SACRAMENTO, Calif. — Sen. John Kennedy of Louisiana is taking intention at California’s Medicaid program for offering housing help, meals, and different social providers to high-need, low-income sufferers who are inclined to rack up large healthcare prices and, he argued, pressure taxpayer funds.
The Republican blasted California throughout back-to-back political assaults in Might, saying the closely Democratic state is committing “outrageous fraud” and “stealing” by spending state and federal Medicaid cash meant for primary medical remedy on unconventional providers corresponding to housing and diet help, fitness center memberships, and even tribal prayers and, he claimed, exorcisms.
“The California Medicaid program will pay for herbal medicines, meal deliveries. They’ll pay for housing,” Kennedy stated. “I don’t know what housing has to do with healthcare.”
“California, they’re just setting all kind of records,” he added. “They’re wild people.”
Regardless of criticism from congressional Republicans and rising scrutiny from the Trump administration, Gov. Gavin Newsom, a Democrat contemplating a presidential run, stated he’s pleased with California’s spending on social providers in Medi-Cal, the state’s Medicaid program. It’s a multibillion-dollar experiment to assist medically frail sufferers meet their housing, meals, and different social wants that Newsom says is just not solely authorized but additionally a cheaper and evidence-backed strategy to offering healthcare for Californians with complicated well being circumstances. He counters that investing in providers exterior scientific settings may also help folks keep away from emergency rooms and hospital admissions, enhance their long-term well being, and in the end save taxpayers cash.
“It’s about whole-person care,” Newsom stated, including that he hopes President Donald Trump’s administration sees California’s management and agrees with the “reforms we’re advancing as national best practices.”
Now one of many governor’s marquee well being initiatives is on the middle of an intensifying partisan battle with Republicans in Washington, D.C., who’ve moved to rein in billions in healthcare spending on low-income and disabled folks throughout pink and blue states. It’s a philosophical divide: Conservatives say social providers are a monetary pressure on Medicaid and shouldn’t be thought of healthcare, whereas liberals argue that investing in prevention in the end saves cash. Whereas experiments proliferated throughout the nation beneath President Joe Biden, the Trump administration has rescinded federal coverage encouraging state Medicaid applications to handle health-related social wants.
The Medicaid battle is placing sufferers in limbo.
Lucy Rodriguez teaches Mexican people dancing within the city of Hollister, in California’s Central Coast area. She stated her life circled this 12 months as soon as an intensive case supervisor with Titanium Healthcare, which contracts with well being insurers to offer providers, started serving to her handle her continual illnesses and keep on prime of her medical appointments and prescriptions, even selecting up free meals containers for her. The 73-year-old is on Medicare and Medi-Cal, which affords extra in depth advantages. The low-income well being program has helped pay her utility payments, and she or he was lately permitted for home-delivered meals.
“This has been a godsend,” stated Rodriguez, who has diabetes, hypertension, and kidney illness. “I was getting so stressed out and depressed. It’s really hard when you’re on a fixed income. Groceries are so expensive, and with summer, electricity gets even more expensive. But this is really improving my life.”
She worries the Trump administration will minimize advantages to low-income older folks.
Final 12 months, the Facilities for Medicare & Medicaid Providers warned states that federal funding for social providers could be decided on a case-by-case foundation. CMS spokesperson Christopher Krepich stated the company is just not ending present agreements, often known as waivers, that grant states momentary permission to offer social providers, that are paid for with state and federal {dollars}. However future purposes, for brand new providers or to increase present initiatives, could possibly be in danger in the event that they veer too removed from conventional healthcare.
“Moving forward, CMS will work with states on innovative waivers that address core healthcare needs, as consistent with evidence-based approaches tied to clinical diagnoses and services, to the goal of ultimately improving health outcomes in the Medicaid population,” Krepich stated in a press release.
In an additional escalation, the Justice Division put out a latest memo permitting states to institutionalize folks with disabilities and extreme psychological sickness as an alternative of offering community-based care. Republicans have additionally focused states, principally blue ones, for what they are saying is a failure to go after waste, fraud, and abuse in Medicaid. In Might, CMS Administrator Mehmet Oz stood alongside JD Vance because the vice chairman introduced the deferral of $1.3 billion in Medicaid cash to California over suspicions of fraud.
California Lawyer Basic Rob Bonta stated Republicans are merely making an attempt to attain political factors whereas ignoring the healthcare wants of poor folks. “The federal government wants to politicize fraud,” Bonta stated, “and use it, unfortunately, as a bludgeon and a cajole to beat up on blue states.”
