State Projections Show Hundreds of Thousands at Risk of Losing Medi‑Cal Under HR1

State administration officials told the budget subcommittee that federal HR1 and related rulemaking will drive substantial disenrollments from Medi‑Cal and narrowed Covered California enrollment.

Andrew Hewitt of the Department of Finance said projected Medi‑Cal disenrollments are 44,000 in 2026–27 and could reach approximately 1.3 million by 2029 as work requirements and redeterminations take effect. DHCS Medicaid director Tyler Sadwith said work and community engagement provisions are expected to cause loss of roughly 43,000 members in the current year and "at full implementation, it will lead to the loss of slightly over 1,000,000 medical members." Sadwith cautioned these numbers do not yet reflect a June interim final rule by CMS that narrows medical‑frailty exemptions and could increase coverage loss.

Covered California projections were updated by Angel Alonso Coronado (Department of Finance), who said the forecasted decline narrowed to about 454,000 enrollees (improved from an earlier 527,000 estimate) because of state subsidy design changes for 2027 and the reversal of a proposed shorter open‑enrollment window.

Administration officials emphasized uncertainty: DHCS is still analyzing the CMS rule and the department is continuing to refine exemption counts. "It is likely that if we were to implement this in compliance with the interim final rule, it would be less than 700,000 that we can exempt," Sadwith said, referring to planned medical frailty exemptions in the enacted budget. Senators and assemblymembers repeatedly asked whether worst‑case numbers could be materially higher; DHCS said the precise scale relies on forthcoming federal guidance and implementation mechanics.

Why it matters: projected disenrollments drive fiscal and operational planning — including county indigent‑care demand, public hospital revenue pressures and the state budget posture for potential bridge or longer‑term programs.