Gavin Newsom Retreats from Free Health Insurance for Illegal Aliens

Gavin Newsom Retreats from Free Health Insurance for Illegal Aliens

It is transparently clear that California Gov. Gavin Newsom is planning to be a presidential contender in 2028.

I have been following his opening gambits closely, and I think I have stumbled upon his primary campaign message: “Elect me. I have tried everything that has failed, so I know what will succeed.“

Recently, he forced cities that have become homeless havens for the drug-addicted and mentally ill to clean up the encampments. This move comes 20 years after trying the “compassion” approach.

Now comes another data point confirming my theory: No more free health insurance for illegal aliens.

Legal Insurrection readers may recall that back in 2022, Newsom pushed to have California be the first state in the nation to provide health insurance coverage to illegal immigrants.

Eligibility for health insurance was expanded in phases, and as of January 1, 2024, all income-eligible undocumented adults aged 26 to 49 were included, making all low-income undocumented adults in California eligible for Medi-Cal.

Needless to say, the plan failed. As of early 2025, the California Department of Finance reported that the state will spend more than $8.4 billion on taxpayer-funded Medicaid health benefits for illegal aliens this fiscal year—over $5 billion more than initially estimated.

During California Assembly Budget Committee hearings over these costs, Republican lawmakers repeatedly criticized the policy for its ballooning costs and strain on the Medi-Cal system. They highlighted that the state was spending far more than originally projected and warned that it was diverting resources from vulnerable Americans.

Mike Genest (Former California Finance Director under Gov. Arnold Schwarzenegger) noted that the state should have taken a look at the immense price tag before buying into the scheme, stating: “The idea that we’d be able to afford in the long run paying for health care for all these undocumented people – it’s beyond unsustainable.

Virtue signalling may seem priceless at the time, but clearly it is expensive.

Newsom is backing away from one of his administration’s most high-profile progressive initiatives.

Under a plan that is part of a larger budget proposal Newsom will unveil later this morning, adults 19-years-old and older who are living in the country illegally would no longer be able to register for the state’s Medi-Cal insurance program beginning in 2026. Children and teens will still be eligible.

And although Newsom’s office emphasized in materials it released that “no one will be kicked off their health care,” undocumented immigrants 19-years-old and older who are already on Medi-Cal’s rolls would have to pay a $100 monthly premium beginning in 2027.

All told, the changes will save the state about $5.4 billion by 2028, according to figures released by Newsom’s office.

The proposed reversal marks a significant retreat on an issue the governor has touted as being a linchpin in his goal of providing universal health care coverage in California.

California faces a projected budget deficit of at least $12 billion, with Medi-Cal costs running billions above initial estimates. The expansion of Medi-Cal to undocumented adults, which began in 2024, has cost $2.7 billion more than anticipated, forcing the state to borrow additional funds to cover the shortfall.

In an attempt to explain his policy retreat, Newsom blamed President Donald Trump’s tariffs for some of the damage.

Beyond higher-than-expected Medicaid spending, Newsom blamed broad economic uncertainty, including federal tariff policies and a volatile stock market. California relies heavily on revenue from a tax on capital gains.

Newsom, a Democrat, highlighted California’s contributions to the U.S. and world economy and said President Donald Trump’s economic policies could reduce state revenues by $16 billion in the coming years.

“California is under assault,” he said. “We have a president that’s been reckless in terms of assaulting those growth engines.”

Hot Air’s Ed Morrissey explains why this excuse is laughable.

The tariffs came into effect six weeks ago and are now mainly paused for negotiations. Did Medi-Cal lose $6.2 billion over the preceding fiscal year in anticipation of Trump’s tariffs?

How exactly would tariffs impact the state’s health-care welfare system anyway? It’s not as if California imports its health-care services from tariff-impacted nations like Mexico, Canada, or China.

Tariffs might explain overall budget shortfalls if they impact economic activity, but we haven’t seen evidence of that yet, except in the massive front-loading of imports in Q1 that anticipated high tariff rates in Q2. Absent that import spike, annualized GDP in Q1 would likely have hit 4% or higher. And that import shift wouldn’t negatively impact state budgets at all.

I will also note that there is a not insignificant loss of paying taxpayers who are leaving the state because of wildfire destruction and continuing California political insanity, which is also draining the state coffers. It is being reported that between 2023 and 2024, 239,575 people moved out of California for other states. This number represents the largest net domestic migration loss of any state in the country for that year.

Hopefully, Newsom has learned valuable lessons about priorities and budgeting. I only wish these insights had occurred years ago, and he had heeded all the warnings given him at the time.

I also hope my fellow Americans don’t buy into the clear attempt to rebrand Newsom into a fiscally moderate centrist.

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