Title
Chief Administrative Office and Health and Human Services Agency recommending the Board:
1) Receive and file a presentation from California State Association of Counties on House Resolution (HR) 1; and
2) Approve and authorize the Chair to sign letters to the Governor, the President pro Tempore of the Senate, and the Speaker of the Assembly requesting State action to mitigate severe fiscal and operational impacts of HR 1 on county safety net programs.
FUNDING: N/A
Body
DISCUSSION / BACKGROUND
HR 1 was recently enacted at the federal level and includes substantial changes to Medicaid/Medi-Cal financing, work requirements, and eligibility processes. These changes shift costs and administrative burdens from the federal government to states and counties.
El Dorado County, along with counties statewide, anticipates significant increases in mandated service costs across public health, indigent medical care, eligibility operations, behavioral health, and hospital systems.
According to CSAC analysis, counties are anticipating $6.0 to $9.5 billion in new costs annually at full implementation of HR 1. These impacts include:
• Increased demand for indigent medical care as an estimated one million Californians lose Medi-Cal coverage.
• Substantial increases in eligibility workload due to new community engagement requirements and more frequent redeterminations.
• Reduced revenues for county-affiliated public hospital systems due to limits on state-directed payments.
• Increased demand for county behavioral health services.
Locally, El Dorado County has already projected that mandated safety net costs will exceed available state, federal, and realignment revenues in coming years. HR 1 accelerates this problem, forcing the County to potentially rely on local discretionary revenue to meet core state-mandated obligations. This comes at a time when expenditure growth already outpaces discretionary revenue growth, and departments were required to reduce discretionary reliance by 3% in Fiscal Year 2025-26.
CSAC has developed a multi-year budget request to stabilize safety net programs:
• 2026-27 Request: $1.9 billion statewide
• 2027-28 Request: $4.5 billion statewide
The request includes the following categories:
• County Indigent Care: $761 million in FY 2026-27; $2.4 billion ongoing (includes infrastructure rebuild funding and support for 417,000 newly eligible individuals seeking county care)
• Public Hospital Systems: $500 million in FY 2026-27; $850 million ongoing (while El Dorado County does not operate such a system, reductions would affect regional access)
• County Eligibility: $373 million in FY 2026-27; $402 million ongoing (supports workload increases for Medi-Cal and CalFresh administration)
• County Behavioral Health: $224 million in FY 2026-27; $828 million ongoing
Impacts to El Dorado County:
• The County anticipates unsustainable increases in mandated safety net program costs, requiring local discretionary funds to backfill if the State does not intervene.
• Loss of Medi-Cal coverage for county residents will increase reliance on the County’s indigent care system, which had prior annual costs averaging $4 million before Affordable Care Act implementation.
• Eligibility workload increases may require redirection of discretionary resources, risking impacts to senior services and other discretionary programs.
• Increased behavioral health demand may strain existing capacity.
To protect county safety net services and avoid substantial adverse impacts on vulnerable residents, staff recommends supporting the statewide HR 1 Multi-Year Budget Request and urging the Legislature and Governor to provide relief funding and policy support.
Adoption of the proposed support letters will:
• Align El Dorado County with a statewide coalition effort.
• Communicate to key State leaders the urgency of addressing county-level fiscal impacts.
• Support legislative and administrative actions needed to maintain essential safety net services for residents.
• Help prevent downstream impacts to public safety, elections, and other core county functions that depend on discretionary funding.
ALTERNATIVES
The Board could choose not to sign the letters to the Governor and Legislature.
PRIOR BOARD ACTION
N/A
OTHER DEPARTMENT / AGENCY INVOLVEMENT
N/A
FINANCIAL IMPACT
There is no financial impact associated with this item, however, failing to secure State partnership and funding may result in significant future discretionary cost pressures due to HR 1 changes.
CLERK OF THE BOARD FOLLOW UP ACTIONS
Obtain the Chair’s signature on the letters and return to Alison Winter for distribution.
STRATEGIC PLAN COMPONENT
N/A
CONTACT
Sue Phillips, Chief Administrative Officer
Olivia Byron-Cooper, Director of Health and Human Services Agency