In California Governor Race, Single-Payer Is a Litmus Test. There’s Still No Way To Pay for It.

When Gavin Newsom ran for California governor in 2018, his support for a state-run single-payer healthcare system was considered a risky move and earned him hefty labor endorsements.

Today, leading Democrats in the wide-open race to succeed Newsom have embraced single-payer as a political necessity, an answer to voters fed up with rising premiums and other spiraling healthcare costs.

But with no clear front-runner, they are sparring among themselves in debates and political ads over who is most committed to a government-run model. No candidate has outlined how California would fund comprehensive health coverage for its 40 million residents, leaving voters unable to discern which candidate has a concrete plan for the nation’s most populous state.

Healthcare and political experts said the concept of single-payer has shifted from progressive pipe dream a decade ago to today’s mainstream talking points in a state where Democrats outnumber Republicans nearly 2 to 1. Democrats have pledged the model as the best way to lower costs in an attempt to woo voters worried about affordability as ballots arrive for the June 2 primary. The top two Republicans, meanwhile, have dismissed government-run healthcare as a “disaster” and “socialism.”

“In many ways, single-payer healthcare has become a progressive litmus test,” said Larry Levitt, a former White House policy adviser and a healthcare expert at KFF, a health information nonprofit that includes KFF Health News.

Few voters fully understand the term single-payer, let alone expect the next governor to achieve it, Levitt said. Rather, he added, the term has become more of a signal to voters about a candidate’s approach to healthcare reform.

Xavier Becerra, the former U.S. Health and Human Services secretary, who for decades backed single-payer healthcare in Congress, has come under criticism from opponents for a nuanced but clear shift away from single-payer. It came after Becerra secured an endorsement from the California Medical Association, a powerful group representing doctors and a longtime opponent of single-payer healthcare bills in California.

At a May 5 debate put on by CNN, Becerra declared his support for “Medicare for All,” a proposal for a federally run system that’s been stalled for years, but he declined to say whether he’d pursue a California-led effort. He said his immediate focus would be on mitigating the drastic federal cuts expected to hit low-income and disabled enrollees in Medi-Cal, the state’s Medicaid program, which covers more than a third of residents.

Becerra is counting on voters not to distinguish between the often-confused terms single-payer, Medicare for All, and universal coverage, noting during the debate that “Californians don’t care what you call it, so long as they have affordable healthcare.”

“A lot of people aren’t clear what single-payer is, and they need a metaphor to understand it,” said Celinda Lake, a Democratic strategist and one of the lead pollsters for former President Joe Biden’s 2020 campaign.

Billionaire activist Tom Steyer, who’s touted his self-funding as a signal he can’t be bought, has emerged as the race’s most vocal advocate of single-payer after opposing it during a short-lived 2020 presidential bid.

As governor, Steyer has said, he would pass legislation backed by the California Nurses Association that has failed to come to fruition under Newsom’s tenure. Pressed on how he would cover the estimated $731.4 billion cost, Steyer told KFF Health News that “God is going to be in the details.”

At a forum last year, former U.S. Rep. Katie Porter said she didn’t believe achieving such a system was realistic in the near term, but the Orange County Democrat later told party delegates that she would “deliver single-payer.” Former Los Angeles Mayor Antonio Villaraigosa and San Jose Mayor Matt Mahan, Democrats who are trailing their competitors in the polls, don’t support single-payer. The top two vote-getters — regardless of party — advance to the November general election.

Some of the most seasoned politicians have failed to deliver single-payer. Newsom, who campaigned on the promise of being a “healthcare governor,” dialed back his ambitions upon taking office, choosing instead to pursue “universal access” to health coverage under a series of Medi-Cal expansions and efforts to contain healthcare spending.

The campaign bus for billionaire activist Tom Steyer, who has made single-payer healthcare a central pillar of his run for governor, in downtown Oakland, California. In 2020, Steyer ran for president opposing single-payer healthcare. (Christine Mai-Duc/KFF Health News)

Vermont, which remains the only state to pass a single-payer healthcare law, reversed course when leaders there couldn’t identify a funding source.

