California’s community health clinics, which serve an estimated seven million low-income people annually, are facing possible federal and state budget cuts in the year ahead.
President Donald Trump, and his new Department of Government Efficiency, have vowed to create a leaner federal budget, possibly cutting or eliminating many health safety net programs. In 2023, 1,400 community health clinics nationwide served more than 37 million people.
California also faces a $2 billion deficit in 2025, according to the state Legislative Analyst’s Office. While this budget shortfall is much smaller than the current year deficit of $27 billion, it may not be able to fully cover cuts from federal funding.
Section 330 grants
A significant portion of CHC funding comes from Medicaid reimbursement; in California, the program is known as Medi-Cal.
Medicaid is the largest source of federal funds coming into state budgets, and accounts for an average of 56% of a state’s budget. Cuts in Medicaid dollars impact all areas of a state’s budget, not only health care.
States also get about 17 percent of their CHC funding from Section 330 grants, which in 2023 amounted to a total of $5.7 billion nationwide.
In 2023, California received a total of $5.8 billion from Medicaid and almost $1 billion from Medicare in reimbursements for CHCs. The state received an additional $715 million in Section 330 grant funding, according to data from KFF.
Bipartisan support
“The Section 330 public health program is the foundational program for access to healthcare for communities across the United States,” said Louise McCarthy, President and CEO of the Community Clinic Association of Los Angeles County. “It’s been around for decades, and it’s been championed by both parties,” she said, in an interview with Ethnic Media Services.
“Presidents on both sides of the aisle have seen and championed major expansions of the program, which offsets the costs associated with serving the uninsured, and providing them comprehensive high quality services,” said McCarthy.
Robust array of services
“Community health centers are mandated to do much more than a typical private physician’s office,” she added. “You’re talking translation. You’re talking outreach and education enrollment linkages to additional services, screening people for social risk factors beyond health care, addressing housing, transportation, food insecurity. It is really about being rooted in community and serving the needs of the community.”
CHCs also provide comprehensive mental health support and dental services, said McCarthy.
Louise McCarthy, President and CEO of the Community Clinic Association of Los Angeles County
Here are excerpts from the interview.
EMS: So CHCs support folks who cannot access healthcare anywhere else?
McCarthy: Absolutely. In Los Angeles, for example, the vast majority of the patients coming into a community health center live below the federal poverty level. They’re either on public insurance or they’re uninsured.
Now in other areas like, for example, rural Northern California, where there are fewer providers, health centers up there might be seeing people with private insurance as well. I know elected officials that have gone to community health centers in their communities, because that’s the best provider in town, and there’s not a whole lot of other providers providing services.
EMS: Are community health clinics already preparing for budget cuts?
McCarthy: In California, we’ve been living under a budget deficit and a fluctuating deficit. So community health centers, on the whole, are constantly thinking about how to do more with less, regardless of who’s in the administration. Our economy fluctuates. So CHCs are thinking in 12-month periods. And they are, unfortunately, not able to think about long-term programs and savings that a dollar invested might make.
EMS: CHCs provide an overall cost savings, correct?
McCarthy: Absolutely. And I think it’s probably one of the reasons why they’ve been championed by both parties. A dollar invested into a community health center is going to reap rewards down the line.
Luckily, in California we have a legislature and administration that sees the value of prevention.
EMS adds: Analysis by the federal General Accounting Office notes that Community Health Centers can result in cost savings of around $1,263 per patient per year by providing preventative and timely primary care, leading to reduced utilization of more expensive services like emergency room visits and hospital stays.
Early detection
McCarthy: CHCs can provide early detection of any illness, of chronic diseases, identifying a high risk pregnancy before it comes to term. They are able to mitigate the factors that might more severely impact the patient’s health and more severely impact the finances of our healthcare system.
So it’s really thinking about how are we making sure that we’re preventing people from getting to high risk pregnancies, uncontrolled diabetes, going to the emergency room and having amputations because of those high risk and unattended diabetes. It’s really thinking about how do we go upstream and prevent larger costs from being incurred by any of our payers and our communities at large.
If someone is sicker, they’re unable to work, they’re unable to contribute to the economy. Kids missing days of school impacts our school funding because they get funded by attendance.
So there’s really a domino effect, when you think about the value in prevention.
EMS: In summary, what does 2025 look like for California’s CHC budgets?
McCarthy: We are at this point looking at about a $2 billion dollar state budget deficit, which is actually not that bad in comparison to other years.
Additionally, it’s important to note that voters in California overwhelmingly voted to support Proposition 35, which invests in our state safety net.
The workforce shortage is by and large the largest crisis that the health centers are dealing with right now. There’s not enough people coming up through the pipeline to do everything in the healthcare setting. Whether it’s a provider, medical assistant, biller, coder, front desk, outreach enrollment, every single piece of the healthcare puzzle is lacking in staffing.
Prop 35
So that’s impacting community health centers, especially because we don’t have the budgets to compete with for-profit entities. We can’t raise our prices because the reimbursement is set by the government, so our prices are set.
Proposition 35 is going to bring investments and some stabilization into the healthcare safety net and prevent some of the erosion that would have otherwise happened without it.
