California's Democratic Governor Gavin Newsom on Wednesday proposed eliminating free healthcare for undocumented migrants in what he said was an effort to balance a budget battered by Donald Trump's erratic governance.
The move is the latest sign of political moderation from a man believed to have White House ambitions, who is looking to soften his image among conservative voters and distance himself from a reputation as a free-spending liberal helming a state where migration is out of control.
Newsom told a press conference that California should freeze admission to the public Medi-Cal program for undocumented people starting next year, and should charge those already enrolled $100 per month.
EXCLUSIVE: Breastfeeding mom of US citizen sues Kristi Noem after being grabbed by ICE
"We're not cutting or rolling back those that enrolled in our medical system. We're just capping it, particularly for those without documentation," he said.
Almost 11 percent of the 15 million Medi-Cal recipients are undocumented, Newsom said.
In March, the California state legislature reported that opening Medi-Cal to undocumented immigrants -- which began in 2023 -- had cost $2.7 billion more than expected in 2024.
The program's costs have also been bloated by high drug prices, including a growing demand for weight control prescriptions.
Trimming eligibility for Medi-Cal and cutting back on drug availability could save the state approximately $5.4 billion over the coming years, Newsom's office said.
He presented the idea as part of an overall plan to make up a $12 billion shortfall in California's budget.
Newsom said the state's financial situation was due in part to the impact of President Donald Trump's volatile tariff policies, which have walloped California, the world's fourth largest economy, and one that is heavily exposed to international trade and tourism.
The state's revenues for the first 18 months of Trump's presidency were expected to be $16 billion lower than they would have been without the volatility, a fall he dubbed the "Trump Slump."
Economists say the US economy as a whole is expected to take a hit from the uncertainty generated by the sudden policy lurches from the White House, with business leaders unwilling to invest and consumers increasingly wary of spending.
California last month sued the Trump administration over the tariffs, saying the president did not have the ability to impose taxes on imports unilaterally, a power the lawsuit said rests only with Congress.
Wednesday's announcement dovetails with Newsom's push to present himself as a fiscally responsible alternative to Trump, while trying to keep pace with the national mood on immigration.
But he faces a tough balancing act in a state where a majority of voters support providing healthcare to undocumented migrants.
"California is under assault. The United States of America, in many respects, is under assault because we have a president that's been reckless in terms of assaulting those growth engines," he told reporters.
"It's created a climate of deep uncertainty," he added.
"This is a Trump Slump all across the United States, reflected in adjustments by every independent economist, by leading banks, by institutions."
Local Republicans hit back Wednesday, characterizing the budget shortfall as Democratic Party overspending that disproportionately benefits migrants.
"I urged the governor to immediately freeze his reckless Medi-Cal expansion for illegal immigrants a year and a half ago, before it buried our healthcare system and bankrupted the state," state Senate Minority Leader Brian Jones said.
"With a massive deficit largely driven by this policy, our focus should be on preserving Medi-Cal for those it was originally designed to serve."
Newsom's proposal must now go to the state legislature for review.