On July 21, Secretary of Health and Human Services Robert F. Kennedy announced that the Centers for Medicare and Medicaid Services (CMS) would be deferring more than $1 billion in Medicaid payments to California and Minnesota while it investigates allegations of fraud in the states.

Let's break down the data on Medicaid in California and what this news might mean for the program. (Check out Minnesota's picture here.)

Medicaid is a program that provides health insurance for people with low incomes. It is jointly funded by the states and the federal government. In fiscal year 2024, the federal government covered 64.8% of the overall program costs, while states covered the remaining 35.2%. The California state budget covered 38.2% of Medicaid costs, 17th among states.

Combining state and federal funding, Medicaid cost $157.1 billion in California in fiscal year 2024, making up 32.4% of the state’s annual budget.

In 2024, the budget was split between:

• Payments to private health plans that states contract with ($68.9 billion)
• Long-term services and supports like nursing home care and home health ($32.0 billion)
• Covered costs for low-income seniors and people with disabilities ($3.7 billion), and
• Other benefits ($45.8 billion).

The Affordable Care Act gave states the option to extend eligibility to a larger subset of adults than previously possible. California expanded Medicaid in January 2014.

Medicaid costs have risen 53% in California since 2014, higher than the 45% nationwide increase in costs.