To enact single-payer, California would need permission from the federal government to redirect billions of dollars from Medicaid, Medicare, and other funding that currently flows to the system — approval not likely to come from the Trump administration.

More than half of adults nationally say healthcare costs will have a major impact on whom they vote for in November, according an April KFF poll.

Danielle Cendejas, a Los Angeles-based Democratic consultant who works with state legislative candidates, said single-payer healthcare increasingly appears on candidate questionnaires from small-business advocates as well as hyperlocal Democratic clubs, in state legislative races and national union endorsements.

What most California voters want to hear, Cendejas said, is how candidates plan to give them more immediate relief from higher premiums, expensive drug costs, and long waits to access care.

The high price tag doesn’t faze Jennifer Easton, a 63-year-old Democrat from Oakland, who said other countries with similar models have proved they can lower costs. She said she supports a single-payer health system because it’s clear to her that Americans have reached the limits of working within the existing system. But she isn’t expecting any of the current candidates to succeed in implementing one, and she hasn’t decided whom to support.

“No one can in four years,” she said. Seeing a candidate enthusiastically support the concept gives her a good idea of their philosophy. “It is, if we’re lucky, a 20-year, 25-year plan.”

Rob Stutzman, a Republican political consultant who advised former Gov. Arnold Schwarzenegger, said while Americans may be supportive of single-payer in polls, focus groups suggest that approval drops quickly when voters realize it could mean losing their current doctor or insurance plan.

At the CNN debate, Steve Hilton, the Republican candidate President Donald Trump has endorsed, said Californians would end up with subpar patient care and “taxes sky high to pay for it,” like in his native United Kingdom.

Instead, Hilton suggested the state stop providing “free healthcare for illegal immigrants who shouldn’t even be in the country in the first place.”

KFF Health News is a national newsroom that produces in-depth journalism about health issues and is one of the core operating programs at KFF—an independent source of health policy research, polling, and journalism. Learn more about KFF.

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Fatty liver disease may reduce body’s ability to use Vitamin D: PGI study

Published in Biochemical and Biophysical Research Communications, a high-impact science journal grouped under ScienceDirect, the study noted that liver injury linked to diets high in fat and sugar may weaken this process by suppressing a liver enzyme called CYP2R1.

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Trump Promised Cheaper Drugs. Some Prices Dropped. Many Others Shot Up.

Since his second term started, President Donald Trump has announced, negotiated, or floated a flurry of initiatives aimed at taming the excesses of the pharmaceutical industry.

No surprise. About 60% of American adults are “worried about being able to afford prescription drug costs for themselves or their families,” a recent KFF nationwide poll showed. More than 80% consider the price of prescription drugs “unreasonable,” and most support increased regulation to lower costs. Americans pay about three times as much as people in other countries for the same prescription drugs.

Last July, Trump sent letters to 17 drugmakers, demanding they voluntarily lower drug prices. Then the president said he’d negotiated with more than a dozen pharmaceutical executives one by one at the White House. In December, he announced that he had compelled them to agree to “most favored nation” pricing on Medicaid, the government coverage for low-income Americans.

Then came the unveiling of TrumpRx, a site where cash-paying patients could find discounted medicines, and a promise to speed biosimilar products — generic versions of certain high-priced specialty drugs — by cutting through FDA red tape.

The scope of these grand gestures remains uncertain. But it’s certainly less than what the announcement promised, partly because many details of the negotiations, even which drugs are covered, are hazy.

White House spokesperson Kush Desai did not answer queries about TrumpRx.

Medicaid already buys drugs at deep discounts. And other patients may well have better options through commercial drug discount programs, which offer far more products, or through their insurance and associated drug company copayment cards.

So, for all Trump’s showmanship, the share of Americans likely to benefit from these options remains slim, even if some people do come out ahead.

“If it makes a difference to any patient, it’s a win,” said Mark Cuban, a billionaire investor on his own mission to bring down drug prices. He pointed to discounted pricing on TrumpRx for branded fertility drugs and GLP-1 weight loss drugs for people without insurance or whose plans don’t include coverage. Cuban launched the Mark Cuban Cost Plus Drug Co., known as Cost Plus Drugs, in 2022 to sell drugs cheaply by eliminating middlemen — buying from factories and selling directly to consumers. Most of the drugs he sells are generics.

