LOS ANGELES – June 30, 2026 – Yesterday, Governor Gavin Newsom signed a budget for the 2026-27 fiscal year that aims to balance the budget over two years while maintaining the state’s commitment to health care coverage and access. The budget includes funding for community health centers’ top priorities, including continuing existing reimbursement rates for state-only funded Medi-Cal services for another year.
“Over three-fourths of health center patients are Medi-Cal members, so Medi-Cal reimbursement is the backbone of health centers’ financial stability. The health center Prospective Payment System, known as PPS, enables health centers to provide comprehensive, whole-person care and critical wrap-around services that promote patient health,” said Louise McCarthy, President & CEO of the Community Clinic Association of Los Angeles County. “The loss of PPS, in combination with H.R. 1 coverage losses and rising uncompensated care, would have pushed safety net clinics to the breaking point. Maintaining PPS for another year is a lifeline. We look forward to working with the next administration on long-term solutions to ensure the viability and sustainability of community health centers.”
Additionally, the Governor and the legislature agreed to other critical investments to protect access to care and coverage, including a one-year delay in eliminating Medi-Cal dental coverage for certain immigrants, investing $100 million in Covered California premium subsidies for the lowest income enrollees, maintaining acupuncture as a Medi-Cal benefit, and delaying and moderating an earlier proposal to fully reinstate the Medi-Cal asset test. The budget also provides vital resources to counties ($197 million) to support increased eligibility workload due to H.R. 1., and to public hospitals ($250 million). Preserving coverage is critical to the sustainability of the safety net and protecting the health of our communities.
While these developments are heartening, we are deeply concerned that the budget moves forward with the transition of two million Medi-Cal members out of managed care and into the fee-for-service delivery system. Moving patients out of a coordinated care delivery model into a system with limited specialty access creates a two-tiered system, overburdens providers and patients, and risks higher long-term costs. While we appreciate that the budget provides resources to address continuity of care and navigation, those resources will not mitigate the disruption that will accompany this transition.
As California confronts structural fiscal challenges and the devastating impacts of federal H.R. 1 policy changes, preserving a stable and viable safety net delivery system must remain a top priority. We look forward to continuing our partnership with the state to protect coverage, strengthen access, and maintain California’s commitment to Health4All.
###
About the Community Clinic Association of Los Angeles County
Founded in 1994, the Community Clinic Association of Los Angeles County (CCALAC) is the largest regional association of community health centers in California. Health centers in Los Angeles serve more than 2.18 million patients at nearly 600 sites across the county. The majority of these patients (74%) have low incomes, and 93% are covered by public insurance or uninsured. CCALAC is dedicated to helping health centers remain at the forefront of health care transformation, in support of the patients and communities they serve. For more information about CCALAC, visit www.ccalac.org or call (213) 201-6500.
Contact: Taryn Burks, Communications Manager at media@ccalac.org | (213) 201-6529.