Medicaid cuts would force counties to shoulder more than $1 billion in additional costs to keep behavioral health systems afloat
Over the weekend, the U.S. Senate advanced amendments to the “Big Beautiful Bill,” adding provisions that would gut the Affordable Care Act’s (ACA) Medicaid expansion and devastate behavioral health systems nationwide. For California, the consequences could be catastrophic.
Under the proposed amendments, the federal government would reduce its 90% funding match for beneficiaries eligible through the ACA Medicaid expansion down to each state’s base match, shifting billions in costs onto California. Medicaid is a key funding source for California’s behavioral health system, and these cuts would force counties to shoulder more than $1 billion in additional costs just to maintain current services. Right now, five million Californians are eligible for Medi-Cal through the ACA. Hundreds of thousands could lose mental health and substance use care without this funding.
These federal threats come just as California leaders finalized a state budget addressing a $12 billion deficit, barely avoiding major cuts to key behavioral health investments.
This threat to services is part of a pattern that consistently leaves our behavioral health system fragile. As detailed in the Steinberg Institute’s latest research, Boom, Bust, Repeat, California’s behavioral health system has been stuck in a cycle for decades: moments of political urgency lead to major investments, only to be followed by budget cuts that dismantle progress and leave counties scrambling to provide care with fewer resources.
While California has made historic investments in behavioral health, nearly tripling funding over the past decade to $18 billion annually, our research shows that without sustained funding, progress will stall. Counties will remain overwhelmed, and communities will continue to go without the support they need.
“We cannot afford to repeat the mistakes of the past. Historic investments are not enough if we dismantle our system when times get tough. We need sustained commitment from our leaders to protect behavioral health funding through good times and bad.”
Karen Larsen
CEO, The Steinberg Institute
As deliberations on the Big Beautiful Bill continue, the stakes for California’s behavioral health system could not be higher. The decisions made in Congress in the coming days will determine whether hundreds of thousands of Californians continue to receive the mental health and substance use care they need, or whether we once again allow a cycle of boom and bust to repeat.
For more information, read Boom, Bust, Repeat here.