The UC Board of Regents Health Services Committee announced at a meeting May 13 that the proposed UC Health budget will decrease for the upcoming fiscal year.

The board held its bimonthly meeting May 13 to 15 at UC San Francisco. The committee discussed proposed cuts to Medicaid, improvements to UC Health’s clinical services and federal policy risks to its operations.

The committee proposed a UC Health budget for the next fiscal year that decreases the 2024-2025 fiscal health budget of nearly $37.8 million by 6.2% for the 2025-2026 fiscal year. These budget decreases were primarily caused by the current UC hiring freeze, reductions in travel and budget alignments, the Health Services Committee wrote in its presentation.

The committee reviewed creating new liaison groups to the federal and state governments to advocate for protecting federal health programs such as Medicare. The committee also spoke about the importance of Medi-Cal and Medicaid to UC Health operations and the risk of defunding these federal programs.

The committee also reviewed changes aimed at improving outpatient access and care. David Rubin, executive vice president of UC Health, said the committee is focused on reducing wait times for clinical appointments to improve outcomes and patient access.

“When you look at the University of California Health in particular, no one questions the quality of the services we deliver. They have a hard time getting in to see us,” Rubin said.

Rubin said reduced research funding and threats to physician well-being are emerging issues that require additional attention. He added that he will work with the office of UC Provost Katherine Newman to create a group responsible for exploring additional sources of revenue such as industry, state and philanthropic funding.

“What we are trying to do is have a leaner UC Health that’s really focused concretely on our strategic framework,” Rubin said.

Cedric Terrell, the 2022-2023 chief pharmacy executive at the UC Office of the President, said UC Health provided over $5.3 billion in net community benefits during the 2022-2023 fiscal year – including uncompensated hospital and professional care to Medi-Cal and Medicare enrollees.

Terrell said part of these savings can be attributed to the 340B Drug Pricing Program. The 340B program allows for select health care providers – including 18 UCLA Health entities – to obtain drugs at discounted prices, according to the presentation. He added that the 340B program helps offset high health care costs, allowing more patients to be served.

“The 340B program continues to be under scrutiny in a lot of different ways,” Terrell said. “Some of it is just bad, bad players.”

The 340B program plays an important role in allowing UC Health to serve patients with social and financial barriers who may otherwise go without treatment, he added.

“We’re now also on the cusp of creating an Office of Strategic Partnerships to coordinate Medi-Cal and Medicare strategy, recognizing that this is two-thirds of our patient mix,” Rubin said.

Rubin also said they hope to expand the UC’s clinical services and medical education programs in new geographic regions in California. The committee will also assist UC campuses in accounting for potential changes to Medi-Cal in their strategies for improving care for underserved communities from these areas.

Tam Ma, associate vice president for health policy and regulatory affairs, said nearly one-third of inpatient days and 20% of UC Health revenue are reliant on Medi-Cal payments.

Ma also said the federal government’s funding accounts for roughly two-thirds of the Medi-Cal budget.

Erica Murray, president and chief executive officer of the California Association of Public Hospitals and Health Systems, said Medicaid is currently facing $715 billion in funding cuts from the federal government. She added that state-directed supplemental payments – which comprise a significant portion of UC Health’s total Medi-Cal payments – are at risk of being cut because of new federal policy aimed at defunding state-directed payment programs.

Murray said there is a proposal in the United States House of Representatives to reduce the Federal Medical Assistance Percentage for states that provide coverage for people lacking permanent legal status. She added that this proposal would result in a significant reduction for FMAP in California.

The U.S. House of Representatives narrowly passed the One Big Beautiful Bill Act on Thursday morning along partisan lines, which outlined cuts to Medicaid totaling almost $700 billion. The bill would require 80 hours per month of work, education or service for Medicare enrollees without disabilities who lack dependents to receive coverage.

Despite concerns regarding the funding status of federal health care programs, Murray said several political mitigating factors – such as the popularity of Medicare and the Republican majority in the U.S. House of Representatives being slim – may lessen the severity of additional cuts.

“Polls show that Medicaid is extremely popular politically and that efforts to significantly reduce coverage could jeopardize the Republicans’ chances of holding onto the House in 2026,” she said.