Social Healthcare
Well being coverage researchers say roughly 80% of well being outcomes are linked to socioeconomic, environmental, and behavioral components, corresponding to housing instability, homelessness, meals insecurity, and publicity to violence, whereas 20% is related to medical care delivered in hospitals and clinics. That proof fueled the Biden administration’s efforts to deal with social providers.
Not less than 24 states use their very own cash whereas drawing federal Medicaid funds for social healthcare experiments. Colorado, Massachusetts, New York, North Carolina, Oregon, and Pennsylvania are amongst those who present housing and diet help.
Because the Trump administration pulls again on social providers, states are rethinking easy methods to fund advantages which have improved preventive look after low-income folks. Some have launched new advantages beneath what’s often known as a state plan modification, a mechanism states use to change their Medicaid applications that doesn’t want federal waiver approval. Michigan and Minnesota, for instance, use this so as to add recuperative look after homeless sufferers after hospitalization. These short-term care amenities provide folks the chance to get better, bridging the hole between hospital discharge and unbiased residing.
This strategy “has the advantage of establishing a permanent, statewide benefit that does not require ongoing federal renewals, offering greater stability and predictability,” stated Lynn Sutfin, a spokesperson for the Michigan Division of Well being and Human Providers.
Different states, in the meantime, depend on federal waivers, which require renewal each 5 years, to offer social providers. Arizona officers stated the state intends to submit a request by the tip of September to proceed its program to offer housing and different providers to homeless sufferers, or these vulnerable to homelessness, with a severe psychological sickness and a continual well being situation or latest incarceration.
“When members have access to stable housing and supportive services, they are more likely to engage in ongoing care and less likely to experience avoidable emergency department visits and inpatient admissions,” stated Roberta Harrison, interim director of the Arizona Well being Care Price Containment System.
California, which has been probably the most aggressive state in adopting social providers, has taken a two-pronged strategy to maintain its huge choices funded previous this 12 months. The state is utilizing its authority to make most of its present social providers and advantages everlasting in Medi-Cal managed-care protection. That regulatory maneuver bypasses federal waiver approval — a transfer that might entice additional Republican scrutiny.
However not every thing the state affords will be funded with out permission from the federal authorities. As some providers are made everlasting, the Newsom administration is looking for new waivers to proceed different social providers, whereas additionally including extra.
It’s an formidable strategy that may develop California’s social healthcare experiment. Newsom stated he’s fearful that the federal authorities will decline the newest waiver request. “How could you not be with this administration?” he stated. “I’m always concerned.”
New Entrance in Healthcare
California affords most of its health-related social providers beneath Biden-era waivers inside Medi-Cal, which has a proposed price range of $217 billion. Though there are greater than 14 million residents on Medi-Cal, the state has been selective about who will get assist from 15 varieties of social providers in its program, referred to as California Advancing and Innovating Medi-Cal, or CalAIM. Sufferers with complicated wants can even obtain assist navigating their well being and social wants from specialised social employees beneath a profit often known as enhanced care administration.
Since 2022, California has been providing social providers, spending practically $12 billion in joint state and federal cash, with the hope of decreasing long-term Medi-Cal spending by conserving enrollees out of pricey establishments together with emergency rooms, jails, nursing properties, and psychological well being disaster facilities.
CalAIM had offered social providers to greater than 528,000 sufferers as of September 2025, the newest state information obtainable. And practically 453,000 low-income Californians have obtained intensive case administration. Some sufferers obtain each providers.
Among the many providers California is making everlasting: Homeless sufferers can get assist discovering an condo, with Medi-Cal paying rental safety deposits and 6 months of hire. Sufferers with continual circumstances corresponding to diabetes and coronary heart illness are eligible for home-delivered meals. Asthmatic sufferers can get mildew faraway from their properties to regulate flare-ups. Low-income seniors with disabilities can get a wheelchair ramp put in freed from cost. And inmates leaving jail or jail will be related instantly with main care, psychological well being, and substance use remedy.
The social providers — particularly housing, meals help, and residential modifications — are already demonstrating success in stabilizing the well being of probably the most complicated sufferers, whereas reaching financial savings for Medi-Cal by way of reductions in emergency room visits and hospitalizations and fewer reliance on institutional care corresponding to nursing properties, in response to the state Division of Well being Care Providers.
