As the state’s hospital and health system leaders just begin to grapple with the massive health care cuts enacted by the One Big Beautiful Bill Act (OBBBA) — as much as $128 billion drained from California over the next decade — another threat from Washington, D.C., has emerged.
Earlier this month, the nonpartisan Congressional Budget Office (CBO) released estimates of Medicare cuts that would be triggered by an increase in the federal deficit resulting from OBBBA. The bottom line, according to CBO: Cuts in Medicare spending could total nearly $500 billion from Jan. 1, 2026, through 2034.
For California, sequestration would trim an estimated $10 billion from resources for hospitals to deliver health care services starting in January and through the next decade.
With hundreds of hospitals operating with negative margins and dozens more barely above breakeven, these additional cuts on top of the reductions from OBBBA will only make it harder for hospitals to ensure that Californians receive the care they need.
But there is an off-ramp for these cuts. Congress has the ability, through the legislative process, to avert triggering sequestration and has avoided such cuts under both Republican and Democratic administrations since the trigger law passed in 2010.
Next week, CHA will reach out to all members of the California congressional delegation asking for their help to prevent Medicare sequestration and sharing a number of other steps Congress can take to protect against the loss of access to health care services:
- Restoration of payments to disproportionate share hospitals, which would preserve $1.3 billion for California hospitals
- Extension of hospital at home and telehealth flexibilities
- Support for rural hospitals through additional Medicare payments for ambulance services and hospital care
- Extension of tax credits for health insurance premiums
- Rejection of site-neutral payment policies
Hospital care in California is hanging by a thread. Every action (or inaction) taken by federal, state, and local policymakers in the coming months will determine whether that thread snaps or is able to hold on.
In this case, Congress has barely more than a month to take action that will help keep Californians healthy, preserve access to care, and protect communities throughout the state.
