UPDATE: Santa Clara County is grappling with an urgent financial crisis as it faces a staggering $223 million loss in Medicaid revenues this fiscal year due to federal budget cuts. This development, stemming from President Donald Trump’s recent budget bill, is the first wave of anticipated financial turmoil for a county that provides vital health services to its residents.
As one in four residents rely on the state’s Medi-Cal program, the cuts are expected to have immediate and widespread impacts. County Executive James Williams confirmed that the county has already begun feeling the effects, with critical revenue streams being slashed and frozen. This situation is further complicated by future eligibility requirements set to take effect in December 2026, potentially leading to millions losing coverage.
“The magnitude of what we’re facing is quite large,” Williams told The Mercury News. “We need to move forward with at least an initial piece of action now given we’re facing hundreds of millions more during the upcoming budget process.”
In light of the immediate loss, county officials are urgently devising plans to cut $200 million from the healthcare system this fiscal year, which ends in June 2026. These plans will be reviewed by the Board of Supervisors in February. Williams emphasized this is the most significant mid-year adjustment the county has faced in over a decade.
Santa Clara County, which oversees four public hospitals and 15 clinics, is now under pressure to restructure its services. Recently, Regional Medical Center in East San Jose reopened labor and delivery services, but this came at the cost of closing the maternity ward at O’Connor Hospital. CEO Paul Lorenz stated that data indicated a need to better serve the community by shifting these services.
“There will be longer wait times, and implications that we may feel immediately but many of which we will not encounter or experience until six months or a year from now,” Lorenz noted.
The situation could worsen further if voters do not approve Measure A on November 4, a proposed sales tax increase aimed at backfilling some Medicaid cuts. Estimates suggest it could generate $83 million in the current fiscal year, leaving a gap of $139 million after the federal revenue loss.
County officials are already voicing concerns about the potential impact on essential services. Board of Supervisors President Otto Lee expressed worry that critical programs, including the recently reopened labor and delivery ward, could face jeopardy due to these cuts. “We have worked incredibly hard over the past few years to protect many of our services at risk of being cut,” he said.
Supervisor Margaret Abe-Koga emphasized the need for a comprehensive approach to the budget, stating that previous cuts have already targeted the “low-hanging fruit.” As budget challenges grow, she called for a deep examination of priorities and potential new revenue streams.
Supervisor Susan Ellenberg voiced a stark reality: the size of the budget gap cannot be resolved merely through operational efficiencies. “We’re likely going to have to cut programs that are actually working and having a positive impact on people,” she warned, highlighting the significant challenges ahead for the county.
The county is bracing for an even graver financial outlook, projecting a loss of $506 million in Medicaid revenues for the 2026-2027 fiscal year. As these developments unfold, the community is left facing the immediate and long-term ramifications of these cuts, underscoring the critical need for effective management and support.
As Santa Clara County navigates these turbulent waters, the implications are clear: essential health services are at risk, and immediate action is needed to safeguard the well-being of its residents. Stay tuned for updates as this story develops.
