Gavin Newsom proposes $2,000 asset eligibility test to control soaring state Medi-Cal costs

California Gov. Gavin Newsom is proposing an "asset test" for seniors to prove eligibility for Medi-Cal healthcare benefits for low-income Californians in response to a budget shortfall. To qualify, people would have to possess less than $2,000 in assets to qualify.

The governor's budget proposal, written by the California Department of Finance, said the reasons for the increased costs include "higher overall enrollment, pharmacy costs and higher managed care costs."

In the last 10 years, he said, Medi-Cal costs have increased by $20.5 billion. 

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Newsom has also proposed freezing new enrollment for adults in the country illegally as a way to cut Medi-Cal costs.

"Some of the most significant contributing factors to this growth are the COVID-19 continuous coverage requirement and the implementation of major policy changes such as the full elimination of the asset test for older adults and the full-scope expansion to all income-eligible Californians, regardless of immigration status," the proposal said. . 

The assets included in the test would be salary, money in a bank account, cash on hand, a second car, home value and retirement funds. Applicants with more than $2,000 in assets would be ineligible for Medi-Cal.

California Gov. Gavin Newsom is proposing an "asset test" to prove eligibility for Medi-Cal healthcare benefits for low-income Californians in response to a budget shortfall.  (Andrew Harnik/Getty Images)

The 2025-26 budget proposal said Medi-Cal costs have increased starkly and continue to outpace revenues. The program cost $37.6 billion over the last year, and the cost is expected to increase by $10 billion over the next year without cuts.

Along with low-income adults, many seniors and people with disabilities use Medi-Cal benefits that include in-home care services. 

For decades before 2024, the asset test was required for seniors to prove their eligibility for Medi-Cal, and Newsom’s proposal would reinstate it. 

The proposal said that the asset test would save $94 million this fiscal year and $791 million by the 2028-29 fiscal year. 

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Newsom wrote that the asset test would save $94 million this fiscal year and $791 million by the 2028-2029 fiscal year.  (Chip Somodevilla/Getty Images)

Disability Rights California, a nonprofit, said the proposal would do "tremendous harm" to Californians. 

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"While we understand the reality of budget shortfalls and that cuts will sometimes be necessary, the priorities and reality of this May revision are even worse than what we imagined," the group said in a statement. "It demonstrates a continued willingness on the part of the governor to sacrifice the health and human services of California’s people, particularly the disabled, poor, and elderly populations of this abundant state."

The group added that the asset test "effectively demands extreme poverty in order to continue receiving critical healthcare." 

For decades before 2024, the asset test was required for seniors to prove their eligibility for Medi-Cal, and Newsom’s proposal would reinstate it.  (Getty)

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The governor defended his proposals, according to the Los Angeles Times, saying, "None of this is the kind of work you enjoy doing, but you’ve got to do it. We have to be responsible. We have to be accountable. We have to balance the budget."

Fox News Digital has reached out to Newsom’s office for comment.