Assembly Standing Committee on Health

Good afternoon and welcome to the Assembly Health Committee's informational hearing on the devastating impact of federal divestment in California's health care system. Before we begin, it feels very important to acknowledge the events of this past weekend. The federal dollars which once supported health care for working families are now being funneled into mass deportation operations.

Operations that resulted in tragic murders by federal agents of Renee Good, Alex Pretti in Minnesota, Silverio Villegas Gonzalez in Illinois and Keith Porter here in California by federal agents. This is where our health care funding is going. Now let me be direct so that we can be clear and clear eyed about what we're facing.

HR 1 cuts will result in about a trillion dollars from Medicaid nationwide being lost. For California, that means tens of billions of dollars every single year stripped from our health care safety net. Up to 2 million California stand to lose Medi-Cal coverage.

Hundreds of thousands of people will be priced out of buying their own coverage through covered California. And we have to acknowledge that in the face of rising costs and state budget challenges while facing these federal threats, that the state of California made a number of state budget cuts to medical that will limit coverage.

We also will be weakening our overall robust health care infrastructure in so doing. And we will be moving away from the ideals of universal health care coverage, which we embodied in Health Care for All policies. When people lose coverage, families delay care, medical debt rises, chronic conditions worsen, and people end up sicker and more expensive to treat.

In the past several months, we in the legislature with the speaker, members of the Health Committee and members throughout the legislature came together to discuss across the state of California, from Northern California to Southern California, in urban and rural communities alike, holding health of healthcare roundtable conversations with providers, labor leaders, community advocates and hospital administrators what we would do about this moment.

Much of what we've heard during those sessions in our statewide discussions will be captured here today during this informational hearing. I want to thank my colleagues for co-hosting these events throughout the state across California.

And I thank many of them for being here today, both members of the committee and other legislators who are committed and championing our opportunity to preserve healthcare and our healthcare infrastructure in this moment for their communities and California at large.

I wanna welcome as a part of that Assemblymember Ahrens, who will join the committee as a standing committee member. And across all of these conversations we've heard a consistent message that has emerged.

Federal policy changes are creating instability, raising health care costs, and California families are losing access to care. And people are scared. The damage goes even beyond coverage losses, our hospitals, and our clinics face tens of billions of dollars lost in revenue.

And we know our safety net providers, the ones serving our most vulnerable communities, will be hit first and hardest. But California cannot sit idle while Trump's Congress dismantles our health care system. We have a responsibility to act decisively, and we will.

California must fight to protect access, fight to defend affordable care, and stand up for families squeezed by reckless federal decisions. I look forward to hearing from my colleagues and the expert witnesses testifying today to help guide our path forward as we build a broad coalition and a serious legislative response to this federal tailspin. Thank you.

With that, we will have the first panel come forward. Members this first panel is designed to provide a reality check about the high stakes of this moment and put things in perspective. I want to thank members of this informational hearing for coming forward.

I want to welcome Assemblymember Rogers, who participated and was an anchor participant or anchor lead for our healthcare roundtable as well as Assemblymember Soria, who did as well. And thank you to our standing committee members as well as Assemblymember... well, thank you. With that - I just have your first name stuck in my head.

With that, we will move on to the first panel. Most of our panelists are using slides today, but background materials are available on Assembly Health website. You can access these by going to assembly.ca.gov, choose committees and click on Health Committee from the Health Committee's website, click on "Hearings" and "Info Hearings," all the while, all the materials will be posted here and we are honored to be joined by a number of panelists today who are sharing their information perspectives with us, many of whom have traveled a long way to be with us.

We request each of the panelists to stick to the allotted time so we can hear from everyone and have time for some dialogue. We plan to provide time for member questions after each panel and we will allow for public comments after all the panels having concluded.

And Assemblymember Jessica Caloza, thank you for anchoring one of the roundtables that we had as well. I will ask each panelist to introduce themselves as part of their testimony with Dr. Hernandez, Sandra Hernandez kicking us off. Thank you. Press one more time

Good morning. Good morning, Madam Chair, Mr. Vice Chair and members of the committee. I'm Dr. Sandra Hernandez and I'm the President CEO of the California Healthcare Foundation. For those of you who might not know of us, we are an independent, nonprofit, philanthropic organization working here in California. Our mission is quite simple.

We listen to Californians, we analyze data and we work with partners across the state to improve the health care system so that it works well for everyone in the state. We're meeting in an incredibly volatile time. The news coming out of Washington is daunting. But I want to be clear.

While the federal landscape has shifted, California has enormous power to mitigate the damage and to protect the health of the people of California. Regardless of federal policy, California has had a long tradition of taking care of its own. In California, Californians do not view health care as a luxury. It is seen as a fundamental necessity for all.

We see this in poll after poll. Californians want a system where people can get care when they need it, without facing significant financial barriers, including the fear of bankruptcy. These aren't just beliefs. We have actually created a legacy that we should be proud of and be prepared to defend today. First slide.

Because the work that's been done in this building and around California, we have made historic progress toward universal coverage. You can see here the dramatic decline in uninsured rates that have occurred. We built a Medi-Cal system that today covers half of the children in the state.

It covers 1 in 5 working Californians and it supports millions of seniors and people with disabilities. In essence, we built a system that prioritized inclusion. Next slide. I won't go through this in detail, but here you can see a full timeline of the coverage expansions that began pre ACA and that has continued up until recently. Next slide.

Today we're defending the health security of nearly 15 million Californians against the largest funding reduction in the history of the Medicaid program. The threats in HR1 come in different forms. First is the financial cliff. HR1 cuts federal funding for health care by $1 trillion nationally over the next decade.

For California, we estimate that this translates to billions of dollars in annual cuts. And as you are all aware, this is a hole in our budget that we simply don't fill with state reserves. Second is the administrative wall. The introduction of work requirements and six month eligibility redeterminations is often framed as a policy about work.

It is a policy about paperwork. We're looking at a scenario where otherwise eligible working parents lose their coverage simply because they aren't able to navigate a complex verification process in a timely way. Third, the attack on immigrant families. Starting October 1st of this year, HR 1 excludes huge populations of immigrant Californians from coverage.

But the damage, of course, starts sooner than that as we're already seeing the chilling effect, where families are terrified of deportation and family separation. They go underground, they avoid clinics, they skip appointments, even for their US citizen children who are otherwise eligible for service. And as a result, preventable health problems become emergencies.

It's bad for patients, it's bad for providers, and it's bad for taxpayers. The pain extends to the middle class as well. By failing to renew premium subsidies for the individual market, the bill will cause monthly premiums to skyrocket for 2 million Californians who buy their own coverage through Covered California, forcing many to drop coverage entirely.

Finally, I want to acknowledge that you've made hard decisions as well due to state budget constraints to date. That's including freezing Medi-Cal coverage for undocumented immigrants and imposing a $30 a month premium for those who stay on. Next slide. So where do we go from here?

I believe this crisis presents California with four distinct imperatives to help meet this moment, to not just defend what we have, but to adapt and to strengthen our system for the future. Number one, we should minimize the harm of work requirements. If we can't stop the federal mandate, we must minimize the friction.

The state should move aggressively to automate verification. We have data systems to know who is working, and we should not put the burden of proof on someone who is working two jobs or experiencing homelessness. We also, of course, need trusted messengers on the ground like community health workers to help people manage this new reporting burden.

Number two, we should make sure that the uninsured can get access to care. We must confront the reality that under HR 1, the number of uninsured Californians will rise. For these residents, our priority must shift to ensuring access to care until universal coverage is possible again.

To do this, we need to revisit the safety net strategies of the pre ACA era. Back then, we navigated a patchwork system where eligibility, covered services and payment models varied from county to county, resulting in different levels of access and care across the state. This is an opportunity to avoid that fragmentation of a system of care.

One big question today is whether the state or counties should lead the way. My advice is to study what worked in the pre ACA local programs and to use what we learn, what we learned to create a standardized, scalable framework that all counties in the state can implement.

This framework should emphasize what we know works prevention, comprehensive primary care, continuity of care, and administrative simplicity. Number three, we should rethink the future of Medi-Cal. We cannot simply patch the immediate holes created by HR 1. We also need to strengthen the Medi-Cal program for the long term.

The program is a vital lifeline, but it is also a massive, complex program that was built piece by piece over 60 years. While the current system has served us well, it requires significant structural reform to take us where we need to go for the next decade and beyond.

That is the work of the future of Medi-Cal commission, which had its first meeting last week. I have deep confidence in the experienced leaders serving on this commission, and I believe they will be valuable partners to this committee and the legislature, as it contemplates deliberations later this year.

Number four, we should use our regulatory authority to contain costs. California must get serious about making health care more affordable. Next slide, please. We estimate that 25 cents of every health care dollar is wasted on administrative complexity, on incompatible data systems, and therefore on illnesses that are ultimately preventable. We simply can't afford that anymore.

The Office of Health Care Affordability gives the state an incredible lever for change. As a member of that board, I'm committed to ensuring that every dollar the state, employers and consumers are spending is buying impactful health care. Next slide.

I also strongly believe that technologies like AI, data exchange, and telehealth can help us do all the things I mentioned much more efficiently and much more effectively. Technology should be central to any strategy going forward. In conclusion, I want to close with this thought. We are all in this together.

There is an urgent need for all stakeholders to set aside their unique perspectives and to come together for the well being of all Californians. California's government and health care system possess incredible power and capacity for ingenuity. We once again need to harness that strength together. The people of California are counting on us. Thank you.

Thank you, Dr. Hernandez. We'll move to LAO.

Good afternoon, committee. Jason Constantouros, LAO. Staff asked us today to walk through some of the key issues we think the legislature faces with regard to HR 1. Now, we did provide an initial assessment of what these issues are in a report we released last fall.

And potentially among your materials might be an infographic, a two page infographic that basically summarizes the report. And actually we'll be speaking mostly from the second page of that infographic if you'd like to follow along. So it looks like this.

One thing I also wanted to emphasize is that since we released our report in the fall, we've learned a bit more about HR 1, and we are still learning more about HR 1. And this is in large part because federal guidance is still forthcoming.

And because of that, exactly what flexibilities the legislature has will likely still evolve as more guidance comes out. With that said, we think there are really three key issue areas before the legislature. And I'll have to say are a lot of these areas will sound very similar to the issues that Dr. Hernandez just spoke through.

In terms of timing, the first sort of key issue is implementing HR 1. Now a lot of that implementation is really going to happen from the administration. And so the legislature, of course, plays a key role in oversight, and hearings like this are exactly the kinds of oversight activities that help with that.

Some implementation also may involve making certain policy decisions, however, and those are decisions where the legislature may want to have a greater role in weighing in on these decisions. And I have to say, even again here, our understanding is still evolving. One key policy decision we sort of raised was around Medi-Cal eligibility.

HR 1 grants states some flexibility to exempt additional people from some of the eligibility rules. It appears the administration is pursuing a lot of these exemptions already.

But the administration is also proposing some additional eligibility and benefit changes around certain immigrant groups, specifically immigrant groups who are scheduled to lose a lot of their federal matching as a result of HR 1. This is one key sort of policy decision that the legislature likely will want to weigh in the coming months.

Another key area we flagged in our analysis is around provider taxes. HR1 includes a lot of new rules around provider taxes, which is a key way to help the state helps pay for Medi-Cal. Now, the rules around provider taxes are somewhat complex.

In concept, at the heart of what sort of needed to be decided in the short term is really whether or not to have a more proportionate and large provider tax that effectively shifts more cost onto providers.

And then, ultimately, some of that cost shifted onto private healthcare consumers or whether to have smaller taxes that result in less costs to to private providers and consumers, but also less funding to the state that would need to be backfilled. And we gave some examples of how this might look.

For example, sort of somewhat large and proportionate MCO tax. We estimated that would cost about $30 per member per month and that would reflect about a 5% increase in premiums. So those would be costs that consumers potentially would face as a result of that action.

Again, I also want to reiterate here that there's been a lot of recent federal guidance on provider taxes and still emerging. And even yesterday we've had some discussions with the administration that provided additional information on some of the guidance that's come from the federal government. So, this is an area that's still evolving.

It's also we'd also emphasize that some of the rules around provider taxes are scheduled to happen in the future, and some of those rules will affect the overall size of the tax in the future. So, whatever is decided now could be somewhat more short term in nature.

Long term, provider taxes will still have to sort of decline over time. So that's one key area is around how to implement HR 1. A second key area, as Dr. Hernandez really noted, is really thinking about the size and scope of Medi-Cal in the future.

And the core issue here is that the state has a sort of structural fiscal deficit. Those of you on the budget committee have heard us talk about this before. HR 1 comes at the time when the state is facing these fiscal constraints.

As a result, the legislature may need to reconsider its Medi-Cal priorities and reconsider the size and the scope of now. Medi-Cal isn't a completely discretionary program. There are lots of federal rules that require minimum eligibility and benefits, and then there are some optional eligibility and benefits on top of that.

And so the legislature does have some levers around deciding who is eligible for the program, what benefits to offer. The legislature, also, the state has some flexibilities in determining in terms of managing utilization and to some extent also how much to pay for services. And these are all areas the legislature could explore.