Aaron Kesselheim, a professor of medicine at Harvard Medical School whose research focuses on drug prices, said the Trump announcements are “one-off agreements made for publicity purposes. They don’t change anything about the way drugs are priced.”

He added: “The agreements are opaque and unenforceable.”

It was unclear, for example, which drugs would be sold at “most favored nation” prices or how exactly that was defined. But, clearly, not all were.

Doing the Math

46brooklyn, a consulting firm and data project that tracks brand-name drug prices, found that close to 1,000 brand drugs went up in price in January 2026. What’s more, 2025 had the highest number of list price increases ever. “This is not a material change, it’s business as usual,” said Antonio Ciaccia, the company’s co-founder.

In the first week of 2026, Pfizer raised the list prices of 71 drugs by an average of 5% and lowered the price of only one, by 9.8%, the data project found.

The biggest win for patients has likely been the Trump administration’s quiet continuation of a Biden administration program: Medicare drug price negotiation for expensive drugs. The negotiated discounts on the initial 10 drugs — from blood thinners to insulins to medicines for inflammatory disorders — went into effect Jan. 1. With reductions in price of well over 50% on some products, the estimated $6 billion in annual savings allowed the program to cap Medicare patients’ out-of-pocket spending on Part D prescription drugs at $2,000 for 2025 and beyond.

An additional 15 high-priced drugs — including popular weight loss and cancer drugs — were subject to negotiation in 2025, with discounted Medicare prices taking effect next year. And 15 more high-priced drugs are set for negotiation this year. All told, the 40 negotiated drug prices are expected to save Medicare well over $20 billion a year.

Even as these discounts take effect, drug industry lobbyists have been working to limit the impact, with some success. For example, the One Big Beautiful Bill Act exempts drugs for rare diseases from negotiations.

Still, “this is historic because it’s the first time the United States has negotiated prices, like every other developed country,” Kesselheim said. “And guess what? Innovation didn’t stop.”

Of course, these discounts benefit only Medicare enrollees. The newer Trump administration initiatives help some other patients, but they are limited and require knowledge of how to access the discounts.

Trump’s One-on-Ones

The president’s televised appearances with the heads of major drug companies resulted in deals, but few, if any, will mean much to patients. For example, after Trump met with Albert Bourla, CEO of Pfizer, the company announced discounts on 30-plus drugs. Bourla called the deal “a win for American patients, a win for American leadership, and a win for Pfizer.”

The discounts are offered via TrumpRx, which, in turn, offer coupons co-branded on GoodRx.com, which already offers discount coupons for many hundreds of medicines.

Pfizer made hay of the deal, announcing it was part of Pfizer’s broader, landmark most favored nation, or MFN, agreement with the U.S. government, enabling patients to pay lower prices for their prescription medicines “while strengthening America’s role as the global leader in biopharmaceutical innovation.”

Pfizer spokesperson Steven Danehy cited a press release from September noting that the TrumpRx site offers patients savings that “range as high as 85%.”

Most of the list features brand-name drugs, competing with far cheaper generic versions from other manufacturers, such as the cholesterol-lowering drug Colestid, which TrumpRx lists for “50% off” at $127.91. Generic versions cost about $17 on the Cost Plus site.

This means the branded companies aren’t making a sacrifice by offering them at lower costs as reflected on Trump’s portal, said Sean Tu, a patent law expert at the University of Alabama. “That’s a sale they would not have made if not for TrumpRx.”

Others are very old drugs, such as Cortef, or hydrocortisone, whose 5-milligram branded Pfizer version is listed at $45 on TrumpRx, half its list price of $91.80. It sells for far less on Cuban’s Cost Plus site. Still others, such as the $607.20 HIV treatment Viracept, are useful only in combination with other drugs that are not discounted.

