Congress has long struggled to fully fund the federal government by passing all twelve appropriations bills on time. The last time there was a fully funded government was in 1997. Since then, there have been a variety of mechanisms used to either partially fund appropriations bills, fully fund some and not others, and offer continuing resolutions (CR) to extend the deadlines. When no compromise can be reached, these issues can lead to either a full or partial government shutdown.
In 2025, Congress was once again unable to pass a complete budget resolution outlining the overall revenue and spending plan for the fiscal year that begins on October 1st. Instead, on March 15, 2025, the President signed a continuing resolution (H.R. 1968) that runs through September 30, 2025, unlocking a budget reconciliation process and averting a government shutdown. This resets the clock for Congress to ultimately continue negotiations. With the current administration focused on cost-cutting and budget reductions, there is increased concern about the potential implications of any agreements reached or resolutions passed unilaterally.
The House Republican majority has set out a budget blueprint directing several congressional committees to procure $1.5 trillion in spending cuts across programs under their jurisdictions.¹ Healthcare, a critical item of the budget, is speculated to receive a considerable blow as Medicaid (Medi-Cal in California) has become a target for major cuts during this budget reconciliation cycle.
The House Energy and Commerce Committee that oversees Medicaid was tasked to find $880 billion in savings.² The bulk of that amount would come from making funding changes to Medicaid—concerning, since Medicaid currently insures more than 94 million people nationwide and is a popular and heavily relied-upon safety-net program.³ The proposed savings would come from changing funding formulas to a per-capita caps amount, also known as a block grant, paid for based on population and not open-ended enrollment.
Per-capita or block grant funding has been proposed before without much success due to heavy opposition by Democrat lawmakers. As a fixed amount of money that the federal government gives to states to provide benefits or services, a block grant results in creating extensive limitations in access and delivery of care. Fixed funding levels would require states to absorb higher costs, or to cut eligibility or benefits. As an enrollment funding model, it provides flexibility and funding security as needs change.
Specific to California is the recently passed ballot proposition securing revenue from the Managed Care Organization (MCO) tax, which amongst other things, is meant for increased reimbursement to physicians for Medi-Cal services. A block grant funding model would deeply curtail the potential of a tax revenue that is based on enrollment numbers.
Recent reports indicate that California has more Medicaid (Medi-Cal) and Children’s Health Insurance Program (CHIP) enrollees than any other state in the country. As of April 2023, approximately 13 million people were enrolled in the Medicaid health insurance programs in California.4
To read more about federal spending, visit:
https://fiscaldata.treasury.gov/americas-finance-guide/federal-spending/
Gabriela Villanueva is CAP’s Government and External Affairs Analyst. Questions or comments related to this article should be directed to GVillanueva@CAPphysicians.com.
¹Hill, Meredith Lee. (2025, February 12). "House budget resolution in limbo as conservatives push deeper spending cuts and work requirements." https://www.politico.com/live-updates/2025/02/12/congress/conservatives…
²Williams, Elizabeth et al. (2024, March 24). "Putting $880 Billion in Potential Federal Medicaid Cuts in Context of State Budgets and Coverage." https://www.kff.org/
medicaid/issue-brief/putting-880-billion-in-potential-federal-medicaid-cuts-in-context-of-state-budgets-and-coverage/
³Tolbert and Corallo. (2024, September 18). "An Examination of Medicaid Renewal Outcomes and Enrollment Changes at the End of the Unwinding." https://www.kff.org/medicaid/issue-brief/an-examination-of-medicaid-ren…
4Statista. (2025). "Total number of Medicaid and CHIP enrollees as of April 2023, by state." https://www.statista.com/statistics/186979/people-enrolled-in-medicaid-bystate/