The legislature did take some action in last year's budget around many of these areas already. It sort of covered the gamut of eligibility and provider rates and service utilization. But the legislature could explore these even further as needed to help sort of deal with the fiscal situation.

One other thing I wanted to note is a key way the legislature has helped control spending in Medi-Cal is by finding other financing sources instead of the general fund. The sort of two key sources in the past have been provider taxes and tobacco taxes.

And as we sort of just discussed, at least on the provider tax side, those have become increasingly less of a feasible option sort of long term. And so if the legislature were interested in financing approaches, they would potentially have to explore sort of new creative options there.

And so then I think that's sort of the final area of issues before the legislature. And that's really about connecting people to coverage who are disenrolled from Medi-Cal. And this area also poses a lot of barriers to the legislature.

The legislature does have levers it's turned to in the past to expand access to care for people who are uninsured. But there are some limitations that would that would need to be explored. As an example, as Dr. Hernandez noted, one of the core ways the state has connected people to health care is through county health programs.

A lot of these county health programs however, sort of ramped down over time. And that's because a lot of the core populations served by those programs were shifted to Medi-Cal. These are part of expansions under the Affordable Care Act and also undocumented populations too.

So to renew these kinds of programs would take a bit of programmatic and fiscal restructuring. Similarly, the state has also in some years sought to better connect people to private health insurance either through Covered California or through employer sponsored coverage. There are barriers here too. You'll hear about some of the barriers as part of other testimony today.

And even just as another example, some folks who are disenrolled from Medi-Cal will be dis enrolled because they do not work enough hours. That population therefore will sort of lack access to the same kind of access to employer sponsored health coverage as other people who work full time.

So given that, the legislature likely will sort of need to think of new and creative solutions kind of moving forward to sort of address the fiscal situation, but also kind of address the bigger policy issues kind of before it as a result of HR 1. Thank you.

Thank you so much. And now we are going to make sure that we never lose sight of what this all means for individuals with the testimony from Chaz Franklin, who is a Covered California enrollee.

Good afternoon everyone. My name is Chaz Franklin and I was asked to come and speak to you regarding the health care premiums. Before I begin I need to give you some background. I am 64 and live in Calusa with my family.

I am a veteran and I was an educator for 27 years, before retiring in August 2021 at the age of 58. I am the father of two and have been married for 27 years. My wife Jean is 63 and is also retired. Between us we earn about $6,000 in retirement a month.

At the time of my retirement, I was put into COBRA and then into Covered California. My family's premium at the time was $300. This was affordable and we were doing fine. On March 1, 2023 I took my first child off our health care. The rates jumped to 456, a 65% increase for three of us.

I called and complained and it was reduced to 301 for a year and then 262 for a year. My second child was taken off the insurance in 2024 and Covered California doubled our rates to 540. Absurd. Absolutely, but still manageable. Both Jean and I have health issues, but we could still afford this.

In August of 2025 I was sent a letter from Covered California stating that the premium for our healthcare was would rise to over $1900 a month for each of us. In January of 2026 I called Blue Shield and asked why our premium was going up from 540 to nearly $4,000 a month. They said the subsidies.

Excuse me, the subsidies were going away and that the new premiums reflect that. They referred me to a law center and I called them. That is why I'm here today. Here's the scoop. I would be paying almost $4,000 a month in healthcare premiums for my wife and I with a high deduct I might add. My mortgage is 1300 a month.

Health care costs three times more than my mortgage. Combine the premiums with my mortgage and the start of my month comes with a $5,200 cost. Remember, we make around 6,000 a month. Retirement is supposed to be about living comfortably and we do that. However, not anymore.

We have had to delve deeper into our retirement to pay for the cost of health care before Medicare at age 65. For me that's a year. For my wife that's 20 months. My premium cost for - before Medicare is $23,136. My wife costs will be $38,560. That's a $61,696 in healthcare premiums alone.

This amount is one third of what I owe for my house. Fortunately, and I say this with all the absurdity and morbid nature that comes with this, I was granted the serendipity of having my wife diagnosed with ALS in October of 2025. This immediately put her on Medicare in November of 2025.

Her total plan's premiums run around $400 a month, meaning this terminal disorder has saved me $1,534 a month in health care costs alone. We still must dig into our retirement until I'm eligible for Medicare and recognize not everyone may have a nest egg to fall back upon.

I come here to express my discontent and take umbrage that Congress, including California's representatives and healthcare bureaucrats sit idly and go. We are doing our best. I am convinced that they are more interested in petty bickering about taxes, immigration, etc. and lining their own pockets with money than they are about the health care for people like me who don't have employee based healthcare, Medicare or Medi-Cal. Thank you.

Thank you so much. I'll bring it back to the Committee for any comments or questions for this panel. Dr. Patel?

I'd like to first share my appreciation for the panelists in bringing forth this information, and certainly our resident, who has explained in very stark detail what these changes are doing to your ability to stay housed.

We know and have long talked about how increasing health care costs can impact a family's ability to stay housed, especially in their retirement years, after working on behalf of California for so many long years.

My question is one that comes out of a little bit of cynicism and suspicion: when we look at these premium increases, is there a way to actually calculate how much of that is directly related to HR 1 and how much may be something that insurance providers may be kicking up as a premium?

Is there some way to know that, or is this all - are we assuming that this is all directly related to HR1?

Because some of this sounds like it even predated HR 1.

Yeah. I think we would need to get back to the Committee. I'm not prepared to talk about the premium issues much. I do understand that we've—Covered California has done some modeling on the premium cost, so there might be some information on that. I just not—I don't have it in front of me, but.

And we'll hear from Covered California in the next panel, so.

That's correct.

Thank you. I think all of us are slightly perplexed at how when you have dependents come off of a plan, your premiums can go up. That, in itself, sounds like an internally structural problem.

Thank you. Assemblymember Addis. And then we'll go Carillo.

Thank you. First, I want to thank you, Madam Chair, for bringing this first to the people of California all around the state with the roundtables that you did and doing the listening sessions and now in our Health Policy Committee.

And it's an issue that we talked about quite a bit last year in the Health Budget Subcommittee prior to understanding what was going to happen with HR 1. We were really trying to prepare ourselves, and I want to thank the panelists, all three of you, really, for what you bring to this conversation.

And I heard, you know, California did do some things last year, trying our very best to protect the 94% of Californians who are currently covered and really put in as many delays and minimize the harm—did our best to minimize the harm that we knew was coming from the Federal Government. I'm glad we're going to hear from Covered California.

I know that, you know, the government, the Federal Government, basically shut down over these ACA subsidies and now is open again and really wrangling with this. I, for one, put a lot of the responsibility on what's happening to the Federal Government.

I know that California has her own struggles, but I would say the Federal Government is absolutely at fault when it comes to the ACA subsidies. I did have a question around standing up a network that really relies on the counties again.

And I don't know if LAO has the answer, if any of the panelists have this answer, but just around cost to be able to stand up a new network compared to the cost of not standing up a new network, because I'm imagining we're going to have a lot of conversations around how expensive it will be to try to get an indigent care model back in place.

But there's also a cost to not creating that model and that cost is going to come in uncompensated care that those with health insurance are going to end up paying for, that hospital users are going to end up paying for. And I'm wondering if anybody has of yet run those cost comparisons.

The cost of inaction versus funding what we morally know is the right thing to do is what I'm asking about.

We haven't released a complete analysis of the specific cost to counties and it is a little tricky to estimate because counties do have some flexibility to design their programs. There's a, there's a general statutory requirement that counties, you know, provide, you know, help, help with health care for low-income individuals, but their counties have, within that, have, have some flexibility to design their programs.

We have gotten some information from counties. I don't have it in front of me, unfortunately, today, but counties have spoken to us about some of the potential cost impacts. I would also say that counties historically covered these costs through something called realignment. There was a, there were—states had two realignments, one in the 90s and one in 2011, and I believe it was a 1991 realignment that they were funding these programs from, in part.

And when these programs ramped down, the state reallocated some of those realignment dollars and the state now benefits from some of that in support of CalWorks.

So, that's the kind of fiscal restructuring that might need to be considered if the state were to sort of renew its network of county health programs.

And I'll just, I'll just—I appreciate that. Thank you. I'll just add, I guess to put a finer point of what I'm trying to get at is we're going to have a lot of discussions this year from a budget perspective.

And I know that a lot of the feedback we're going to be given is going to be about how expensive it is to provide health care coverage to folks. And there's going to be a lot of concern about the level of that expense.

But I think what we all know to be true is that not having health coverage is very likely even more expensive from a societal perspective, from a hospital perspective, from a human perspective. I think your name is Mr. Franklin. You know, just talk to us about—his wife basically had to be diagnosed with an illness in order to have affordable health care.

There's a huge, huge cost to that, but we need to be able to put a dollar figure to that to have an informed conversation.

And so, I just hope as we get in, and I know the LAO has done a phenomenal job. This is not a criticism, but certainly, as we go into budget hearings, it would be important to me to know what is the cost of not providing care from a dollar perspective?

I think it's vital that we're able to include that. And I'll just say I was looking at some of the pages. I think this is the LAO document that you held up.

And there's things, you know, optional is prescription drugs, dental care, hospice, PT, OT, private duty nursing, anyone who has interacted with anybody who receives Medi-Cal services, dental care, hospice, numerous others, would tell you that the cost of not having care is greater than the cost of getting care. But we need to see those hard figures.

I think that's important for the conversation and it's going to be important, as a number of members have ideas around revenue generation, that we have a holistically informed conversation. So, I just—I'm so sorry, Mr. Franklin. It's something certainly we have been grappling with.

And I know grappling probably falls a little flat given the situation that you're in. California did backfill Covered California subsidies for lower income. We tried to stabilize some of those premiums for people knowing what was going on. It's a discussion we're going to continue to have during the budget hearings.

But I will, I will say I wholly blame the Federal Government for what's happening with the ACA subsidies and really encourage any of our federal representatives that are listening to take heart to your story, Mr. Franklin. It's one that's not uncommon to Californians right now.

Thank you, Madam Chair. Thank you for both of your presentations, Dr. Hernandez and Mr. Constance Taurus and Mr. Franklin, for sharing your personal experience. Dr. Hernandez, I believe that in your recommendations you said that looking at what worked, being ACA is one of your recommendations.

Can you give us a couple of examples, if you can, of what it is that worked so that we can start working on that?

Thank you. I didn't introduce myself in this way, but I was formerly the Director of Health in San Francisco and pre-ACA and pre-expansion of Medi-Cal, we aimed, as a county, to try to figure out how to provide care, not coverage, but care for everyone in the county.

We built a program that was described as Healthy San Francisco. Healthy San Francisco was a program by which you could argue was both a organized way of our safety net providers to come together to provide service to anybody who lived in San Francisco, assuming they were not eligible for Medicare or Medi-Cal or commercial insurance.

It was care at last resort. And it asked businesses—it required businesses of 20 or more employees to either provide coverage or to pay into a pool.

And that pool, along with some realignment dollars and also with the FQHC Dollars, because the FQHCs play a very integrable role and by the way, does across the state for all of our primary care. You'll hear that, I'm sure, later today.

And we essentially designed a program, and we built it on top of the chassis of the San Francisco Health Plan, which was the Medi Cal plan. So, we did not create a new bureaucracy to enroll people in that program. At its peak, there were about 60,000 San Franciscans on the program.

By the way, I should note that the business community did litigate that on...grounds, and San Francisco prevailed. And at the height of the program, there were about 60,000 residents of California that were getting care in a comprehensive safety net program. And I should note that we had small businesses at the table.

We had labor at the table; we had all the safety net providers. We had all the acute care hospitals, private and otherwise, at the table when we created Healthy San Francisco.

It's sort of the example I was alluding to in my remarks that if everybody comes together and does their part, you can do something that's quite comprehensive and that was relatively easy to implement. Now, San Francisco has an economic base that is different than other counties. So, I would note that.

But that's what I was alluding to, that kind of design. Those partners are already beginning to come together to talk about how they deal, because if you don't have insurance, what ends up happening is you end up in emergency rooms.

And a lot of the motivation for creating Healthy San Francisco, where emergency rooms that were under diversion, that is to say they were too full, an ambulance couldn't come to that hospital because the hospital had no capacity. And that's the kind of situation we're likely to see as people forego health insurance or lose it entirely.

I hope that's helpful.

It's very helpful. And we've had some conversations about that. And I think that we should be working in creating a healthy California, not just a healthy San Francisco. Thank you.

We'd be happy to help you with that, Assemblyman.

I'm going to have Assemblymember Soria and then Schiavo ask questions. We are scheduled slated to end this portion of the hearing at 2:20. Just keep that in mind.

Great. Thank you so much to the panel. Also, thank you, Mr. Franklin, for articulating your point very well and putting a face to the issue that many Californians are grappling with in this moment. And so, I appreciate, you know, your personal story. I did want to specifically ask—obviously, I represent an area that is very rural, Central Valley Assembly District 27.

And as was mentioned by Dr. Hernandez, this work requirement is going to become more of a paperwork requirement.

And so, when I think about what this is going to mean for my community, I'm thinking about the higher unemployment rates that we have in our region. So, how is that, you know, how are we going to be able to counter that with these additional requirements?