Last week, TrumpRx added Amgen’s Humira, for years the world’s best-selling drug, at $950 a dose, down from a list price of nearly $7,000. But Humira lost its patent protection in 2023, and biosimilars — essentially generic equivalents — have since come to market. More to the point, two of those biosimilars are listed on TrumpRx for as little as $207.60 a dose.

Since most of the TrumpRx products are available only to customers without insurance who pay cash, the arthritis drug Xeljanz’s drop from $2,277 to $1,518 a month would still leave it unaffordable.

A Few Notable Deals

The much-touted TrumpRx site, launched Feb. 6, consists largely of Pfizer’s 30 drugs (30 of roughly 85) with a smattering of discounts likely to generate headlines.

These include three fertility drugs from EMD Serono, a subsidiary of the pharmaceutical giant Merck KGaA, the most expensive of which, Gonal-F, has a list price of $966 but is only $168 per IVF cycle using a TrumpRx coupon.

They will save women thousands of dollars — although the overall cost of fertility treatment will continue to put them beyond the reach of many, since drugs represent only a portion of the payment.

The TrumpRx discounts could reduce the $15,000-to-$25,000 cost of a single fertility treatment cycle — women typically need two or three cycles to become pregnant — by about 10%, said Sean Tipton, spokesperson for the American Society for Reproductive Medicine. In some European countries, each cycle costs about $3,000.

In exchange for lowering those prices, EMD Serono got tariffs lifted on its mostly overseas-produced medications. It also won the right to a sped-up FDA approval process for a fertility drug it’s been marketing heavily in Europe.

Another newsworthy offering on the site resulted from a deal with Novo Nordisk for Wegovy, its GLP-1 drug for weight loss and diabetes, with the price reduced to as little as $199 a month for the pen. (Many insurers cover such drugs only for diabetes, leaving those who are interested in losing weight paying out-of-pocket. Zepbound, Wegovy’s Lilly & Co. competitor, is also on the list, at $299.)

Pressure has been building on Novo and Lilly to lower the U.S. price of their GLP-1 drugs. The compounds have lost patent protection in India, and pressure from customers buying overseas will likely increase when generic Wegovy goes on sale in Canada, for as low as $73 a month, possibly this year.

In the United States, meanwhile, dozens of patents should keep Wegovy generics off the market until 2039, said professor Robin Feldman, a patent expert at the University of California Law-San Francisco. A recent report from the research group I-Mak delved into several ways patent manipulation keeps generics off the U.S. market long after they are available in European countries and Canada.

And while the Trump administration has vowed to approve biosimilars more rapidly to ensure more competition and lower prices, that may not have much impact. The big hurdle in getting generics and biosimilars to market is often not FDA approval, but the time it takes to override the thickets of patents that U.S. law allows manufacturers to deploy to protect their intellectual property.

For example, in 2021, the FDA approved a generic of Otezla, a popular drug for psoriatic arthritis, but it will not hit the market until 2028. Its entry would require drugmakers to pay rebates to Medicare if they charged the program more than other developed countries for “single source” drugs and biologics. That would essentially allow the Medicare program to piggyback on other countries that negotiate the prices of some of the most expensive medicines. Those programs are still going through the rulemaking process and, again, would benefit only those covered by the Medicare program and only indirectly.

The average patient-consumer, if willing to pay cash, may find some bargains. But getting the best deal could take a lot of mixing and matching, forcing patients to become choosy shoppers, eyeing deals for essential medicines as they would for a carton of milk or eggs.

Data reporter Maia Rosenfeld contributed to this article.

KFF Health News is a national newsroom that produces in-depth journalism about health issues and is one of the core operating programs at KFF—an independent source of health policy research, polling, and journalism. Learn more about KFF.

This <a target="_blank" href="https://kffhealthnews.org/health-care-costs/trumprx-reality-check-drugs-not-always-cheaper/">article</a&gt; first appeared on <a target="_blank" href="https://kffhealthnews.org">KFF Health News</a> and is republished here under a <a target="_blank" href="https://creativecommons.org/licenses/by-nc-nd/4.0/">Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License</a>.<img src="https://kffhealthnews.org/wp-content/uploads/sites/8/2023/04/kffhealthnews-icon.png?w=150&quot; style="width:1em;height:1em;margin-left:10px;">

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Low accumulation of abdominal fat in midlife linked with slow brain atrophy, Study

Magnetic resonance imaging (MRI) scans of the brain and abdomen were analysed of 533 women and men in late midlife, who were followed for up to 16 years. During this period, participants underwent repeated MRI measurements of visceral fat and brain structures, along with their cognitive assessment.

