California Hospitals Face Layoffs, Financial Strain Amid Funding Cuts

Federal and state funding reductions under H.R. 1 impact healthcare providers across the state

Mar. 22, 2026 at 9:06pm

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Hospitals across California are grappling with a wave of layoffs and financial strain as federal and state funding cuts take effect. More than 3,400 healthcare workers have lost their jobs since mid-March, with the situation expected to worsen as the 'One Big Beautiful Bill Act,' or H.R. 1, continues to reshape healthcare financing.

Why it matters

The cuts to Medicaid funding under H.R. 1, the largest reduction in the program's 60-year history, are particularly impacting states like California, where Medi-Cal provides coverage to over 15 million low-income residents, including 1.6 million undocumented immigrants. This is leading to hospital layoffs, financial instability, and even bankruptcy for some providers.

The details

The cuts are already being felt, with CalOptima, a county-organized health system in Orange County, seeing an 8% decline in membership since H.R. 1's passage. L.A. Care Health Plan, the largest publicly operated health plan in Los Angeles County, recently laid off 225 workers, 3% of its workforce. Hospital executives are largely focusing on reducing administrative positions to minimize the impact on patient care, but some facilities like Pomona Valley Hospital Medical Center are planning layoffs of 265 workers. The freeze on new Medi-Cal enrollment for undocumented Californian adults, effective January 1, 2026, is also contributing to the financial strain, with estimates suggesting that 289,000 Medi-Cal members may lose coverage by June 2026, rising to 400,000 by 2029-2030.

  • In mid-March 2026, more than 3,400 healthcare workers have lost their jobs in California.
  • H.R. 1, also known as the 'One Big Beautiful Bill Act,' was signed into law last summer.
  • The freeze on new Medi-Cal enrollment for undocumented Californian adults went into effect on January 1, 2026.
  • Estimates suggest that 289,000 Medi-Cal members may lose coverage by June 2026, rising to 400,000 by 2029-2030.

The players

H.R. 1

Also known as the 'One Big Beautiful Bill Act,' this federal law initiates nearly $1 trillion in cuts to Medicaid over the next decade, representing the largest reduction in the program's 60-year history.

Medi-Cal

California's Medicaid program, which provides coverage to over 15 million low-income residents, including 1.6 million undocumented immigrants.

CalOptima

A county-organized health system in Orange County that has seen an 8% decline in membership since the passage of H.R. 1.

L.A. Care Health Plan

The largest publicly operated health plan in Los Angeles County, which recently laid off 225 workers, 3% of its workforce.

Annette Walker

President of City of Hope Orange County, who explained that the goal is to protect clinical staff during the layoffs.

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What they’re saying

“Nobody's healed because of what I do. I facilitate systems for those people.”

— Annette Walker, President of City of Hope Orange County

What’s next

The Future of Medi-Cal Commission, led by former state secretary Mark Ghaly, is working to develop recommendations for reforming Medi-Cal funding to mitigate the impact of these cuts. The commission aims to present its findings to state lawmakers after November.

The takeaway

The financial pressures facing California's hospitals due to the federal and state funding cuts under H.R. 1 are forcing difficult decisions about services and staffing, with the potential for further hospital closures and bankruptcies. Addressing these challenges will require comprehensive healthcare policy reforms to ensure access to affordable care for all Californians, including the state's most vulnerable populations.