And then, you know, some of the communities are very rural and isolated and have language barriers or folks that have language barriers. And so, how—what are you anticipating that the Legislature should be doing in terms of policies to ensure that we are supporting these types of communities that have even greater access challenges today?

Even though obviously we've had a lot of progress in California, in my community, the access piece is still, you know, way behind other parts of the state, so that.

And then, I just want to make a point in terms of affordability, because I do agree that we do need to look at efficiencies, but I also want to make sure that I caution folks, as we're thinking about affordability in areas like mine, where we don't have economies of scale, affordability looks different than in more urban, dense communities.

And so, I want to make sure that we are thoughtful about, you know, as we're looking at ways to reduce healthcare costs that we don't inadvertently impact communities like mine, for example, Madera County, Madera Hospital, which is becoming very costly to continue to provide care because the fact that we're more rural, again, we don't have economies of scale.

And so, it is different than in a much more urban, urbanized area.

Yeah. I just wanted to offer two flexibilities in administering the eligibility requirements that might be helpful to you and the Committee as you're thinking about the potential impacts. One flexibility afforded to states is that high unemployment counties can be—someone from a high unemployment county can be exempt from the work requirement. That high unemployment is—there's a measure, it's based on sort of the national unemployment average, and then it's some amount of that.

And I don't have the specific list of counties that could be affected by that. When we looked at it, we estimated that that exemption could exempt a few 100,000 people.

It is somewhat dependent year by year, though, because the unemployment rate fluctuates quite a bit and the unemployment in California fluctuates more than the national average.

The other flexibility that might be worth digging more into is that to measure work requirements, the state could either, you know, sort of measure hours and it's work or school or community service.

But the state could also take an income-based approach to measuring compliance and that could help with, to some extent, with automation, depending on how that's sort of implemented. So, there are some flexibilities in place that might help address some of that. It might not preserve access for everybody.

There still would be a significant number of people affected by the policies, but it could help mitigate some of that.

And last question from Assemblymember Schiavo. Thank you.

Thank you so much. Thank you. Wonderful to have you here today. I'm so glad that Healthy San Francisco got a moment in the sun. I was there with you back way, Blue Ribbon Commission and all, and think that it was something very special that we built there.

And I was really happy to be a part of it as well and hope that that can be a model for the rest of the state where that can be applicable. But Dr. Hernandez, I appreciate the ideas and thoughts that you brought as well.

And being on the Office of Healthcare Affordability, I wonder if you can talk a little bit about how in this moment we think about the work that's happening there. Because I think obviously hospitals are being squeezed, not feeling, but actually being squeezed.

Clinics are being squeezed through these cuts that I agree we lay squarely on the feet of this Federal Administration in these painful cuts that we are now left trying to scramble and figure out. And I'll note that there are no Republican members here at this hearing.

And I just have to say that out loud, which is unfortunate because I think that we're going to need bipartisanship to find a path forward. But how can we think about that work that's happening and how that's going to impact hospitals in a really difficult time for them where we need to get a handle on costs?

I mean, the cost that Mr. Franklin is talking about is unbelievable, right, unsustainable, and literally going to put people into homelessness or without health care. So I would love for you to talk a little bit about that and before you speak, because I just want to not have to say anything else because I know we're wrapping up.

I also want to echo what our Budget Chair talked about around making sure that in our analysis, this is one of the things that I think is so painful and frustrating is that we always talk about how much something will cost, but we never talk about how much it will save in the long term.

And we have to really think holistically about, sure, we're going to save all this money kicking people off health care, but when they come through our emergency rooms, we're going to pay 5, 10 you know, the exact number, times as much when they're coming through our emergency rooms.

And so, are we really saving money at the end of the day? And I think we need real numbers to be able to have this kind of analysis. And I think, you know, to the, to Assemblymember Patel's point, everybody has skin in the game on this issue now.

And I feel like I'm saying that a lot on this Committee, but I feel like insurance companies don't have as much skin in the game as they should because they just raise their rates and just push people to pay it. And it's, you know, it's with no choice, right?

You don't have health care for your chronic issues, right? That's your choice. That's not a choice. That's someone with a gun to their head.

So, everyone's going to have to show up to this table that you were talking about that needs to be built and get real about creating a health care system that actually works for Californians in California. And I would love to hear some more thoughts on OKA.

Thank you. So, the Office of Healthcare Affordability has set a spending target. It is really bending the curve over a long period of time. So, I think it's just important that we keep that in mind in the sense that we won't get at a reduction in overall spending in the very, very near future. That's one point.

Point two is, and I say this part as a trained primary care clinician, if we want people to not be in hospitals, and I know nobody who really wants to be in an ER or an acute care hospital for any length of time, we really need to invest deeply in a primary care delivery system.

And right now, if you value where you pay, we do not value primary care. Our spend on primary care is very, very low.

And thus, you don't have people going into primary care and being able to deliver the kind of services that we would ideally do outside of the walls of the acute care hospital, which are just very, very expensive capital investments. So, there is a working group to try to figure out what an appropriate spend is there.

There's a working group to try to draw more primary care clinicians into our delivery system. There's a big effort to think about primary care teams that use health workers and other individuals that can help us leverage that. So, a big effort at improving our primary care access.

If you look and compare us to third world countries, their primary care system is better than ours in this country, in the sense of its accessibility and what we pay for services and our long-term investment there. So, that would be a huge piece. And then I mentioned data. We have an interoperability plan.

If you think about the fact that today, if you're seen at an ER one day and in a primary care hospital the next day and a week later, you're in an ambulance that takes you to another hospital, that hospital has no idea today what happened at the last two visits, what was ordered, what was prescribed, whether you got it, whether you took it or not.

That kind of friction is friction that patients and consumers suffer with because you repeat the same things. I was here then. Well, what did they do? What did the test results say? Did they get a CT?

I'm going to repeat the CT. Those are the kinds of, we describe it as inefficiencies, but they're inefficiencies that are largely borne by patients and consumers. We should be much more.

I mean, if you think about the economy of this state being based on technology and the notion that we don't have ready data interoperability, that would be an enormous benefit to patients in navigating our system and it would be an enormous cost saving to the expenditures that we have in the system.

So, those would be two very concrete things that we should be focused on if we're going to bend this cost curve in the near future or out in the distant years.

First, I do have health care. It's $2,300 a month. But in reference to what she said, my wife is on MyChart and MyChart got us to Enlo and got us to UC Davis. And it also got us to—because, because my wife, we've been playing the waiting game and I advocate. I got her through. We've got MyChart.

All of the doctors have been able to read her charts in one system. So, it's out there. And it just came up for her. I don't have that on mine, but my wife has MyChart. And so, doctors at different hospitals have been able to read the knowledge and the medical.

That's how we got our ALS diagnosis from the EMG, from two different doctors when we got our second opinion. So, that is out there.

Oh, go ahead.

I'm sorry, Madam Chair. I mean, it's a good example. His wife has MyChart and he doesn't. Everybody should have interoperability in the state. It should be a goal.

I want to thank this panel for coming forward, particularly Mr. Franklin for sharing your very personal story. Your story will help to shape what we do in the state of California. And I know that it's costly, often, when you have to come, come up and share those details.

So, I want to thank you for doing so, and certainly to my longtime mentor, Dr. Hernandez, thank you for coming here. And LAO, always thank you for your insights. We're going to move now to our next panel, which will provide some important state level updates about implementation of HR 1 and its projected impacts.

We'll also hear about the status of the safety net, what options are available to people across the state as they lose coverage, and how we might think as legislators about bolstering the safety net. We will begin with the Department of Healthcare Services leadership with Dr. Michelle Boss and Chief Deputy Director, Tyler Sadwith. Congratulations.

Thank you for being here today. And please go ahead.

We need you to press your button.

Thank you, Madam Chair. Michelle Baass, Director of the Department of Healthcare Services. Today, we will provide a brief overview of the HR 1 Medicaid provisions and the impacts to the Medi-Cal program.

In your committee materials, there's a slide deck that we will generally use for our presentation, but given the time constraints, we may not cover every single slide. Medi Cal serves nearly 15 million Californians, roughly 35% of the state, including 5.5 million children and teens. It supports older adults and individuals with disabilities. It is more than healthcare.

It is a lifeline for the communities we serve, providing vital access to medical, dental, long term care, preventive care, mental health care and support, substance use disorder treatment, and care for chronic conditions.

HR 1 makes sweeping changes to the Medi Cal program and will cause widespread harm by making massive reductions in in the tens of billions in federal funding and potentially cripple not just this healthcare safety net, but also the general healthcare infrastructure that all Californians depend on.

In particular, the provisions of HR 1 that apply to Medi Cal focus on restricting eligibility and access requirements. This includes the work and community engagement requirements, semiannual redeterminations for the Affordable Care Optional Expansion Group, restrictions on retroactive coverage, and new cost sharing requirements.

Noncitizen coverage limitations—this includes reductions in the federal matching rate that we receive for emergency services for individuals with unsatisfactory immigration status and restrictions on lawful immigrant eligibility.

State financing restrictions—this includes restrictions on some of our vital funding mechanisms such as provider taxes and state directed payments and a one-year ban on abortion providers receiving federal Medicaid dollars. The changes will impact our emergency rooms, public hospitals, rural hospitals, community health centers, ambulance providers, and the broader health care delivery system that serves every community.

Millions we—millions will be impacted and we estimate that up to 2 million individuals may lose coverage as a result of these provisions. As we continue to understand the federal policies, we will work towards implementation and review our data to continue to refine these numbers.

Provisions of HR 1 go into effect upon—some of them go into effect upon enactment of HR 1, which was July 4th of 2025, and others may not start until 2029. Most of the eligibility changes that we will discuss today go into effect January 1st, 2026, and the noncitizen changes going into effect October 1st, 2026.

As we work on implementation and in conversations with our stakeholders, partners, providers, we are guided by the following principles—automate to protect coverage. We want to maximize the use of data sources to confirm eligibility without burdening members.

Reduce paperwork, reduce that friction that was discussed earlier, streamline verifications and safeguard coverage stability. Communicate with clarity and connection. Implement an outreach and education campaign that is culturally relevant, linguistically accurate, and written in plain language to build trust and help members understand the changes.

Simplify the renewal experience. We want to modernize and streamline the Medi Cal renewal process with clearer member-friendly form and six-month renewal steps that are easier to navigate. Educate and train those who serve Medi Cal members.

We plan to deliver comprehensive training on all the HR 1 provisions for county eligibility workers, provide clear guidance, practical tools, and ongoing technical assistance so counties and our DHCS Coverage Ambassadors can confidently support our members. And then, finally, provide timely and transparent communication to our members.

We plan to share information on HR 1 changes early on so members can build awareness and anticipate changes to their coverage and have ample time to prepare to take action and meet the new requirements. This Thursday, we are planning to release an HR 1 implementation plan.

This plan includes the department's approach to mitigating the impact on Medi Cal members, minimizing coverage loss to the greatest extent possible. We will also be doing a public webinar next week on this implementation plan. This plan has been informed by ongoing work groups with our counties, managed care plans, providers, advocates, and community partners.

The changes that we will discuss in more detail today fundamentally undermine our capacity to provide care when people need it most, with consequences that extend far beyond Medi Cal. These proposals, again, will impact our broader health care delivery system that serves every community.

The challenges of HR 1 are extensive and will be felt for years through California's communities and healthcare delivery systems. We will continue to deliver the Medi Cal program with integrity and compassion for the Californians who depend on us and for their care and wellbeing.

I will now turn it over to Tyler Sadwith, our State Medicaid Director and Chief Deputy Director to review these provisions in more detail.

Thank you, Director, and thank you, Madam Chair, and good afternoon, Committee Members. My name is Tyler Sadwith. I'm the State Medicaid Director. I'd like to take this opportunity to very quickly walk through some of the sort of technical details regarding the most salient provisions of HR 1 and highlight their impact to Medi Cal.

As another panelist mentioned, HR 1 represents the largest cuts to federal eligibility and federal funding in the Medicaid program ever. We are doing everything we can, taking every step possible to minimize harm to members and providers, but we cannot avoid its impact entirely. Perhaps the most significant provision impacting members is work requirements and community engagement requirements.

This provision requires in effect The Affordable Care Act adult expansion population, of which 5 million of our 14 million members are enrolled in, to demonstrate compliance with a set number of hours of working or volunteering or being in an educational program or meeting other qualifying activities.

There are a certain number of exemptions and exceptions that I will walk through briefly. The punchline is that we estimate at full implementation up to 1.4 million members will lose coverage, based on as a result of this requirement. In budget year, we estimate up to 233,000 will lose coverage.

So, in effect, this applies to childless adults age 19 to 64. The requirement is that they either have demonstrated that they have worked for 80 hours in a month prior to their enrolling in Medi Cal or in any month during the look back period when they come up for redetermination.

They can also meet this requirement by performing community service for 80 hours a month, participating in a federally designated work program for 80 hours a month, or being enrolled half time in an educational program. As another panelist mentioned, we can also count this by income.

