over the next several years, undocumented young adults, older adults, and—as of January 2024—all remaining adults successively became eligible for Medi-Cal.
As a result of its massive expansion, Medi-Cal has become the single largest program expenditure in the state budget; in the current fiscal year, total costs are expected to be nearly $160 billion: $98 billion in federal funds along with $36 billion from the state General Fund and $25 billion in other funds. Most of the other funds supporting Medi-Cal come from local government (often county hospitals) and provider taxes including a tax on managed care organizations (often referred to as the MCO tax). The MCO tax was increased in 2023 and again in 2024. Some of the funding generated by the MCO tax increase in 2023 was targeted to support higher payment rates for Medi-Cal providers in order to improve patients’ access to care—a longstanding priority among healthcare stakeholders. However, state budget woes have called this plan into question. In November, voters will decide whether revenue generated by the MCO tax must be spent on increased provider rates or whether a larger amount can be used to help balance the state budget.
Over the past several decades, California has led the nation in extending Medicaid’s reach; as PPIC’s recent research has shown, this has improved insurance coverage and well-being as well as reducing poverty. PPIC has been studying the Medi-Cal program throughout our history. We have tracked Medi-Cal’s separation from cash welfare, its transition to managed care for the vast majority of participants, its complex financing, and its increasingly important role in the public insurance landscape. Given the program’s prominence in California’s safety net, we will continue to produce in-depth research and timely analysis of Medi-Cal’s ongoing transformation.