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Trump’s Drug Strategy Aims To Bolster Addiction Services — Despite Gutting of Government Support

The White House’s newly released strategy for tackling the nation’s drug and addiction crisis calls for a number of ambitious public health approaches that some experts say are laudable but will be hampered by the administration’s own actions.

The sweeping 195-page National Drug Control Strategy, published May 4, advocates for making access to treatment easier than getting drugs, preventing young people from developing addictions in the first place, increasing support for people in recovery, and reducing overdose deaths.

Those broad goals are widely supported by public health researchers, addiction treatment clinicians, and recovery advocates.

But accomplishing such goals will be difficult in the face of the administration’s mass layoffs of federal employees, cancellation of research and community grants, attacks on organizations and practices that serve people who use drugs, and cuts to Medicaid, the state-federal health insurance program for low-income people that is the largest payer for addiction and mental health care nationwide.

Many components of the National Drug Control Strategy are “things that we would agree with and that we fully support,” said Libby Jones, who leads overdose prevention efforts at the Global Health Advocacy Incubator, a public health advocacy group.

But there are “disconnects in what the strategy says is important and then what they’re actually going to fund,” she said of the Trump administration. “Those inconsistencies feel particularly loud in this strategy.”

The White House’s National Drug Control Strategy, released every two years, is a touchstone document meant to lay out the federal government’s coordinated approach to what in recent decades has been one of the country’s defining problems.

Since 2000, more than 1.1 million people have died of drug overdoses. Although deaths have decreased recently, the numbers remain elevated compared with earlier decades, and research suggests overdose death rates among Black Americans and Native Americans are disproportionately high.

The strategy document published this week is the first of President Donald Trump’s current term. In keeping with the administration’s approach to addiction issues, it places heavy emphasis on law enforcement efforts to reduce the supply of illicit drugs. The document repeatedly refers to the ongoing “war” against “foreign terrorist organizations” — the Trump administration’s term for drug cartels — and touts increased enforcement at U.S. borders.

It also outlines plans to implement artificial intelligence technologies to screen for illicit drugs brought into the country and wastewater testing to detect illegal drug use nationwide.

The second half of the strategy focuses on reducing the demand for drugs through public health prevention efforts, addiction treatment, and support for people in recovery. It promotes the role of religion in recovery and calls for the widespread use of overdose reversal medications, such as naloxone.

In a news release, the White House’s Office of National Drug Control Policy called the document a “roadmap” that will “continue dismantling the drug supply and defeating the scourge of illicit drugs in our country.”

The Trump administration did not respond to requests for comment about how the strategy aligns with its other actions.

In December, Trump signed a reauthorization of the SUPPORT Act, which continues several grants related to treatment and recovery and the requirement for Medicaid to cover all FDA-approved medications for opioid use disorder. In January, he announced the Great American Recovery Initiative, including a $100 million investment to address homelessness, opioid addiction, and public safety.

However, few details have been provided about the initiative, and in January, about a month after the SUPPORT Act passed, billions of dollars in addiction-related grants were abruptly terminated and reinstated within a frantic 24-hour period.

That “whiplash” left “a sense of instability and uncertainty in the field,” said Yngvild Olsen, a national adviser with the Manatt Health consultancy. She led substance use treatment policy at the Substance Abuse and Mental Health Services Administration, or SAMHSA, under the Biden administration and left about six months into Trump’s second term.

That insecurity was exacerbated by the president’s 2027 budget request, which proposes cuts to several addiction and mental health programs and the consolidation of key federal agencies working on those matters. Jones’ group and nearly 100 others in the field have signed a letter asking Congress to reject the proposals, as it did with similar requests last year.