Congress established $580 a month as representing 80 hours of work at the federal minimum wage here in California, because our minimum wage is higher, it turns out people can meet that income compliance threshold by working less than 80 hours a month, and we plan to implement that.

We are taking every step that we can to automate this process and determine if people are exempt or compliant based on available administrative data.

And since the day the law passed, we have been taking steps to expand the federal, state, and private sector data sources available to us so that we can perform those exemptions and those determinations of compliance on an ex parte basis. This means that an individual will never have to manually report or submit information.

We know that when people have to manually report or submit information, based on the experience of several states that have implemented this Medicaid, that results in very high procedural disenrollment rates. The median disenrollment rate is 77% of that population that cannot be exempted or determined compliant on an ex parte basis.

So, our first guiding principle, as the Director mentioned, is to automate as much as possible, and that is what we are doing. Just to provide a snapshot of some of the exemptions. People that do not have to demonstrate compliance with the requirement.

There are eligibility group related exemptions, children under 19, foster youth and former foster youth, parents and other caretakers, individuals duly enrolled in Medicare and several others. I'm just going to breeze through this because our minutes are limited.

There are other exempted populations that really are enrolled in that Affordable Care Act Adult Expansion Group that are nonetheless exempt by law. These include individuals who are American Indian or Alaska Native veterans with a certain disability rating, individuals who are medically frail, individuals meeting CalWORKs work requirements, and so forth. Individuals participating in substance use disorder treatment.

I want to highlight the medically frail exemption here is something we are actively exploring.

We are working with Managed Care Plan Chief Medical Officers, the AMA, and clinicians representing a dozen disease organizations and medical societies to make sure we are building out the medically frail criteria as expansively as possible in a way that's defensible and auditable given federal guidance provided to date. We are using federal IRS data.

Equifax is a vendor that provides income data, looking at other vendors of income data for people that participate in the gig economy that might not be captured by the IRS or Equifax, EDD data, educational data.

Really just, you know, I think our slides that are available to the Committee show the steps we continue to take to make sure that we can, again, on the back end, using administrative data, exempt people to the maximum extent possible or deem them compliant so that they never have to go through the red tape.

One other major exemption was mentioned by another panelist which is living in a county with a high unemployment rate and by our estimates, that includes 22 counties representing 15% of the impacted population. One other major provision impacting Medi Cal members in the Affordable Care Act Adult Expansion Group is the increased frequency of redetermination.

Typically speaking, states have to redetermine eligibility once per year for all members to make sure they're still eligible to enrolled. HR 1 requires states to double that frequency for the Affordable Care Act Adult Expansion population to once every six months. So, this means that people may lose coverage as a result of procedural disenrollment, unfortunately.

And it also means that this works in concert with the work requirements policy that I just mentioned. There are several other eligibility related provisions of HR 1.

It reduces retroactive eligibility from three months, which is what we currently offer, to two months for most of Medi Cal members, except for the Affordable Care Act Adult Expansion Population, where retroactive coverage is limited to one month. HR 1 also establishes cost sharing requirements for the Affordable Care Act Adult Expansion Population.

There is no minimum amount established in the law and certain services like primary care, family planning, behavioral health, and FQHC visits are exempt from that. Again, we are taking all of the steps that the Director mentioned to use the guiding principles of automating to protect coverage wherever possible, communicating to members with clarity and intention, simplifying the renewal experience, educating and training those who engage in support members, and providing timely and transparent communication so that they're fully aware of how their eligibility may be impacted.

The implementation plan describing these efforts will be available on Thursday and we have a public all comer webinar next Thursday to walk through that and provide information. There are several provisions of HR 1 that impact individuals depending on their immigration status.

There's one significant provision that changes the scope of individuals who previously were fully eligible for federally funded full scope Medi Cal, but as a result of their immigration status, according to HR 1, they are now not eligible for full scope federally funded Medi Cal.

Here in California, that impacts up to 200,000 individuals and per the Governor's budget, this group will move into restricted scope Medi Cal. There's one other change related to immigration status. For individuals who are not eligible for fully funded full scope Medi Cal, the Federal Government does provide a match for emergency services and the match drops from a 90% rate to a 50% rate for those embers. I received a sign. We have one minute left.

I will say that there are some major impacts to state financing mechanisms that we rely on to fund the Medi Cal program, including healthcare related taxes like the MCO Tax, the Hospital Quality Assurance Fee. These do represent significant reductions and significant changes to the Medi Cal program.

I think there's—we'd be happy to provide information about these provisions and one final provision of HR 1 that I'd like to mention is the ban on abortion providers, a one-year ban. The Federal Government prohibits certain providers of family planning and reproductive health care from participating in the Medi Cal program.

Here, this impacts Planned Parenthood and 80% of Planned Parenthood members rely on Medi Cal. So, this is significant, and the Governor's budget notes several funding options to mitigate the impact of this provision.

Thank you, appreciate that, and I'm sure we will have an opportunity to ask some questions at the end. We'll move now to Jessica Altman with Covered California.

Good afternoon, Chair and Members. My name is Jessica Altman and I'm the Executive Director of Covered California. I want to thank you for this opportunity to be here and for hosting this critical public discussion today.

I did provide the Committee with slides as background, though I will not be walking through them sort of one by one in my remarks today. Covered California is the place where consumers can purchase quality comprehensive health insurance and get financial assistance to help pay their premiums and lower their out-of-pocket costs depending on their income.

An estimated 1 in 6 Californians has, at some point, been covered by a plan purchased through Covered California.

These are small business owners and employees, gig workers, early retirees like Mr. Franklin, who you heard from on the first panel, farmers, and other low and middle income Californians who have no other options for affordable coverage as they don't have the privilege of an employer offering stable benefits. As a marketplace under the Affordable Care Act, Covered California is subject to federal law and regulation and generally speaking, the tax credit structure is defined by the Federal Government and by Congress.

Unfortunately, recent federal policy changes through HR 1 and what is called the Marketplace Integrity and Affordability Rule, a new regulation, will have sweeping impacts and alongside the expiration of enhanced premium tax credits are expected to lead to substantial declines in marketplace coverage and a rise in the number of uninsured.

Of course, in addition to what we've just heard about in our Medi Cal program. Both HR 1 and the final federal rule impose policies that collectively will limit enrollment opportunities, add new administrative burden on consumers, limit eligibility, and increase consumer costs.

There are too many to highlight, but I want to highlight a few that help to illustrate the real impacts consumers will face. Under HR 1, many lawfully present immigrants, such as refugees and asylees, will no longer be eligible for any federal financial help through marketplaces starting in coverage year 2027.

These are lawfully present immigrants who have been eligible for marketplace tax credits since the inception of the Affordable Care Act, but who will no longer have access to crucial financial assistance that keeps their coverage affordable. We estimate over 112,000 of our current enrollees will be impacted by this change again going into effect next year.

In another example, under new federal rules, Covered California will be required to shorten our open enrollment period, the critical window consumers have to enroll, from 12 weeks to eight, starting next year in 2026 for the 2027 coverage year, giving people simply less time to enroll.

Gender affirming care is now no longer an essential health benefit under federal rules and in future years, consumers will face stricter enrollment verifications and lose access to automatic renewals, making it harder both to enroll and stay enrolled in their coverage.

While HR 1 made numerous policy changes, one thing it did not do was extend the enhanced premium tax credits which, as I sit here today, did expire as of December 31st, 2025. These tax credits dramatically improved affordability of coverage, further lowering premium cost for lower income consumers, and providing financial help to middle income consumers for the first time.

The result is record enrollment in California and across the country. In 2025, Covered California reached an all time record of nearly 2 million enrollees, and our state saw a record low 6.4% uninsured rate. Unfortunately, with the expiration of these enhanced tax credits, consumers are seeing much higher premium costs starting this month as premium billing has started throughout the month of January.

The enhanced premium tax credits accounts for two and a half billion dollars of premium assistance that California's consumers are now losing out on. We have estimated that enrollees will, on average, see their monthly premium costs nearly double, an increase of 97%.

I want to here create a distinction between with the word premium, which in the marketplace is sometimes used as the amount the insurance company charges, but often used as the amount the consumer pays reflective of the tax credit reducing that cost. It is that amount that is nearly doubling.

An average, of course, as we've heard today, does not capture every scenario. And some consumers, particularly middle-income consumers, like I believe Mr. Franklin, you heard from today, who are losing eligibility for tax credits altogether, are seeing even more extreme increases in their monthly costs.

Our estimates indicate that due to the enhanced tax credits alone, not to mention the HR 1 impacts and other changes, could result in as many as 400,000 of our enrollees dropping marketplace coverage due to lack of affordability.

We are now in the closing week of open enrollment, and we are closely tracking our data for 2026 coverage. To share what we know so far, new enrollment—these are people coming in to enroll during our open enrollment period— is down 32% compared to the same time in open enrollment last year.

We are seeing more consumers opt for bronze level coverage which does have a lower monthly premium but comes with a higher deductible. And it is still too early to tell how renewal enrollment is impacted for the many Californians hoping to stay covered.

But early data indicates higher rates of cancellations among those middle income consumers, which you can understand having heard Mr. Franklin's story today.

Discussion over the enhanced premium tax credit extension continues at the federal level and we have done as much contingency planning as we can to be ready if Congress and the President take action to extend them, including giving consumers more time to enroll and get the tax credits they are eligible for, if we are lucky enough to be in that situation.

However, there is absolutely no guarantee that that is going to happen, and so, we are urging consumers not to wait on Washington and to use this...

...Open enrollment window to enroll. Financial help is still available, and many consumers can still find plans for $10 or less on Covered California. We also want to highlight our gratitude for California's continued leadership to protect consumers in our state. The Legislature appropriated $190 million to Covered California to provide assistance in 2026.

While this cannot backfill the two and a half billion dollars, we are using that funds to keep premiums level for our lowest income enrollees and nearly 380,000 are already benefiting from that assistance. So, thank you. In closing, Covered California is working hard to promote enrollment despite these challenges.

We have been communicating about these changes since July directly to our consumers and we look forward to continued collaboration with many partners like DHCS, advocates, health plans, agents, navigators, and many others to engage and support consumers.

We appreciate the committee's work to highlight the challenges Californians face because of these recent federal policy changes and I would be happy to be here as a resource and take any questions you may have. Thank you.

Thank you. We are going to move on now to Michelle Gibbons from CHEAC.

Good afternoon, Chair and Members, Michelle Gibbons, and I'm here today on behalf of Counties.

I want to emphasize an important point that did come up in the discussion already and I want to make sure that it's top of mind as these legislative discussions continue and that is that state level savings achieved through coverage losses or the loss of food benefits—that's not true state savings.

In addition to the terrible impacts to our community members for losing these services, these so-called savings also represent a shift in cost to counties and that's without regard to whether counties can afford it or not. HR 1 places significant and compounding fiscal pressures on counties.

This includes an expanded demand for county indigent care programs, reductions in payments in federal matching funds to public hospitals, loss in Medi Cal revenue that supports county health and behavioral health programs, increased strain on county public health hospital and behavioral health safety net systems as families lose coverage and turn to counties, increased county eligibility workloads and expanded work requirements in CalFresh and Medi Cal and the increased frequency and complexity in those determinations also require additional county staff and resources and system changes.

There's also a cost shift in CalFresh administrative expenses as a result of HR 1.

So, regarding indigent care, it's important to start with and understand what county indigent care programs are and what they are not. County indigent care programs are the health care provider of last resort for uninsured eligible legal residents.

Counties are provide—are required to provide subsistence medical care, meaning basic medically necessary services provided at a level that avoids unnecessary suffering and does not endanger life or health. And each county establishes its own standards of aid and care, and that varied quite a bit throughout the state. County indigent care programs are not health insurance.

It's not comprehensive insurance coverage. They are not uniform or consistent statewide. Counties are not mandated to serve undocumented individuals, and the Section 17,000 mandate is not inclusive of behavioral health services. Those are guided by other statutes and it's really subject to the availability of resources.

Prior to the Affordable Care Act, counties served far larger uninsured populations than we do today. The type and consistency of care depended heavily on where an individual lived. In 35 counties, indigent care is administered by the county medical services program, which has standardized eligibility and benefits.

And CMSP as an entity contracts with providers for the provision of services. In 12 counties, the public hospital systems or their county health departments administer the indigent care programs with public hospitals serving as the primary provider. And some counties also contract—some of the hospitals also contracted out with private hospitals or clinics for provision of certain services.

In 11 counties, I call them the Article 13, counties indigent care programs were administered through county health departments. Care was either provided directly by the County Health Department or contracted out, or there were hybrid models as well.

Where counties were able to be more generous than the mandate, it was only because resources at the time allowed them to do so. As the number of people seeking assistance from county indigent care programs grow, counties are going to have to reassess their current eligibility and their benefit levels.

Today, counties face a serious challenge in being asked to re establish indigent care infrastructure that's been significantly reduced or modified over the past decade. These systems can't be rebuilt overnight. They are large public systems. They do not turn on a dime. Counties and CMSP funding programs they have funded indigent care through 1991 realignment.

However, since 2013, the state has diverted roughly 700 million a year from counties in the CMSP Board to support other state priorities through AB 85, and that significantly also slowed the growth rate, like the rate at which those funds are available and grow for counties to use.

