California Governor Gavin Newsom (D) has put forth a proposal to halt new enrollments of undocumented immigrants in a state-funded healthcare program as a strategy to address a $12 billion deficit.

What Happened: Newsom unveiled his nearly $322 billion state spending plan for the upcoming fiscal year on Wednesday. The plan outlines steps to address unexpectedly high Medicaid spending and a volatile economic environment, factoring in federal tariff policies and an unstable stock market, reported Fortune.

The proposed freeze would prevent low-income adults without legal status from applying for Medi-Cal, California’s Medicaid program, beginning in 2026. However, those already enrolled will remain covered and the changes will not affect children. From 2027, adults with "unsatisfactory immigration status" on Medi-Cal will be required to pay a $100 monthly premium, aligning with the average cost of subsidized health plans in California’s marketplace.

Newsom criticized President Donald Trump‘s economic policies, suggesting they could decrease state revenues by $16 billion in the future. He stated, “California is under assault. We have a president that's been reckless in terms of assaulting those growth engines.”

Newsom’s office projects that these changes will save the state $5.4 billion by the 2028–2029 fiscal year.

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Why It Matters: Newsom’s decision highlights a notable change in his stance. California expanded free health care to all low-income adults regardless of immigration status, aiming for universal coverage, a plan spearheaded by the Governor himself. However, the program cost $2.7 billion more than expected, with over 1.6 million undocumented individuals enrolled this fiscal year, as per the budget.

In March, Newsom refused to cut health benefits for immigrants despite a $6.2 billion Medicaid shortfall, defending the state-funded program as a long-term cost saver that doesn’t rely on federal funds.

This proposal comes at a time when California’s economy has grown to become the world’s fourth-largest, surpassing Japan. However, according to Newsom, the state has been grappling with economic instability due to federal tariff policies, which he has publicly criticized and even fought against.

The proposed Medicaid enrollment freeze is part of a broader effort to manage the state’s finances amid these challenges. However, several Republicans as well as Democrats have criticized Newsom’s decision.

Masih Fouladi, executive director of the California Immigrant Policy Center, stated, "The proposal just doesn't match with our values as a state,” while Sen. Dave Cortese said, "Congress may be walking away from its obligation to the poor, the elderly and the disabled, but California will not."

At the same time, Republican Leader James Gallagher slammed Newsom for blaming Trump and reasoned that the budget deficit was due to Newsom’s “reckless spending, false promises and failed leadership."

READ MORE: Chuck Schumer Says Trump Is ‘Letting Cartel Members’ Into The US, Asks How Much ‘Memecoin’ Did They Pay

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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.