The national drug strategy adds new, potentially contradictory information to this confusing landscape.

Increasing Access to Treatment

One of the most significant public health goals in the strategy, mentioned at least half a dozen times, is to make it easier to get treatment than it is to buy illegal drugs.

National data underscores the necessity: More than 80% of Americans who need substance use treatment don’t receive it.

The administration’s actions on health insurance may make it difficult to improve that statistic.

Medicaid is the main source of health care coverage for adults with opioid use disorder. When implemented, the Medicaid work requirements in Trump’s One Big Beautiful Bill Act are projected to strip that coverage from about 1.6 million people with substance use disorders.

The last time Medicaid rolls were purged — after covid-era protections expired — many people who had been receiving medication treatment for opioid addiction stopped it and fewer people started treatment, according to a study published last year.

Olsen, who is also an addiction medicine doctor, said she loves the strategy’s emphasis on making treatment readily available to anyone who wants it. But she said that’s “hard to really imagine when now people may have to pay for it themselves because they may be losing their Medicaid insurance coverage.”

One analysis estimated the upcoming Medicaid changes could lead 156,000 people to lose access to medications for opioid use disorder and result in more than 1,000 additional fatal overdoses per year.

People with private insurance may be affected, too.

The Trump administration has refused to enforce Biden-era regulations aimed at bolstering mental health parity, the idea that insurers must cover mental illness and addiction treatment comparably to physical treatments. And recently, the administration said it would redo those regulations altogether, raising fears that addiction treatment could become increasingly unaffordable.

The administration did not respond to specific questions about how it reconciles its actions on Medicaid and parity with the goal of increasing treatment.

Prioritizing Prevention

The strategy highlights preventing addictions before they begin as one of the keys to reducing demand for drugs. It calls for “promoting a drug-free America as the social norm” and implementing school and community-based programs that are backed by science.

“Investing in primary prevention, before drug use starts, saves lives and resources,” it says, citing several studies about the cost-effectiveness of such programs.

Yet, the president’s budget proposes cuts to these types of programs, and federal layoffs have decimated the agencies that would implement such work.

The White House’s most recent budget request proposes cutting roughly $220 million from SAMHSA’s Center for Substance Abuse Prevention and nearly $40 million from the Drug-Free Communities program.

Since the new administration started, SAMHSA has lost about half of its staff, and the Centers for Disease Control and Prevention is down about a quarter. 

“It’s not clear to me that they’re really going to be able to have the funds or the people to be able to carry that out,” Olsen said of the strategy’s prevention goals.

Another wrinkle appears in the strategy’s discussion of marijuana. The document points to marijuana use as one of the drivers of increasing drug use disorders and reports that “convergent evidence from multiple sources” suggests cannabis use increases the risk of psychosis. It calls for developing new tools to treat marijuana withdrawal and addiction.

However, just two weeks ago, the White House moved to reclassify medical marijuana to a lower tier of scheduled substances and is moving to hold a hearing to do the same for marijuana broadly.

“The administration, on the one hand, is moving in a direction of liberalizing access to cannabis,” Jones said, “but at the same time, in the strategy, it talks about the dangers of doing so.”

“There’s a disconnect there that just makes you question: Which one do you believe?” she added.

The administration did not respond to specific questions about its marijuana policies.

Stopping Overdose Deaths

One of the more surprising elements of the National Drug Control Strategy comes in the last paragraph of the final chapter. It focuses on public drug-checking programs, which often involve using test strips to help people who use drugs determine whether there are more-dangerous substances, such as fentanyl or xylazine, in the batch they bought. That helps them determine whether or how to safely use those drugs.

“Rapid test strips and similar technologies that detect fentanyl and other drugs are an important tool that should be legal,” the strategy document says.

However, SAMHSA announced in a recent letter that it would no longer pay for test strips, as part of the Trump administration’s “clear shift away from harm reduction and practices that facilitate illicit drug use.”

The administration has similarly attacked harm reduction programs in an executive order and its budget requests. It did not respond to specific questions about how this position interacts with the drug control strategy.