And then in 2019, the state began diverting all of the CMSP Board's realignment revenues. So, I want to say, while it is important and we support maintaining coverage in Medi Cal as much as possible, I'd also want to say that the state is not just faced with Medi Cal or county indigent programs.

We strongly support efforts to keep people enrolled in state coverage and to maintain access to care. And if the state doesn't backfill coverage losses, the need for care doesn't disappear. Costs don't vanish, they shift to counties to the tune of billions of dollars.

It's anticipated that many individuals will fall into county indigent care programs, shifting the full financial burden to counties and some people will have no access until they present with serious emergencies, driving up costs and worsening outcomes.

If counties are expected to absorb these costs and the impacts of HR 1 more broadly, then counties need a true partnership with the state to identify workable policy and fiscal solutions to preserve California's health care safety net. Thank you and I welcome your questions at the appropriate time.

Thank you so much. We are going to move on now to Martha Santana Chin from LA Care.

Good afternoon, Chair and Members of the Committee. My name is Martha Santana Chin and I'm CEO of LA Care Health Plan. LA Care is the largest publicly operated health plan in the nation, serving over 2.2 million enrollees in Los Angeles County.

We are an independent public agency created to provide coverage for low-income residents and we are governed by a 13-member board representing consumers, providers, hospitals, and county officials and our charge is to ensure access to care for vulnerable communities in our neighborhoods and to support the safety net that makes that possible.

Medi Cal is absolutely vital, not just for the health of our community, but also for our economy. In Los Angeles County, 41% of residents rely on Medi Cal and without that, their health and their livelihoods are at risk. Health care is one of the fastest growing sectors in Los Angeles County, employing over 787,000 people.

So, a strong Medi Cal program is critical for the health of our communities, as well as for our economy. Because of the importance of Medi Cal, we are deeply concerned about the impacts of state budget actions and HR 1 impacts.

As you heard today, millions of individuals are going to be losing coverage over the course of the next several years and those losses will raise uncompensated care costs for hospitals clinics at the same time as those same providers are losing funding from restrictions in provider taxes and several other funding mechanisms.

For LA Care, maintaining an adequate provider network is both a legal obligation and essential for member access and the county's economy. We rely heavily on safety net providers, including clinics, hospitals, and physicians. However, stark reimbursement disparities among Medi Cal, Medicare, and commercial payers have already pushed our safety net providers to the brink of financial instability.

Recent federal and state actions are accelerating this crisis severely threatening access to care and without immediate intervention, these mounting pressures will destabilize the safety net and jeopardize sustainable healthcare for millions of low income Californians.

And when people lose coverage despite being essential members of our community and contributors to our economy, they are left without access to care. They are forced to forego preventative services, rely on crisis care, face mounting medical debt, and even personal bankruptcy, and ultimately struggle to maintain, to become, or be productive members of society.

And this undermines the health and prosperity of not just individuals but the entire state. It is important to note that it is not just those who rely on Medi Cal who are affected by the safety net destabilizations.

Like any ecosystem, and perhaps more than any other ecosystem, if one essential element of our healthcare delivery system is detrimentally affected, so too are all the other elements, partners, and parties, and recognizing this urgent systemic threat, a coalition of safety net stakeholders have come together to explore alternatives to unified in the belief that our time requires immediate action.

Preserving access to coverage is not just the policy choice, it's a moral and economic imperative. If restoration of full scope Medi Cal is not an option currently, we must act now to consider pragmatic alternatives.

We want to make sure that no one in our community is left behind and as federal policies became clear, the safety net community needed to come together to be responsive to these policy changes.

California has led the nation expanding Medi Cal coverage to all income eligible individuals regardless of immigration status and we fully support full scope statewide coverage for all.

Nevertheless, the challenges created through the passing of HR 1 and the political motivations and additional actions at the current Federal Administration and state budget actions require us to think very creatively about how we ensure all Californians continue to have access to care in a standardized way and in a way that we can maintain the integrity of our safety net providers.

Recognizing this urgent threat, the Safety Net Coalition has come together to explore alternatives and believes that this reality demands immediate action.

These stakeholders include the County Health Executives Association of California, the Local Health Plans of California, LA Care, the California Association of Public Hospitals and Health Systems, the California Hospital Association, the California Primary Care Association, AltaMed, the LA Department of Health Services, and the California Medical Association.

Together, we have been exploring state funded alternative coverage options to address the statewide gap that could result if full scope Medi Cal are no longer available due to changes in federal and state policy and this work is informed by outreach to advocates and healthcare experts.

We fully acknowledge that this is a traumatic moment and we need to be pragmatic about any alternative that will address the more urgent needs of our vulnerable populations.

The principles behind our Safety Net Coalition and our work are to first maintain flexibility so that when full scope Medi Cal is feasible, we're able to have individuals covered by Medi Cal.

We are also focused on keeping as many people covered as possible and sharing responsibility for reducing state cost, as well as making sure that we are soliciting stakeholder input to design the program.

We are working to develop a statewide state-only funded coverage program that keeps people covered and creates a bridge to restore full scope Medi Cal benefits when fiscal conditions approve and we are centered on three priorities: upholding California's value of coverage for all, protect the health care delivery system that millions rely on, and balance the fiscal realities.

A state-only coverage program should be designed to be statewide and standardized, leveraging existing administrative infrastructure, provide coverage for individuals losing full scope Medi Cal due to recent federal and state policy changes, consider the Essential Health Benefits Framework, including appropriate limits, and offer member incentives to avoid costly acute care.

It should also cost less than full scope Medi Cal while emphasizing timely access to primary care and advancing administrative simplicity. As we consider options, we'd like to emphasize that any state only coverage option should serve only as a temporary backstop in response to HR 1 and could be phased out when full scope Medi Cal becomes feasible again.

We're planning for the worst case scenario and we know that without action, we fall back on a fragmented county indigenous system that looks nothing like the coverage landscape today, as Michelle explained. We must start the work now because the system is complex and this is going to take time.

Previous statewide programs, like the Low Income Health Program and Healthy Families, took over 18 months to design and implement and major policy changes are hitting us this year, next year, and the year after that. So, this analysis must begin now and will require collaboration with advocates, the Legislature, the Administration, and the entire safety net community.

In the current budget environment, the healthcare safety net and the patients we collectively serve are at risk.

A state-only funded alternative coverage option is in no way meant to replace restoration of full scope Medi Cal benefits for all low income Californians but is instead intended to be a stopgap measure to provide coverage and ensure access to essential health care services within the fiscal and political realities of our moment.

Thank you so much for that. We will move on to our last panelist presentation. Hannah Orbach-Mandel from the California Budget and Policy Center.

Good afternoon, Chair and Assembly Members. My name is Hannah Orbach Mondahl and I am a Policy Analyst at the California Budget and Policy Center. The Budget Center is a nonpartisan, nonprofit organization that does research and analysis around our state budget. Thank you for inviting me to speak at this hearing today.

I'm going to share how HR 1's cuts to Medi Cal will impact Californians and the options state policymakers have in responding to these cuts. First, I will start by providing a brief overview of the federal budget package signed last year, with a specific focus on Medicaid or Medi Cal.

As we have heard today, the Republican-led bill, HR 1, includes the most significant federal cuts to health care that we have ever seen. Federal funds account for over 1/3 of California's budget. Therefore, federal cuts of this magnitude will cost the state billions of dollars over the course of 10 years.

At the national level, the historic cuts to the Medicaid program total about $1.1 trillion, and all of this comes while giving away tax breaks to the ultra wealthy that total about $1.4 trillion. The cuts included in HR 1 are designed in ways that will disproportionately affect low-income families, immigrants, and communities of color.

Focusing on Medi Cal, as we heard earlier, DHES estimates that up to 2 million Californians could lose their Medi Cal coverage as of HR 1, and tens of billions of dollars per year in federal funds coming into the state are at risk.

This not only threatens the care for millions of Californians, but it also threatens to destabilize the entire health care system that all your constituents rely on, regardless of their insurance provider.

HR 1 undermines Medi Cal in two main ways—it imposes financing restrictions that strip billions in federal support, and it creates eligibility and access barriers that make it harder for people to stay covered.

In terms of financing restrictions, HR 1 imposes restrictions on provider tax rates which will reduce revenue available to support Medi Cal services, reduces federal emergency matching, and implements new provider payment limits. That's not an exhaustive list, but each of those provisions will create budget pressures for the state.

HR 1 also includes eligibility and access restrictions that are designed to make people lose coverage. HR 1 eliminates Medi Cal and CHIP coverage for many lawfully present immigrants, like refugees and trafficking survivors. Additionally, HR 1 implements more frequent eligibility checks for adults in the ACA expansion population, which could lead to more people losing coverage simply because of administrative burdens.

Another key provision of HR 1, which we've heard about today, imposes work requirements on ACA expansion adults, which requires adults to prove they are working or looking for work to keep their health care coverage. Research has consistently shown that work requirements are ineffective, unnecessary, and punitive, they are simply harmful cuts to health care in another name.

These bureaucratic work requirements threaten to push families and individuals deeper into poverty by withholding health care. HR 1 represents an existential threat to all of the progress California has made in expanding health coverage over the past decade.

These cuts will result in millions of Californians losing crucial health insurance and this will create ripple effects throughout the health care system. Hospitals will face financial strains as they lose key funds, already crowded ERs will get more crowded, and some people will avoid seeking necessary medical care, putting their health at risk.

Now, on top of these federal cuts, I also want to briefly go over state budget cuts and proposals that will worsen these health care losses. The 2025-'26 state budget included cuts that reversed years of progress towards universal coverage.

Last year's state budget implemented an enrollment freeze for undocumented Californians on Medi Cal, imposed an unprecedented monthly medical premium only for certain groups of immigrants, and eliminated dental benefits for certain groups of immigrants.

These cuts harm the most vulnerable communities in our state and on top of that, this year's budget proposal from the Governor does not include any meaningful action to mitigate the harm from these massive cuts to health care. Instead, the budget proposal includes additional policies that will further cut off health care for Californians.

Specifically, this includes proposing imposing federal work requirements on immigrants who receive Medi Cal through a state-only program, even though there is no federal requirement to do so.

The budget proposal also denies full scope Medi Cal to immigrants whose health coverage is being stripped away from HR 1, leaving refugees, asylees, and trafficking survivors without health insurance and with only emergency Medi Cal. Bottom line, the January proposal imposes additional harm on immigrants' access to health care.

I want to share with you various solutions the Legislature can take to help mitigate the harm coming from these federal and state cuts to healthcare. I'm going to start with three options. First, the state should continue to engage stakeholders for an inclusive decision-making process on the implementation of HR 1.

The state should continue to coordinate with counties, advocates, healthcare providers, and community organizations before implementing new federal requirements. Early engagement and inclusive decision-making processes can improve outcomes and prevent unintended loss of coverage. Second, the state should continue to ensure it is communicating proactively, regularly, and effectively with Medi Cal enrollees.

The state should ensure that Medi Cal enrollees receive accurate and accessible information in their preferred language about policy changes, including what steps they need to take to enroll in or maintain Medi Cal coverage.

The state should also partner with and invest in community health workers and community based organizations that are trusted messengers in their communities to help reach more Medi Cal members. Third, the state should protect immigrants in state funded Medi Cal from federal work reporting requirements, as there is no federal requirement to do this for this program.

Exempting them from additional access restrictions is essential to prevent further inequities in access to care. These three options will help meaningfully minimize the harm to people's access to health care. However, mitigating the harm is not enough.

State leaders and agencies should work to preserve and, where possible, restore health coverage in the face of unprecedented loss of federal funding. Doing so will require new ongoing state revenue, particularly from corporations and wealthy individuals. While families struggle with rising costs, highly profitable corporations continue to benefit from generous state and federal tax breaks, yet corporations just received massive federal tax cuts through HR 1, funded by the very cuts to health care and food assistance that will harm millions of people across our state.

The state has options to raise this revenue and a common sense place to start is by eliminating costly corporate tax loopholes and ensuring that highly profitable corporations pay their fair share in state taxes.

I want to share three specific options you all have for raising revenue from wealthy corporations and to ensure they pay their fair share to the state in exchange for providing with a skilled workforce, public infrastructure, and large consumer base.

First, the state can end the largest corporate tax break, the Water's Edge Loophole, which allows corporations operating internationally to avoid 3 to 4 billion dollars in state taxes every year by stashing profits in offshore tax havens.

Second, the state can place reasonable limits on corporate tax credits and deductions so that no profitable corporations pay next to nothing in taxes to the state.

The state recently temporarily capped corporate tax credits to prevent cuts to state services, but that cap is set to expire at the end of this year, which will result in the state losing several billion dollars each year.

Without an ongoing limit on the amount of tax credits corporations can use each year, some very profitable corporations will be able to nearly eliminate their state corporate tax liability.

A third option state leaders have is to require greater tax contributions from top earning corporations by moving from a flat corporate tax rate to a graduated rate structure that taxes highly profitable corporations at a higher rate. This would be more in line with California's personal income tax system which taxes higher levels of income at higher rates.

