California’s uninsured rate has declined dramatically in the past few years. Much of the increase in health coverage has been the result of the state’s decision to expand Medi-Cal, its Medicaid program, under the Affordable Care Act. While the federal government has funded a large share of program growth, state costs have also risen. This cost growth, combined with major policy shifts still conceivable at the federal level, has created additional uncertainty about the future of Medi-Cal financing. As state lawmakers and other stakeholders plan for the future of the program, it is important to understand how Medi-Cal is currently financed and how it fits into California’s overall budget. This context is essential to any discussion of funding options. State spending on Medi-Cal has grown over the past decade, outpacing growth in state revenues. In recent years, the state has increasingly relied on sources beyond the General Fund to support the program. Still, Medi-Cal accounts for 15 percent of total General Fund expenditures (the second largest budget outlay after K–14 education), so the program is at the center of state budget discussions—particularly when revenues falter.
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