Within the Central Valley, for example, Well being Plan of San Joaquin CEO Lizeth Granados stated CalAIM has helped place homeless sufferers who had been routinely hospitalized into housing. And sufferers with uncontrolled diabetes noticed their blood sugar drop after receiving diet counseling and home-delivered meals.
Total, Granados stated, the well being plan has seen main enhancements in continual illness administration and reductions in hospital stays, dropping to 44 inpatient hospitalizations per 1,000 members because it launched in 2022, down from 61 per 1,000 earlier than CalAIM.
In Orange County, officers with CalOptima Well being credited CalAIM housing providers for contributing to a virtually 27% drop in unsheltered homelessness. “We’ve been able to expand our street medicine programs, too,” stated Yunkyung Kim, the insurer’s chief working officer.
Across the state, Medi-Cal well being insurers stated they’re optimistic that CalAIM will proceed to economize and enhance affected person well being. But, the destiny of some providers can be determined by the Trump administration.
California has requested CMS to proceed enrolling jail and jail inmates in Medi-Cal 90 days earlier than their launch to take care of constant remedy for substance use, psychological problems, or bodily circumstances, a CalAIM service nonetheless in its early levels.
The state has additionally proposed a brand new job help profit that counties may decide into to assist sufferers discover and retain work in response to imminent federal work necessities imposed by congressional Republicans’ One Large Lovely Invoice Act, signed by Trump final summer time.
And the state desires to proceed its array of conventional healers and pure helpers for Californians with tribal affiliations, together with music remedy, dancing, drumming, and referrals to sweat lodges for psychological well being remedy and substance use restoration. Whereas it covers non secular providers, corresponding to ceremonies, rituals, and natural cures, state officers stated Medi-Cal doesn’t cowl exorcisms.
Already, the Trump administration’s positioning has compelled the state to remove room-and-board advantages, which is threatening native efforts to offer restoration beds.
The state is reducing short-term post-hospitalization housing, which was meant to forestall hospitals from dumping homeless sufferers or these vulnerable to homelessness onto the streets. The CalAIM service offering as much as six months of momentary housing and ongoing care is ending on the shut of this 12 months. And the state is reducing recuperative care advantages, now not paying for beds for sufferers to get better from sickness or harm, as an alternative providing solely wraparound providers.
In San Francisco, these beds have been essential in decreasing overdose deaths, serving to transition homeless folks off the streets and into housing, and decreasing hospital mattress utilization, stated Neal Sheran, a medical director with the town’s Division of Public Well being. Town’s well being plan operates a sobering middle, and recuperative care amenities the place sufferers can get better from hospitalizations.
“We’re concerned,” Sheran stated. “Funding for the overnight piece of these programs is really crucial to their success.”
Cuts on the Horizon
Even with out federal threats, state price range pressures have strained CalAIM financing. Newsom has proposed decreasing funding for social providers by $68.3 million this fiscal 12 months. The minimize will deepen subsequent 12 months and stay at $150.2 million per 12 months starting in 2028.
Suppliers fear that Medi-Cal sufferers will lose entry. And providers, corresponding to home-delivered meals and housing help, can be additional restricted.
“It’s moving us back to the old days where our healthcare system is more expensive and reactive, instead of investing in prevention,” stated Anwar Zoueihid, a vice chairman and the chief technique officer on the Los Angeles-based Companions in Care Basis, a CalAIM supplier. “It’s contradictory to Make America Healthy Again.”
To save cash, the state is tightening eligibility to restrict providers and cut back inappropriate use. For example, Medi-Cal sufferers with meals insecurity would now not be eligible for home-delivered wholesome meals with no qualifying situation like diabetes. And a homeless affected person would get capped at six months for assist discovering an condo.
A few of the largest suppliers of CalAIM say providers must be constantly evaluated and curtailed if well being plans had been too permissive. In some instances, meals and housing providers got to low-income sufferers who didn’t essentially qualify because the highest-need.
“It’s important everybody takes a look with a very sober view at whether we’re truly benefiting people so we’re spending money in the right places,” stated Charlie Robinson, the chief well being fairness officer at L.A. Care, one of many state’s largest Medi-Cal well being insurers.
Dorothy Seleski, the Medi-Cal president for Well being Web, stated the well being insurer isn’t deterred by state and federal cuts.
“Regardless of what happens at the federal level, we are committed,” she stated. “This is a significant transformation of the healthcare system, and we are already seeing major reductions in avoidable emergency room trips, avoidable hospital admissions, and we’ve closed gaps in preventive care.”