There is no one size fits all solution, but my colleagues at the California Budget and Policy Center would be happy to provide your office with additional details should you be interested in these budget solutions.

Addressing the human costs of the massive federal cuts to healthcare and the state budget challenge will require bold leadership to ensure your constituents can access the care they need. Without revenue raising efforts, the state will be faced with the prospect of making even deeper, more painful cuts to Medi Cal and other critical services.

However, these revenue options would allow the Legislature to reject key state cuts to healthcare in the '25-'26 state budget and what has been proposed in this year's budget proposal. So, to sum up, the state is facing massive cuts to health care from HR 1, which will likely result in millions of Californians losing critical health care.

However, policymakers have options to mitigate these harms from these cuts and preserve access to care, especially by raising revenue. Thank you.

Thank you so much. And Committee, I'm sure you have a lot of questions based on a very robust conversation.

I did want to just start out with some organizing queries just so that we can kind of deal with the scale that we're looking at.

Across the testimony that we had from Covered California and DHCS and a little bit from Ms. Gibbons from CHEAC, can you all give us a sense of how many, the urgency level, of how many people essentially will not have access to health care and when, either as a result of falling off of electing not to get on Covered California, or because of the constraints related to work requirements, or state implications for Medi Cal coverage?

Sure. So, in—as proposed in the Governor's budget, in the budget year, we estimate 289,000 individuals will lose coverage as a result of the six-month redetermination process. 233,000 individuals related to the work and community engagement requirements, and then 200,000 related to the change in qualified non-citizens moving to restricted scope.

So, that gets you to about 722,000 in the budget year.

In the budget year.

Yeah. And then that grows to about 2.2 million ish, 2 million, in out years when it's full implementation.

2 point,,,?

2—or 2 million total. Sorry.

2 million total. And then, if we would add the Covered California portion to that.

Covered California has two estimates. One is directly related to the enhanced premium tax credit expiration, which is the major policy change in the current coverage year of 2026. That estimate is as many as 400,000 of our current members being priced out of coverage.

When you add in the provisions that will take effect next year, including the shorter open enrollment and the changes in lawful presence eligibility, and in 2028, with the new, what I call the red tape provisions, around process, that estimate rises to as many as 660,000 in total coverage loss.

And just as a follow up, when they are electing not to get on to participate in Covered California, where will those individuals go and what kind of coverage will they get?

What I would say to that question is there are people who will find other coverage. But the way that Covered California is designed is to provide coverage for people that don't have direct access to it from another source. If they had access to employer coverage, they would be on employer coverage.

If their income made them Medi Cal eligible, they would be on Medi Cal. If they were 65, they would be on Medicare.

And so, to find other coverage often necessitates really challenging choices and major economic choices like leaving your small business to go back to a large employer, like unretiring, like moving from part time because you are also a caregiver back to full time work and regaining benefit eligibility.

So, I hesitate to sort of say it is easy for anyone on the marketplace to get coverage from another source when, by design, they are on the marketplace because they don't, at least in their current economic and life decisions, have that access.

Okay. And lastly.

And what I would add is that in both of the buckets that both Director Baass and Ms. Altman talked about, there are a portion of those individuals that may become eligible for county indigent care programs. I'll give you an example.

There are some county indigent care programs where they've increased their federal poverty limit and inclusive of some of the folks that perhaps would fall off of Covered California. However, this is because that as folks were enrolled in Affordable Care Act and into other coverage, they were able to do more.

And so, as that's changing, we have higher pressures fiscally. And so, counties are going to have to reevaluate the benefit level, the eligibility levels, and what services folks are provided. And so, that could change. So, I don't have a direct number for how many of those folks could even lose access to an indigent care program.

But I do—I will just say that counties are having those discussions and really trying to figure out what that will look like on the grounds.

Okay. So, just for—I'll just back of the envelope math, in combination, I recognize that we are talking about different coverage eligibilities.

We have about 1.1 million Californians, probably north of that, if we were in this budget year, who are going to be experiencing a serious change in their overall coverage and likely not be able to have coverage whatsoever.

I wanted to just also just go back to some of the comments that Ms. Santana made about this idea of full scope Medi Cal because I think that's an important thing for us to fully understand and really ask Director Baass at DHCS, would having full scope Medical be something that is available to Californians right now, all Californians right now, be at all possible, or is it a pipe dream given the federal climate in which we are existing and how long?

I know you don't like crystal balls, but I often ask you to look into them. How long would that last?

I mean, I think just given the state's significant fiscal situations, particularly the challenges in the out years, it's really a matter of resources to provide full scope coverage to the individuals who may lose coverage as a result of state budget actions or as a result of HR 1 changes in the future.

So, it really is a matter of just the state's budget situation in the fiscal kind of out year understanding of where the numbers are.

But it is safe to say that we as a state will never be in the position to be able to backfill the loss of federal funds?

As proposed in the Governor's budget, we're not backfilling all of the loss of federal funds. That is correct.

Okay. All right, I'm going to stop there and ask for some Committee questions and I'll come back. Assemblymember Caloza and then Assemblymember Ahrens.

Thank you so much to our Chair for your leadership, for allowing me to partner with you to host one of the roundtables in my district. And thank you to Martha for hosting us at LA Care and thank you to all the panelists. I think we could have spent easily an hour on each person.

And so, I know this hearing is probably really tough because you're not sharing good news. It's like bad news layered onto bad news layered onto more bad news. But I feel like what we're looking at and what our Chair is forecasting is really the healthcare crisis before our very eyes.

And I feel like that's what we're staring at. There's been like a lot of really salient points raised already by a lot of my colleagues I don't want to repeat.

But I know one of the things that talked about that I know I've heard about are the loss of jobs at each of your respective organizations amongst your members and would love for some of you to highlight what the job loss looks like for our workforce because I know that for LA Care, for example, I believe you lost 225 positions as a result of HR 1.

And I think that's really important to highlight because those who continue to remain enrolled, and you can correct me if I'm wrong, sound like the staff that we're going to have within our healthcare systems are likely to be more overworked and we're going to have less health care workers doing the work of providing the quality care that our patients needs.

So, if we can speak to that, I would appreciate it.

Well, thank you for raising that. Yes. You know, LA Care recently had to go through a reduction in force, as a direct result of the federal changes and state budget solutions that were implemented. Our enrollment last year already dropped close to 110,000 and we're expecting another 650,000 member loss in the next couple of years.

So, it is very significant. And in our county, we are not alone. Many of the health care providers that contract with us have already had reductions in workforce, are contemplating closing service lines or facilities altogether, and the situation is dire. We are very, very worried about the destabilization of the, of the health care safety net.

And as I mentioned earlier, in LA County in particular, close to 800,000 people work in the healthcare sector. So, when enrollment drops and people lose coverage and insurance, it doesn't hurt just that individual, but it hurts really the entire economy. I know that's true for many other areas in the state.

I know—I'm sure you'll hear some of that in your next panel, but thank you for highlighting the economic impact. It's real.

I would note that UC Berkeley, the Labor Center, they came out with a study just after HR 1 was passed. About 200,000 healthcare workers they anticipate will lose their jobs as a result of these changes.

Thank you and look forward to working with you and following up with many of you after this to figure out what more we can do together to help reduce the risks, the harm that HR 1 and the Trump Administration is really causing on all of our communities. So, thank you to our Chair.

Assemblymember Ahrens. Welcome.

Thank you, Madam Chair. This is my first hearing on the Health Committee, and I want to thank the Chair for her leadership and my colleagues for having me. Pretty heavy stuff, I think.

I want to appreciate the comments by Hannah about having conversations about ideas about revenue generation because it's really hard to fathom the cuts that we would have to make in this year's budget and moving forward without looking at revenue options.

And I really appreciate several of my colleagues in the Legislature as we sort of grapple with how do we address these issues within our authority. And I do think that all options can and should be on the table when we're trying to protect vulnerable Californians from the devastating impacts of congressional Republicans.

I also would like to share in my—adding to my voice, in recognizing that there are no Republicans who decided to show up to the Committee. This was a notice committee that is public and everyone was invited. Okay. I want to notice the absence.

My question is sort of related to the sort of onerous work requirements or volunteer requirements that would essentially is expected to kick hundreds of thousands, if not a few million people, off health insurance.

Has the Administration, Director Bass, looked at any sort of public or private volunteer programs to create to in order to meet the 80 hours per month requirement? Is that something that's feasible?

Trying to fight where we can, trying to have conversations about revenue, trying to have conversations about the least impact, how we can be more efficient in the state of California, but also recognizing the realities that we're dealt with right now.

Has there been any conversations about how we can help Californians sort of work on a public private partnership to meet those requirements so that they can at least keep their health care?

Thank you for the question. I know California Health and Human Services Agency, and the Labor and Workforce Development Agency are working together to identify potentially pilot counties to do some of those efforts at the local level.

And I also know some of our counties are also having those conversations at the local level of what are the partnerships that might be available between the workforce investment boards, for example, and the county human services departments and even the managed care plan involvement to really make those partnerships to provide opportunities.

There are also some tech solutions out there that I think folks are looking at as well that kind of is an inventory of what the opportunities might be in each community.

Thank you very much. And has there been any sort of analysis or projections on the increased costs to state and local governments, as well as to the individuals and employers buying health insurance because of significant increases in emergency room costs to provide emergency care for newly uninsured?

Thank you, Assemblymember. So, the Department has not calculated that. And I think the LAO on the previous panelists sort of noted the need for that by another Member of the Committee. So we'd probably defer to the LAO for that global impact of uncompensated care.

Yeah, I think that that kind of information will be very helpful as we advocate against any future cuts and as we seek remedies of our own. And finally, do we have any projections on how many more Californians and employers can expect their monthly health insurance premiums to increase because of congressional Republicans slashing federal health care investments?

So I can speak specifically to covered California when we go back to what I said about sort of we use premium in two ways in the marketplace here I'm going to speak to the actual premium that the insurance company charges before we get to the tax credit. This year we had a 10% premium increase for covered California.

But really for anybody who buys directly for individuals and families, this is the highest that we've seen in years. And while that is a very high number, we are actually proud of it because the national average is over 20%.

What I wanted to answer in relation to your question is that a portion of that is directly because of the federal changes and the enhanced premium tax credit expiration. And as we head into future years, similar things will be told about HR1 for Covered California premiums.

That's because when people leave coverage, the people who leave are disproportionately healthier people. And so for the people that remain, the people for whom having health insurance is truly not a choice, the average cost is higher and therefore the premium is higher as you have a less healthy risk pool, to use the term of art.

Thank you so much. Thank you, Madam Chair.

Assemblymember Schiavo. And then we'll go Addis.

So we I don't think, and I'm sorry if I missed this, but is there, do we have a ballpark number on how much were these federal cuts are leading to? I'm hearing tens of billions of dollars. Do we know how many tens of billions of dollars?

So we are still working through that. Some of the changes with regards to our provider taxes and our state directed payments are, you know, phased out over time. And so, you know, those tens of billions isn't going to happen in the budget year.

And so those are kind of over the next five to 10 years is when we will get to kind of the max amount there. So that's, that's the reference.

Okay. Do we have a sense of how much it might be this year?

The state General Fund cost this year is an additional 1.1 billion to essentially one of the changes that is most notable is the change from the 90% FMAP matching rate to 50%. And so the state is covering that loss in federal dollars using General Fund.

And so in the budget year we have 1.1 billion in additional General Fund costs as a result of HR1.

Okay. So I know there was, you know, discussion about the impacts on counties and I am, you know, concerned that a lot is going to fall on counties, especially around the six month eligibility requirements. And I wonder do, is there flexibility that DHCS has around automating verification to reduce paperwork?

And do we think that the counties have IT infrastructure in place that can handle this verification that they're going to have to be doing now? Do you know how that's going to work?

Thank you Assemblymember. So our goal as much as possible, to the maximum extent we can, is to automate a lot of the eligibility verifications at the state level. Our goal is to prevent county caseworkers or Members from having to take action to maintain enrollment and coverage in Medi Cal.

So that's really sort of the driving strategy again based on sort of the data from other states. That's sort of one of the core interventions to maintain Medi Cal Medicaid enrollment. The volume of caseload work that will impact counties will increase as a result of HR1.

And that includes both the six month redeterminations as well as the work requirements. So we, we do note that we continue to work with our sort of county partners to develop sort of an estimated impact of what that, what that work will entail.

I think we're definitely dedicated to, you know, efficiency and tech based solutions to help help solve this problem.

Assembly Member, if I may, I'm going to channel my colleagues at CWDA for a minute. Just say even with the best of automation, there's still going to be a human element. This is getting more complicated for individuals.

And so some of the time that they take to kind of walk somebody through this in case manage them, it is going to increase. Not just the number of redeterminations or the comp, you know, having to do that more frequently, but just how complicated this process is.

And so it is going to take additional time and resources and it's going to take additional staff as well.

And there's not anything in the proposed budget that would cover those pieces.

No, we have community health workers can be used for some of this work in terms of eligibility and enrollment. And so that is a benefit under the Medi Cal managed care delivery system that we are looking to our managed care partners to really develop.

We also have 4 million related to clinic navigators to also help in this process. That is part of the proposed governor's budget.

