State Budget Cuts Threaten Patient Access to Care Across Community

Eliminating Prospective Payment System for Medi-Cal Patients with Unsatisfactory Immigration Status Could Cost Clinics Millions

Apr. 8, 2026 at 10:53pm

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A minimalist design in the style of Keith Haring, where a stethoscope is defined entirely by vibrant neon lines against a dark background, emphasizing the shape and energy of this essential medical tool.Neon-bright outlines of medical tools underscore the vital services provided by community health clinics, now threatened by state budget cuts.Santa Cruz Today

A proposed state budget cut to eliminate the Prospective Payment System (PPS) reimbursement for state-only Medi-Cal populations, including individuals with Unsatisfactory Immigration Status (UIS), would result in an estimated $1 billion annual loss for community health centers across California. This policy change would drastically reduce revenue and threaten the stability of Santa Cruz Community Health (SCCH) and thousands of other clinics statewide, forcing them to reduce hours, lay off staff, scale back services, and potentially close their doors altogether.

Why it matters

Community health centers like SCCH play a vital role in providing comprehensive, affordable, and culturally-competent care to underserved populations, including those without insurance or with limited immigration status. Eliminating the PPS reimbursement would undermine this critical safety net, leading to reduced access to primary care, dental services, behavioral health support, and other essential health services for vulnerable communities.

The details

The proposed state budget cut would eliminate the Prospective Payment System (PPS) reimbursement for state-only Medi-Cal populations, including individuals with Unsatisfactory Immigration Status (UIS). For SCCH alone, this policy change would result in an annual loss of approximately $2.3 million, funding that supports about 2,000 patients and 12,000 visits each year. Clinics serving Medi-Cal members countywide are facing a similar rate of funding cuts (18% of Medi-Cal members).

  • The proposed policy change is set to take effect in July 2026.
  • Community health centers are projected to lose at least $1.6 billion in FY 2026–27 alone, with losses expected to grow in years ahead.

The players

Santa Cruz Community Health

A community health center that operates three clinics across Santa Cruz County, providing a range of services including primary care, dental care, and behavioral health support. The organization was founded over 50 years ago by a group of UC Santa Cruz students as a grassroots women's health collective.

Andrew Goldenkranz

A board member of the Santa Cruz Community Health Center and the current chair of the Advocacy & Audit Committees.

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What they’re saying

“Eliminating PPS for UIS patients would drastically reduce revenue and threaten the stability of Santa Cruz Community Health (SCCH), along with thousands of community clinics statewide.”

— Andrew Goldenkranz, Board Member, Santa Cruz Community Health Center

“PPS rates are essential in ensuring community health centers have the resources needed to deliver comprehensive care that so many rely on, including primary care, dental care and behavioral health services, among others.”

— Andrew Goldenkranz, Board Member, Santa Cruz Community Health Center

What’s next

The state legislature will need to decide whether to reverse the elimination of the PPS reimbursement for state-only Medi-Cal populations, including those with Unsatisfactory Immigration Status, in order to prevent widespread clinic closures and reduced access to care across California.

The takeaway

This proposed state budget cut threatens the viability of community health centers that serve as a critical safety net for vulnerable populations, potentially leading to the loss of essential primary care, dental, and behavioral health services in underserved communities across California.