The Los Angeles County Department of Health Services has joined a chorus of California hospitals and health systems lobbying the state for a $500-million emergency payment to public hospitals bracing for massive financial losses.
The California Assn. of Public Hospitals and Health Systems is requesting a one-time general fund payment in the 2026-27 budget to help cover inpatient care for fee-for-service Medi-Cal patients at the state’s 17 public hospitals.
While the exact percentage of the $500 million allocated to each hospital will depend on inpatient claims, the county expects that roughly 25%, or $125 million, will end up at Los Angeles County hospitals, said Dr. Christina Ghaly, director of LA Health Services.
“That’s the money that is really necessary to serve as a stopgap and continue that lifeline that the public hospitals desperately need, particularly with the state’s proposed shift of undocumented individuals from managed care into fee-for-service,” Ghaly said.
Ghaly praised county voters for passing Measure ER, which will provide an estimated $220 million annually for the next five years to the county health system through a new half-cent sales tax, Ghaly said.
But it’s not enough to stanch what the county estimates will be a $700-million annual loss by the 2028-29 fiscal year.
LA Health Services is the largest public health system in the state and second-largest in the nation. It serves as a safety net for the county’s 10 million residents, providing healthcare regardless of an individual’s ability to pay.
More than 80% of the system’s patients rely on Medi-Cal, Los Angeles General Medical Center Chief Executive Jorge Orozco told a state Senate committee in March.
The One Big Beautiful Bill Act, which President Trump signed into law last summer, alters Medicaid eligibility requirements and includes about $1 trillion in federal Medicaid reductions over 10 years, according to the Legislative Analyst’s Office. As a result, California is expected to lose tens of billions in total funding for Medi-Cal, the state’s Medicaid program.
About 660,000 people in Los Angeles County are expected to lose Medi-Cal coverage, “but they will not stop needing healthcare,” Orozco said in March. “They will still come to our emergency rooms for everything from routine illness to life threatening conditions. And safety net hospital systems like ours will be forced to absorb those costs.”
County health officials have enacted hiring freezes, consolidated services, reduced overtime and taken other cost-cutting measures in anticipation of the losses, resulting in about $230 million in savings.
“But we need to be clear: we cannot cut our way out of a funding loss of this magnitude,” the department said in a statement released this week. “Without help from the State, we will be forced to consider options no one wants, reduced patient services, staff layoffs, and potential facility closures.”
The county has not yet identified specific services for closure, Ghaly said.
“Our focus is entirely on preventing the harm that would come before we have to make those tough choices,” she added.
A memo on the department’s fiscal outlook prepared for the Board of Supervisors sounded the alarm in April.
“For the patients we serve, losing Medi-Cal doesn’t mean they stop getting sick — it means losing access to care. Health Services will still be here, but with over 600,000 more uninsured patients in LA County alone, the strain will be felt across our health system and across every emergency room in Los Angeles County,” the memo read.
“Without substantial new revenue sources, Health Services will have no alternative but to consider planning for service curtailments — including possible facility closures and staff layoffs — beginning in early 2027.”