But for county eligibility workers, we don't see a proposal in the governor's budget.

But we did acknowledge that we are working to develop one for the spring.

I will say, Assemblymember Schiavo, one of the things that we consistently heard across the six roundtables that we did was this conversation around the impact to county. Workers.

And just in terms of the overall workload, it was estimated in some that there would be a 3x times requirement in terms of the number of people that would need to be in place in order to be able to handle the additional workforce eligibility pieces.

Yeah, well, you can't ramp up 3x when you have your budget getting cut. So that doesn't seem like a good scenario at all or realistic. And then one last question, if I may.

With the projected loss of $2.3 billion annually due to the mandatory phase down of SDPs, do we know which services are most at risk if that revenue continues to decline?

Thank you, Assemblymember Yeah. So the state directed payments are a mechanism that we use in Medi Cal to sort of direct certain payment amounts or payment rates to certain provider and beyond what Medi Cal managed care plans negotiate with providers. In large part, those are used for hospital care.

So inpatient hospital care would be the predominant sort of clinical setting or provider type impacted by the changes in HR1 that reduce the maximum amount of payment rates that can be established in state directed payments now starting in 2028, I believe through a phase down no higher than Medicare.

I mean, there's hospitals generally, but there's training programs within that trauma care, regional access to specialists. The ripple effect will be wide, right?

Yes, Assemblymember, and I think Ms. Gibbons wanted to comment on that.

Yeah. Thank you for allowing me. I'm going to channel my colleagues at the Public Hospital association for a moment and I think you'll hear more about it. But to your question about, you know, loss of revenue or increased costs, there's the cost to the state or the loss of revenue to the state.

There is also a loss of revenue to the counties directly. And so this is one of those areas that that is a direct loss of revenue to our public hospital systems. And that's going to be felt in a major way. So I know you'll Hear more about it. But just wanted to put that pin there.

And I'll have Ms. Antana Chin as well pipe in and then we'll go to Assemblymember Addisis and Patel. We are slated to end this portion by 3:40.

Yeah, thank you. Thank you for the opportunity and thank you for your question. You know, one thing that I want to underscore is the impact that even just the work requirements are gonna have on the healthcare delivery system.

While there is some availability of community health worker support, community health workers cannot make the final determination on whether or not somebody is eligible. That ultimately lands on the county. But all of the cuts on the provider tax system, the MCO tax and the list goes on and on.

There is significant impact to the revenue that our providers are receiving today. And because over the years providers have depended more and more and more on these directed and supplemental payments and those are at risk, it's essentially destabilizing the providers.

And so what we're very worried about is that as those providers get hit, you know, the hospitals as an example, private hospitals, close to 50% of the money they get to cover the cost of care for a medical recipient comes from something other than a base rate.

And over time, we have not invested in the base rates at the same level. I mean, you know, our providers don't get paid Medicare or commercial rate equivalents.

And oftentimes what happens is they'll come to health plans like us and say, you know, we're going to have to charge you more on your covered California business or for some other insurance product because we have to offset the losses from us serving your medi cal Members.

So it is very concerning that a lot of the financing mechanisms that we've historically depended on are being dramatically reduced because it's going to impact our providers in a very serious way.

Thank you. And we'll go to Assemblymember Addis and then Patel.

Thank you so much. I think I have more comments than questions just for folks. I know there was a lot of acronyms thrown out and a lot of interest in what's happening with the budget.

And so just some of the things that we'll be covering in the sub one budget hearings particular to Health and HR1, HQAF, MCO, the Reproductive Dollars covered California. But I do want to make this comment because we're hearing a lot about using tech programs, making things more streamlined, being able to implement, sort of take the weight off.

And I do think that accountability around timelines, deliverables, those pieces is going to be really important. We've seen from the Department, there's times where there's and this is not a criticism of you, this is piece of being in government that we all are challenged with.

But there's times where there's good intentions and then we're not able to deliver and we talk about it for much too long. And I just, I don't think we're going to be able to withstand lengthy promises around a streamlined system.

We're going to have to really be able to deliver on a streamlined system and know that not just the impetus but the urgency and the actuality of that can happen.

I also want to reiterate some things that were said at the original budget hearing that happened last week, that it's important to the State Assembly in particular that there's early and often communication from the Administration, from the departments ahead of the May revise and that we're not surprised.

I've heard a lot of things kind of thrown out here in terms of where the missing dollars are, missing programs, what we need to do, et cetera. But sometimes we get surprised at the end. And so we want to make sure that that communication. I think today is a start.

I want to commend the chair for beginning this conversation, but I think today is a start, but we really do need to not have major surprises as we get closer, closer to the May 10th revise and then say thank you to Ms. Orbach.

I think you mentioned a number of things the state could do and one of those is to engage with stakeholders. And so I just want to invite everybody to come to the sub one budget hearings. Feel free to come give your me toos and submit your comments for things that we'll be talking about.

And then my questions really echoed what the Chair said at the beginning is how many people and when. But I'll add to that would be having maps for Members.

We talked about this last year, but Members again this year as we have a renewed conversation, need to see what's happening in their own districts, whether it's the loss to medical, the loss from covered California hardships for the hospitals, whether those are public hospitals or others.

I think that's going to be important for our Members to be able to see and to be able to make decisions around as we think about, you know, the hundreds of I'm just looking at the numbers you stated, the hundreds of thousands of folks that are going to lose coverage where in our state they're going to lose coverage.

Dr. Patel?

Yes. And I do want to say thank you to Chair Bonta for coming to San Diego for our convening. We were able to invite in our county Department of Health to talk about how this is actually going to create more bureaucratic work for them without that additional support for staffing.

And the work that the counties do is very different than the work that other people, such as community health workers do. It's very different work making sure we re enroll. So thank you for bringing that conversation to San Diego County. It's very important for us in the district to be able to address that.

Tyler, a specific question for you. You mentioned that using the alternative of the work work with the wage and the work requirement might be a different way of looking at it. As I did the math roughly in my head, $580 is $80 a month on federal minimum wage. California minimum wage is double that, nearly.

Does that actually change the work requirement for people and increase eligibility? And would we be able to capture gig workers that way better also?

Thank you, Assemblymember. So I'll break that into sort of two parts. Based on the law, someone who earns $580 per month would comply with the requirement. And so in California, because our minimum wage is higher than the federal, what that means is they actually have in order to comply, they actually they can work less than 80 hours.

So that is the approach that we're taking for implementation. We are still awaiting comprehensive guidance from our federal partners at the Centers for Medicare and Medicaid Services.

But based on an interpretation of the law, that is the case with respect to gig workers, The ability to have $580 of income used to sort of check the box and say you meet this requirement that applies no matter what your employment, source of employment is. It's inclusive of but not limited to gig workers.

When I mention gig workers, I mention it because we're looking at new types of data sources that have income data for gig workers and for people who may not be reflected in IRS data, EDD data, et cetera.

So that was just why I mentioned that as we're really, really committed to going above and beyond to make sure we can exempt people or deem them compliant using data on the back end.

I really appreciate your thoughtfulness in that, in making sure we're including as many people as possible at whatever level we can because we know that there is going to be an enormous multiplier effect in our economy and as we look at how things are going to be constrained economically not having those health care dollars flowing through our communities and through our economy.

So I appreciate that. Wanted to echo some of the sentiments of Assemblymember Coloza in that multiplier effect that loss of Health Care Dollars will have on our communities. Thank you. Chair Ponta.

Thank you. And just as a wrap up and thank you to this panel, we certainly have started to essentially kind of scratch the surface of the impacts of H R1 and the realities of our state budget in part as a result of what we are seeing.

I just wanted to highlight and not lose sight of I think probably one of the most resonating points here, which is that we need to make sure that we have a true and strong state and county partnership right now as we seek to at least stabilize our health care infrastructure.

And I want to note that that was something that definitely came across in our conversations previously and also appreciate the work of the Safety Net Coalition that has been looking at the kind of even immediate term and long term impacts of what will happen under HR1 and recognize that it is not an option to go back to the pre ACA indigent care model which was insufficient.

And I think the basic requirements were essentially make sure that nobody dies. You use better language than that. But that was essentially the standard of care that we were focusing on.

And it's also seemingly impossible for us to move forward with with the Federal Government taking the stance that it is right now to ensure this kind of full scope medical approach that would also honor California's sentiment around universal health care and health for all as we work so hard to do so.

I am very interested and intrigued by the bridging model that we need to have in place or the stopgap model that we need to have in place.

That seems like it would be something in the middle of those two extremes to ensure that we are able to deal with the immediately the 1 million people who are going to be off of healthcare very soon and that number is only going to increase over time.

I just wanted to give I know that we're over, but each of you, the panelists, if you could give your one sentence focus Legislature focus recommendation, what would you have us focus in on right now in this legislative session and in the budget? Oversight. And we'll go, we'll go my left to right.

Thank you for the question. Our one sentence point is that you. Do have options to mitigate this harm. And restore care and that starts with raising revenue. And by exploring those options we can raise money and reject those cuts in the state budget. Thank you.

I think my request, our request would be to really focus on pulling the stakeholders together to come up with creative solutions, building on models like what was happening in San Francisco. We have a willing coalition of partners that is willing to get through this rough patch and we're ready and willing to engage. Thank you.

Thank you. I think I've taken from this hearing that the Committee is very much focused on the right things. I would just emphasize that as we look at coverage loss, that any person losing coverage, no matter their income, no matter where in the state they live, is equally as tragic.

And it's important that we remember that whole picture.

Yeah. I would echo your words. Around partnership with counties, I have to do my job and just say avoiding death, unnecessary pain and suffering and endangering life and health. And I think in terms of a focal point, continuing that partnership with counties, we would promote the state alternative as well.

And then if not, we have a lot of planning and discussions to be had around county indigent care programs too.

Thank you, Madam Chair. I would recommend being wide ranging and broad and exhaustive in thinking about options.

I think, I think in particular the losses in coverage that will result in non compensated care, people showing up in the emergency Department, what that means in the local, you know, for the entire healthcare system in California, the ripple effects it has to other markets.

So thinking broadly about what the problem is, broadly about what options are, and broadly about what the partners are at the state, the county, the Administration. So just being extremely comprehensive in the thought process.

And I would just say now more than ever, it's our time for fierce urgency for collaboration. We need to pull together, find the contributors in all of our spaces, and go, you know, really stretch the way we think about how to provide coverage.

Thank you, Director Bass, and thank you to our panelists. We are going to move on now to our last panel and I'm sure there will be opportunity for Assemblymember Schiavo to get in her thought with some of the folks who are coming forward. We are going to be moving on now to the panel around community perspectives.

And we will actually start with Stacy Cross from Planned Parenthood, Mar Monte, who will kick off the panel.

This panel is going to make sure to focus on the long standing issues in our community that already posed severe challenges like workforce, the impacts of federal actions that we are feeling already, and how folks are preparing for the massive cuts at the federal level that are ongoing and will increase year over year.

We were pleased to be able to bring some of the voices and organizations who participated with us in our local roundtables to Sacramento today to uplift what they shared with us in their communities. And with that, we will start with Stacy Cross.

Thank you. Good afternoon, Madam Chair and Members of the Committee. My name is Stacey Cross and I'm the CEO of Planned Parenthood Marmonte, which is the largest Planned Parenthood affiliate in the country. And I'm one of seven affiliates serving California. We operate 30 health centers across mid California and Nevada and provide over 300,000 patient visits per year.

Thank you for convening this hearing and the opportunity to speak about the devastating impact HR1 has already had. I will address the federal defunding of Planned Parenthood health centers nationwide, its consequences for California, and the very real harm we're already seeing at Planned Parenthood Marmonte.

In California, the seven affiliates serve one third of all of the Planned Parenthood patients nationwide. And and Planned parenthood Monte serves 1/3 of all those patients. One in four California women has received care at Planned Parenthood.

And a recent Kaiser Family foundation report found that nearly half of the women of reproductive age enrolled in Medi Cal rely on Planned Parenthood for birth control services. Our affiliates are the largest provider in the Family PACT program and the largest provider of abortion care in Medi California.

More than 80% of our nearly 1.3 million patient visits we provide each year are reimbursed through the Medi Cal program. And I want to be really clear that the California Community Health Network cannot meet the demand for sexual and reproductive health care without Planned Parenthood.

That's why defunding Planned Parenthood has been catastrophic and will be catastrophic for patients. The defunding provision of HR1 prohibits Planned Parenthood from receiving federal funding.

As a result, we no longer receive reimbursement for the vast majority of the care that we provide through Medi Cal and Family pac, including family planning, STI testing and treatment, cancer screening and other preventative services.

Now, in a really cruel irony, because abortion care receives no federal funding, it is the only service for which we're still getting reimbursed in dollars. For California alone, the defunding provision in HR1 results in the loss of more than 300 million federal funding. Planned Parenthood Mormonte stands to lose up to 100 million annually.

At planned Parenthood Mormonte, the impact has already been devastating. We made the difficult decision to reduce expenses to focus on core services by closing five health centers, sunsetting three really critical services. Family medicine, behavioral health and prenatal care.

