California Medi-Cal benefit reductions and workforce impact

Major Medi-Cal insurers in California, including Health Net, CalViva Health, and Community Health Plan of Imperial Valley, have announced plans to discontinue assisted living benefits. These benefits are part of the CalAIM initiative, which aims to stabilize high-cost users and reduce emergency room visits.

Advocates have expressed concern that the loss of coverage for approximately 3,500 patients—many of whom are elderly or living with cognitive impairments—could lead to increased homelessness or the displacement of residents into hospitals and nursing facilities. Pauline Shatara, deputy director of California Advocates for Nursing Home Reform, noted that some facilities have already reported residents being dropped off at emergency rooms.

Following these benefit cancellations, Los Angeles-based provider 24 Hour Home Care announced the permanent layoff of 738 workers, effective September 15. The company attributed the job cuts to Health Net’s plan to eliminate Personal Care and Homemaker Services (PCHS) starting January 1, 2027.

In response to these developments, California regulators have ordered Health Net to implement a corrective action plan. The Department of Health Care Services cited eight deficiencies in the insurer’s transition process, stating that violations such as failing to submit transition plans and denying services “jeopardize member safety, disrupt continuity of care, and endanger medically vulnerable members.”

Under the state mandate, Health Net must extend services for all affected members until the end of the year, replacing an earlier plan that would have terminated coverage as early as October. The state warned that failure to extend benefits and create individualized transition plans could result in fines of $25,000 per member per day.