Regina LaBelle, a Georgetown University professor who served as acting director of the Office of National Drug Control Policy during the Biden administration, wrote about the contradiction in a blog post: “It is the height of rhetoric over reality to champion a tool while simultaneously cutting off the funding used to acquire it.”

KFF Health News is a national newsroom that produces in-depth journalism about health issues and is one of the core operating programs at KFF—an independent source of health policy research, polling, and journalism. Learn more about KFF.

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States Eye Aid To Prop Up Distressed Hospitals Amid Federal Medicaid Cuts

LOS ANGELES — At Martin Luther King, Jr. Community Hospital, patients on gurneys line the hallways of the emergency department waiting for care, and overflow mental health patients are consigned to outdoor tents.

The 152-bed hospital, which sits on a sprawling medical campus close to the predominantly Latino and Black neighborhood of Watts, is struggling for financial stability. Its patients are poorer and sicker than average, many of them are uninsured, and three-quarters of MLK’s patient care revenue comes from Medi-Cal, the state’s version of the Medicaid program, which pays low rates. For hospitals statewide, by comparison, less than one-third of patient revenue comes from Medi-Cal.

And MLK Community Healthcare, which comprises the hospital and two nearby clinics, is independent, so it cannot fall back on a larger chain to absorb some of the financial pressure.  

Similar problems plague hundreds of financially vulnerable hospitals around the country, in rural and urban areas. And their financial woes are about to get worse.

The Republican budget measure known as the One Big Beautiful Bill Act, signed into law by President Donald Trump last July, is expected to cut federal Medicaid spending by $911 billion over 10 years. And it could contribute to an increase of more than 14 million in the number of uninsured people, many of whom will go to already crowded emergency rooms to get care they can’t pay for.

The law does include a special fund to boost rural healthcare, totaling $50 billion over five years. But that’s far less than the $137 billion it is expected to cut from rural health spending over the next decade. And the rural health fund does little or nothing to help the numerous urban hospitals, such as MLK, that also face serious financial troubles.

MLK, like many other hospitals, is scrambling to secure outside financing to avert serious disruptions of medical services when the brunt of the policies contained in the federal law begins to hit early next year. The hospital’s leadership team projects a revenue hole of $80 million to $100 million annually for the foreseeable future. It would be MLK’s largest budget gap since it opened in 2015.

“Even if we cut services that our community needs — maternity care, behavioral healthcare, diabetes management — it wouldn’t make a significant dent in the gap we’re facing,” said Elaine Batchlor, the CEO of MLK Community Healthcare. ”Many of those same people would still come to us through our emergency department, only they’d be in worse shape and might need more expensive care.”

MLK Community Healthcare CEO Elaine Batchlor stands outside the check-in area for Martin Luther King, Jr. Community Hospital’s emergency department, a long tent outside the main building in Los Angeles. (Bernard J. Wolfson/KFF Health News)

Across the U.S., hospitals and patient advocates are looking to state lawmakers and local officials to help shore up shaky finances. In California, Assembly member Esmeralda Soria, a Democrat representing Fresno, is pushing legislation to expand a 2023 “distressed hospital loan fund” that allocated nearly $300 million in zero-interest loans to 16 hospitals in the state, including $14 million to MLK. The state would pony up another $300 million under Soria’s bill.

At least two other states are weighing similar programs. A bill in Pennsylvania would create a $100 million “distressed hospital grant” program. And a funding bill for the Illinois Department of Healthcare and Family Services contains a provision to create an $85 million loan program for troubled hospitals.

Carmela Coyle, the CEO of the California Hospital Association, said the original $300 million disbursed by the state legislature helped but was not enough.

“This program is focused on those who are standing on the edge of that financial cliff, and it’s intended to give them a little space, brush them a little bit back from the edge,” Coyle said. “But we’ve got many more hospitals that are taking giant leaps toward the edge of that cliff every day.”

Despite the association’s influence, an expansion of the loan program is far from certain, given fiscal constraints that have already induced state leaders to roll back California’s ambitious healthcare agenda, with restrictions on coverage for immigrants and funding cuts for community clinics. Democratic Gov. Gavin Newsom recently warned lawmakers to expect more cuts in his revised May budget — and that’s before the main federal spending reductions kick in.