Our family Member medicine program had been around for 30 years and had more than three generations at most of our health centers. These decisions were heartbreaking for us. At Planned Parent and Vermont. The federal cuts are a betrayal. Of patients who rely on us for preventative care.

Without support, Planned Parenthood affiliates must be forced to consider closing additional health centers or reducing hours, days of operations, cutting staff, scaling back services that people rely on to stay healthy. Planned Parenthood Marmonte is rooted in innovation and resilience.

And despite these closures, we are doing everything possible to keep our doors open to continue to serve patients with essential sexual and reproductive health care. Emergency state funding has helped us continue serving patients through the end of calendar year 2020 and we are deeply grateful.

Today we are draining reserves and budgeting against funding that is not guaranteed, all while facing additional federal attacks and the broader cuts to the medical system. This is not sustainable for us. Without a longer term solution, patients will lose trusted providers in their communities.

These relentless federal attacks Planned Parenthood may have has remained rooted in our core mission to provide care no matter what. We are defunded, but we are not defeated. Everyone has a Planned Parenthood story Now more than ever. We need strong state leadership to stand with us and to protect California's constitutional right to reproductive freedom.

Thank you again for this opportunity to speak. We look forward to continuing to work with the state to secure investments needed so patients can receive the care they need and deserve at Planned Parenthood, just as they have for many generations. Thank you.

Thank you. We're going to move now to Robert Gamboa from the Los Angeles LGBT Center.

Thank you, Stacy, and thank you Madam Chair and Members of the Committee. My name is Robert Gamboa. I use he, him, his pronouns, and I'm the Associate Director of Public Policy with the Los Angeles LGBT Center. And thank you for the opportunity to testify today.

Since 1969, the Los Angeles LGBT center has provided care, safety and dignity for LGBTQ people and families. What began as a small act of courage is now the largest LGBTQ services organization in the world. Nearly 800 staff deliver care across health, housing, social services, cultural services, education and advocacy programs.

Each year, we provide more than half a million client visits across all of our programs and locations. As a federally qualified health center, we provide comprehensive primary and behavioral health care to more than 11,000 patients through over 100,000 visits each year. This includes Medi Cal primary care, mental health services, psychiatry and supportive services.

56% of our patients rely on Medi Cal now. LGBTQ Californians already face serious disparities in health, housing and safety. But today, federal actions are actively destabilizing the systems of care our communities depend upon. From the removal of LGBTQ data to the weakening of non discrimination protections and aggressive anti trans enforcement actions.

These policies are compounding inequities and driving fear into our clinics. We are seeing this impact directly. Patients are staying away from the clinics out of fear of being targeted or questioned about immigration status.

Families delay routine and preventative care and parents fear their children will lose access to medically necessary medications or that clinics will be forced to shut down essential services. This constant uncertainty is causing real psychological harm and destabilizing the specialized evidence based systems of care that these communities depend upon.

These threats to Medi Cal are not Abstract for undocumented people, people with disabilities, low wage workers, and transgender patients, Medi Cal is often the only pathway to continuous care and proposals to freeze enrollment or impose work requirements will push people out of coverage and into crisis driven care.

Recent federal actions have already led California to restrict reimbursement for care provided to certain lawfully present populations, with changes set to take effect this year. That means community health centers will be forced to absorb large increases in uncompensated care with which many FQHCs simply cannot sustain. At the same time, as many as other systems cut services.

Patients are being pushed into community health centers that are already at capacity. By law we cannot turn anyone away and by mission we never would. But without new resources, this surge will create dangerous wait lists for primary care, mental health and specialty services. And when care is delayed, crises escalate. Looking ahead, we are facing a fiscal cliff.

If federal changes reduce our medi Cal population by even 20%, thousands of patients will be pushed from stable coverage into sliding fee programs they cannot afford. We will return to pre ACA reality where patients ration lab work, delay treatment, or skip prescriptions because rent and food come first. For health centers, this is not survivable through small adjustments.

It would mean multimillion dollar revenue losses, layoffs of providers and culturally competent support staff, and elimination of specialized services. These federal policies are destabilizing coverage and do not promote work or wellness. They manufacture a public health crisis while dismantling the safety nets we all rely upon for survival.

Federal Executive actions, investigations, coverage exclusions, and proposed rules have created widespread uncertainty about the use of federal funds for gender affirming care. CMS has proposed rules that would prohibit Medicaid and CHIP funding for transition related care for transgender youth and bar hospitals that provide this care from participating in Medicare or Medicaid.

If finalized, these policies would force many providers to stop care that is required under state law. And California must act now to protect all providers and patients of gender affirming care no matter what.

At the same time, multiple federal programs are eliminating gender affirming care coverage across populations, including Tricare for youth, the Veterans Administration for Veterans, and now the Federal Employees and Postal Service health plans for all ages, starting this month, pushing many Californians into already overextended community clinics and sharply increasing uncompensated care. The chilling effect is real and devastating.

Clinic closures and program terminations are already happening, and fear and uncertainty are driving families to delay or Fargo care, worsening depression, anxiety and suicide risk, especially for transgender youth who already face disproportionate mental health crisis. If California doesn't act fast, many of us will die.

I have a couple of different proposals that I've been sharing with the LGBTQ Caucus, and I'm happy to forward those along to you, but I believe my time is up. Thank you.

Thank you. We're going to move now to Dr. Dolly Goel from the Santa Clara Valley Health Care.

Good afternoon, Chair Banta and Members of the Health Committee. I am Dr. Dolly Goel, Chief Clinical Officer for Population Health with Santa Clara Valley Healthcare. I have served as a Chief Medical Officer role for Medi Cal and indigent patients in our county system for the last 30 years.

Thank you for the opportunity to speak on behalf of the county of Santa Clara about how our community and our public hospital System, which is one of 17 public health care systems in California, will be impacted as a result of the unprecedented Medi cal cuts in HR1. HR1 puts our public health systems on a catastrophic path.

I want to echo the catastrophe that has already been laid out. The consequences will not be limited to Medi Cal patients. As you have heard from several panelists today, there will be a ripple effect for all patients seeking care across our state, including patients with private insurance and lots of money.

For Santa Clara county alone, HR1 is estimated to result in a $1 billion annual loss due to federal cuts when it's finally implemented. That is 25% of our health system's budget. This is because Medi Cal is the single largest funding source for our public hospital system, which is the second largest in the state.

Our county operates four hospitals and 15 health centers, two of the three trauma centers in the region and one of only three trauma and burn centers between LA and the Oregon border. We serve as the backbone for health care delivery for nearly 2 million residents.

If even one hospital or trauma center were to close, the impact would be immediate. We've actually seen this. In 2008, we had to close our emergency room for four hours because an event and I mean completely close it within a half an hour.

All of the local hospitals were frantic to find out when we were going to open because they were swamped with ambulances and could not care for the level of patients that were showing up in the emergency room.

I want to point out these ambulances were full of not just medical and indigenous patients, they were full of commercial and private patients who could not access care because the hospitals were overwhelmed. That was a four hour shutdown. So I want you to think about that and think about what would happen if our hospital closed completely.

HR's eligibility restrictions will cause massive disenrollment across California, as you've heard today, and the work requirements alone are expected to impact more than three quarters of a million individuals in counties with public hospitals. It will also likely trigger a cascade of hospital closures and service reductions, forcing more patients to California's public hospital systems.

California's public hospitals operate under a fundamentally different model than private hospitals, and therefore HR1 affects us very differently. It targets the financing structures that public hospitals depend on. Most public hospitals are core providers of care to Medi Cal and uninsured patients. Nearly half of our payments are from Medi Cal and uninsured, far more than other hospitals.

And county public hospitals are legally required to care for all poor and indigent persons, regardless of their ability to pay and regardless of how they enter our system. Under HR1, as people lose medi Cal coverage, they will not stop getting sick, as Chairman Banta pointed out in her opening remarks.

Instead, they will delay care, skip medications, and show up in our emergency room sicker with more complex conditions. This dramatically increases uncompensated and indigent care costs for public hospitals. And it affects everyone. Longer ER wait times, delays in care, strain on staff and beds.

It impacts not only uninsured, but also Medicare and commercially insured patients who rely on the same system. Most importantly to me as a physician, people will die, people with treatable conditions. Like many counties, we do not have enough reserves to absorb hundreds of millions of dollars in costs caused by federal funding losses and rising uncompensated care.

We are seeking to partner with the state to mitigate the worst impacts of HR1.

We respectfully ask the state to help people enrolled in Medi Cal through investments that help maintain coverage and participation to provide dedicated state funding support for public hospital systems, including restoring state match funding for public hospitals that was previously eliminated, and to allocate significant support to counties to address the expected surge in uninsured patients.

I will just close with this public hospitals represent only 6% of California hospitals, yet we serve 3.7 million Medi Cal patients. We deliver 50% of the state's top level trauma and burn care, and we train more than half of the doctors in California. We are the backbone of health care delivery in California and need to be protected.

The cost of cuts we face will come at the expense of other safety net services, placing even more Members of our community at risk. We are here as a resource and a partner. We want to work with you because patient lives are at stake. Thank you for this opportunity.

Thank you, Dr. Goel. We'll move now to Doug Archer from the Dignity Health Mark Twain Medical Center. You'll have to press the button.

Madam Chair, Members of the Committee, I just want to thank you for allowing me to be here today. My name is Doug Archer, and for the past seven years, I've been able to serve as the President of Mark Twain Medical Center Critical Access Hospital in San Andreas.

I'm pleased to be here representing Dignity Health, our 29 hospitals and the broader hospital community. As the largest provider of medical services in California, Dignity Health is proud to consider itself a longtime partner to the state in assuring access to Medi Cal beneficiaries.

Last year alone, Dignity Health provided more than 800,000 inpatient days and over 1.2 million outpatient visits. We rely heavily on the provider fee to make our commitment to Medi Cal work. Bottom line is the changes in HR1 stand to impact Dignity Health by more than $1 billion annually. And Mark Twain. We rely on Dignity Health sustainability.

Mark Twain is a 25 bed critical access hospital, and we're the only hospital serving Calaveras County and the local foothill communities. Last year, we provided more than a million in direct patient financial assistance and nearly 5 million in total community benefit. In Calaveras County, medical is often the only option our residents have, especially for rural working families.

For our rural communities, access to care is not just about convenience, but it's actually about whether the care exists at all. At Mark Twain last fiscal year, we finished with a negative 1.6 operating margin despite almost 10% growth in volume. Those numbers are not about profit.

It's about patients, and it's about our ability to Fund sustainable care for our community. They reflect the cost of keeping services available in our rural setting. Staffing an emergency Department 24 hours a day, seven days a week, maintaining inpatient beds and mostly adequate staffing.

When our volumes fluctuate, we could have two patients today and walk in tomorrow to 12 patients. It's hard to manage swings like that. Also meeting the ever changing regulatory, legislative, seismic and safety mandates, HR1 will result in coverage losses for more than 2 million and will strip nearly tens of billions from California's health care system.

And as we talked, those patients will not just disappear, they'll show up in our ER and more than likely in worse shape as they avoid or delay care without access to primary hospitals like I'm sorry. It is not only the loss of coverage under HR1, but also the changes to how the states implement the provider fees.

For hospitals like Mark Twain, the provider fee is a lifeline and we rely on the provider fee to remain viable. The stress on the healthcare system and patient access is not just isolated to HR1. We are still required to absorb significant cost increases and unfunded mandates.

The cost of the upcoming legislation requiring metal detectors and the staff to run them, the cost for nursing and professional staff to be on call and readily available, the $25 minimum wage, all add to our operating losses. And this doesn't include our need to meet the 2030 seismic deadline which will cost my little hospital $16 million.

Not to mention the operational impacts of the construction for Dignity Health Seismic number approaches over 4 billion. And of course in California it's over 100 billion. Hospitals are truly facing an untenable position and we're facing radically escalating cost and reduced reimbursement. Yet we also must comply with the spending caps imposed by the Office of Healthcare Affordability.

This situation is simply not sustainable and it's forcing us to ask very difficult questions. Can we continue to offer the services? Can we offer those services locally? Can we maintain surge capacity, especially in our foothill communities with wildfires, floods, natural disasters, can we retain staff for high census times? Quite literally, can we stay open?

These are not financial decisions, they are actually access decisions. Once a service line closes in rural communities, rarely does it come back. And HR1 will just accelerate these hard decisions. Not to mention often rural hospitals are first or second largest employers in the county.

So these decisions actually are significant impacts to our economic health in our rural communities. In the past three years, four California hospitals have closed or barely been saved by last minute state assistance. And in 2025 alone, over five hospitals shuttered critical services like maternity and pediatrics.

In closing, policies like HR1 shift costs onto rural hospitals that have no capacity to absorb them and patients ultimately bear the consequence. I urge this Committee to move to view upcoming legislative decisions as well as the state budget through the lens of patient access and and protect the hospitals that make essential Care possible in rural California.

Thank you for your leadership and your commitment to our patients.

Thank you. We'll move on now to Veronica Palacios from SEIU Local 1021.

Good afternoon. My name is Veronica Palacios. I am a Member of SEIU Local 1021 chapter, Vice President at Alameda Health Systems, and an eligibility worker for 25 years at the largest public health system in the East Bay.