Report: Fraud, Waste Plague California’s $220 Billion Medi-Cal Program

California’s Medi-Cal crisis has left taxpayers paying for fraud, waste, and abuse.

The Pacific Research Institute released a study this week breaking down how taxpayers are paying for “a program that has grown beyond the state’s ability to effectively manage it.”

The findings come as the Trump administration announced on July 21 that the Centers for Medicare & Medicaid Services is pausing over $860 million in funding to California after federal officials discovered in-home supportive services claims that significantly exceeded national trends.

Sally Pipes, the institute’s president, told the Daily Signal that rooting out fraud should be lawmakers’ top priority.

“If lawmakers could make only one thing happen this year, it should be eliminating fraud, waste, and abuse from Medi-Cal, which now covers 15 million Californians at a cost of $220 billion. The entire state budget for fiscal 2026-27 is $351.7 billion,” she said.

The report, titled “Too Big, Too Broken: Restoring Integrity to Medi-Cal,” states that the program has expanded far beyond its original mission.

TRENDING ARTICLES

opinion

Supreme Court Rejects Another End Run Around the Second Amendment

John Commerford

opinion

Look Who’s Back! Winsome Earle-Sears

Joe Thomas

news

Residents Voice Opposition to Proposed Mosque Ahead of City Council Vote

Emily Medeiros

Medicaid was created in 1965 as a safety-net program for low-income Americans, seniors, and people with disabilities.

Over the decades, eligibility expanded, including to pregnant women in the 1980s, and to able-bodied adults under the Affordable Care Act. California has since gone further, extending state-funded Medi-Cal coverage to low-income immigrants regardless of immigration status.

Today, Medi-Cal covers roughly 1 in 3 Californians and accounts for about 40% of the state’s budget.

According to the report, that rapid growth has strained the program, leading to longer wait times, worsening provider shortages, more difficult oversight, and mounting fiscal pressures.

To address those problems, the report recommends improving oversight, strengthening eligibility verification, increasing transparency around financing, and prioritizing resources for the most vulnerable.

Pipes said eliminating fraud would not only save taxpayer dollars but also help vulnerable Californians access care more quickly.

“If fraud and abuse are cut from Medi-Cal, there would be so much more funding available to cover those who are truly vulnerable and eligible for the program,” she said.

“Today, many of the eligible cannot find a doctor because there is too much demand for too few doctors,” Pipes added. “As Robert Kennedy Jr., secretary of [Health and Human Services], said: ‘Medicaid exists to serve vulnerable Americans—not to bankroll unsupported claims.’ Accountability must be restored.”