“This is a very difficult budget environment,” said Kristof Stremikis, director of market analysis and insight at the California Health Care Foundation, a nonprofit that advocates for healthcare improvement. “It is hard to come up with funding for new programs and even existing programs right now.”

MLK Community Hospital is a 152-bed facility in Los Angeles near the predominantly Latino and Black neighborhood of Watts. The hospital’s leadership team projects a revenue hole of $80 million to $100 million annually for the foreseeable future. (Bernard J. Wolfson/KFF Health News)

Some lawmakers noted skeptically that the initial loans are now on their way to at least partial debt cancellation, which is allowed under existing law. Soria’s bill spells out a clearer path to loan forgiveness.

“Are these loans or are these grants? Because they seem to be turning, really, into grants,” Assembly member Pilar Schiavo, a Democrat in Santa Clarita, said during an April 21 hearing on the bill.

Ultimately, it might not be desirable to save struggling institutions by pouring dollars into them, because care is increasingly offered outside of hospitals, Stremikis said.

In the short term, though, the financial health of hospitals that received loans appears to have improved, according to a KFF Health News analysis of state data. The average operating margin of the 15 loan recipients for which comparable data is available shifted from a loss of 15.4% the year before the program to a gain of 2.3% after the money was disbursed.

It is unclear how much of the improvement can be attributed to the loans. Hospitals also secured other sources of funding, and they adopted efficiencies as a condition for the interest-free money.

MLK reduced the use of high-cost temporary labor by hiring more permanent staff, cut the average length of patient hospital stays to decrease staffing hours, streamlined billing, and negotiated more-favorable contracts with insurers, said Atul Nakhasi, a practicing physician who is also MLK’s vice president of government affairs and community relations. Batchlor said that the loan helped MLK get through a cash flow crunch and that a second loan, if it became available, would be used for the same purpose.

This summer, MLK expects to open a psychiatric assessment unit, where patients in mental distress can be stabilized in an environment replete with plush reclining chairs and “calming” rooms. Hospital executives hope the new unit will provide a significant new source of revenue, while taking pressure off the emergency department.

Batchlor sits on a beanbag chair in one of the “calming” rooms in MLK Community Hospital’s new emergency psychiatric assessment, treatment, and healing unit. (Bernard J. Wolfson/KFF Health News)

The main EmPATH patient area contains large reclining chairs for people who need to be evaluated and stabilized. Hospital officials say the unit will be a welcome new revenue source and help take pressure off MLK’s perennially crowded emergency room. (Bernard J. Wolfson/KFF Health News)

Kaweah Health in Visalia, California, suspended some services, temporarily stopped contributing to employees’ retirement, and briefly froze wages in exchange for a loan of just under $21 million, said the organization’s CEO, Marc Mertz.

Madera Community Hospital got a $57 million loan — the largest disbursement from the state fund — to reopen after being shuttered for more than two years. The hospital reopened early last year, but it has not yet stabilized financially, said Matthew Beehler, the chief strategy officer at American Advanced Management, a privately held company that bought Madera out of bankruptcy.

“You can definitely say the hospital would not have been opened without the distressed hospital loan,” though the company has also invested more than $50 million, Beehler said. He said Madera would hope for another loan if the program were extended.

KFF Health News is a national newsroom that produces in-depth journalism about health issues and is one of the core operating programs at KFF—an independent source of health policy research, polling, and journalism. Learn more about KFF.

This <a target="_blank" href="https://kffhealthnews.org/health-care-costs/medicaid-cuts-distressed-hospitals-aid-california/">article</a&gt; first appeared on <a target="_blank" href="https://kffhealthnews.org">KFF Health News</a> and is republished here under a <a target="_blank" href="https://creativecommons.org/licenses/by-nc-nd/4.0/">Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License</a>.<img src="https://kffhealthnews.org/wp-content/uploads/sites/8/2023/04/kffhealthnews-icon.png?w=150&quot; style="width:1em;height:1em;margin-left:10px;">

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