Significant federal and state policy shifts are poised to reshape how health care is delivered nationwide, with a particularly acute impact in lower-income, rural areas like Mendocino County.
Lucresha Renteria, executive director of Mendocino Coast Clinics (MCC), outlined a series of looming changes Monday night in a presentation to the Fort Bragg City Council. She warned the new policies could profoundly affect patient eligibility, funding streams, and even the very mission of community health centers.
“I'm sorry, I come with mostly bad news today,” Renteria said, setting a sober tone before detailing five major changes that tighten eligibility for Medicare and Medi-Cal eligibility and could reduce access to the services.
Redefining “Federal Public Benefits”
The first change is a technical update to the definition of “federal public benefits” published in the Federal Register on July 14. According to the Kaiser Family Foundation, the revision bars many groups of lawfully present immigrants as well as undocumented immigrants from accessing many health care, educational, and other social services. The group warned of “negative impacts on the health and well-being of immigrant families due to more limited access to services as well as confusion and fear about using services.”
“What this really means,” Renteria said, is that if a person does not have “satisfactory” immigration status — a new way of describing people without legal papers to be present in the United States — “then you wouldn't be able to use a health center” like the Mendocino Health Clinics. She noted the change is being challenged in court.
The Kaiser Family Foundation said the updated list of covered programs is not exhaustive and could expand. “Is school lunch a federal public benefit?” Renteria asked rhetorically.
New Work Requirements for Medi-Cal
The second change adds new hurdles for Medi-Cal eligibility, regardless of immigration status. Able-bodied adults aged 19 to 64 without dependents will soon be required to document at least 80 hours of work per month, community volunteer service, or school enrollment. States must implement the requirement by January 1, 2027. Renteria said the new rule applies to adults who make about $1,300 to $1,800 per month.
The new rule will require county agencies to conduct “look back” checks — to ensure compliance during the three months before an application — and then to recheck every six months thereafter. Renteria said Mendocino County’s existing delays in processing Medi-Cal applications, sometimes as long as six months, are likely to worsen.
Another hurdle is a new federal mandate for co-pays beginning Oct. 1, 2028. Patients will be responsible for up to $35 per health care item or service, though primary care, emergency and pregnancy services will be exempt.
Narrowing the Definition of “Qualified Immigrant”
The third change narrows the definition of “a qualified immigrant” to lawfully permitted residents, certain refugees (Cubans and Haitians) and specific migrants from Micronesia, Republic of the Marshall Islands, and Republic of Palau.
“So DACA, unfortunately, looks like it's going to sunset,” Renteria said. “We all are going to suffer.”
While many of the changes Renteria discussed are happening at the federal level, policy is also shifting at the state level. California, which has historically offered Medi-Cal coverage to undocumented immigrants, will stop enrolling undocumented individuals in full-scope Medi-Cal after January 1, 2026, Renteria said.
Reductions in Provider Tax Revenue
The fourth change involves a decades-old financing mechanism that states have been using to pay their share of Medicaid, known in California as Medi-Cal. These “provider taxes” have been criticized by organizations like the Committee for a Responsible Federal Budget as a way for states to “reduce state general fund financing, inflate federal spending and increase health care costs.”
In November 2024, California voters approved Proposition 35, which earmarked managed care organization taxes specifically for Medi-Cal. KFF Health News, published by the Kaiser Family Foundation, called such provider taxes “the tax hospitals love to pay.”
With the passage of Proposition 35, the taxes paid by Kaiser and other managed care organizations — estimated at $9 billion for the 2024-25 fiscal year — cannot replace existing Medi-Cal funding. These taxes are intended to bolster Medicare’s low reimbursement rates, not backfill existing spending.
The new federal budget freezes the threshold for provider taxes for all states for two years. It then gradually reduces the tax rate for states like California who have adopted Medicaid expansion. California will have to lower provider taxes by .5% each year, until the threshold of 3.5% is reached in 2032. This reduction will be phased in starting in fiscal year 2028.
“So unfortunately, programs that were built on the amount of revenue that we're getting from [provider taxes] are going to be virtually cut in half,” Renteria said.
A New $50 Billion Rural Health Fund
The fifth change, unlike the others, offers some relief: a $50 billion Rural Health Fund. But Renteria cautioned that the structure of the program could disadvantage California.
According to the Kaiser Family Foundation, the fund represents just 37 percent of the estimated federal Medicaid losses in rural areas. Half will be distributed equally among states with approved applications, regardless of rural population size.
“There is no difference between what Tennessee is going to get versus Alaska, versus California,” Ms. Renteria said.
The Kaiser Family Foundation raised additional questions and concerns: How will the Centers for Medicare and Medicaid Services decide which applications to approve? What proportion of the fund will go to rural areas, and to which types of hospitals? Will the agency make distribution decisions public?
Despite those concerns, Ms. Renteria said the fund is “good news” in the context of the other changes. Applications are due in December 2025, and she assured council members that Mendocino Coast Clinics would pursue its share.
Elise this is excellent. I watched this presentation at the meeting and wanted to write something up. But you have covered it well and spent time cracking open difficult concepts like the rural health fund. The wackiest one is work requirements for MediCal. Virtually any job disqualifies one from MediCal!. I'm glad somebody besides myself is working outside of press releases.