By Haddon Libby
The “Big Beautiful Bill Act,” passed by the House last month and under Senate consideration, significantly affects Californians’ access to Social Security, Medicaid, SNAP, and Medicare.
The bill does not modify Social Security benefits or eligibility. President Trump’s pledge to eliminate federal income taxes on Social Security benefits—taxable up to 85% for individuals with income above $34,000 or couples above $44,000—is unmet, disappointing California’s 6.2 million beneficiaries. In a state where the median household income is $92,000 and living costs are 40% above the national average, this tax burden hits hard. Instead, the bill offers a temporary $4,000 increase to the standard deduction for seniors aged 65 and older until 2028. This phases out at $75,000 for singles and $150,000 for couples. For a senior in the 12% tax bracket, savings are $480/year which is $1,000 less than the elimination of taxes. The cost of $200 billion over a decade is one-fifth the expense of a full elimination of taxes. Nevertheless, these actions help to deplete the Social Security trust fund by 2032, a year earlier than projected.
California’s 14.6 million Medi-Cal enrollees face severe impacts from the bill’s $700–$880 billion in Medicaid cuts. Key provisions include:
- Work Requirements: By December 2026, able-bodied adults aged 19–64 without dependents must work, volunteer, or train 80 hours monthly. The Congressional Budget Office (CBO) estimates 3.4 million Californians could lose coverage by 2034 due to this.
- Eligibility Restrictions: Benefits end for 1.4 million non-citizens as an enrollee will be required to have a Social Security. With 26% immigrant residents in California, the state faces major funding gaps, as state-funded coverage for undocumented individuals ends.
- Frequent Checks: Six-month eligibility redeterminations will increase administrative burdens and may risk disenrollment for 37% of Medi-Cal’s disabled or elderly children.
- Provider Tax Freeze: Prohibiting new taxes limits California’s ability to fund Medi-Cal’s $142 billion budget, straining already challenged hospitals.
The Center for American Progress projects $30 billion in state healthcare funding losses which is expected to cause the closure of many health clinics. Governor Newsom warns of a “decimated” system, with rural providers particularly vulnerable.
The bill’s $230–$300 billion SNAP cuts, the largest ever, affect California’s 4.8 million recipients. Provisions include:
- Work Requirements: Adults aged 18–64 must work, with exemptions for parents of children reduced. CBO estimates that two-thirds of people receiving SNAP will lose benefits.
- Administrative Burden: By halving federal funding, California must cover a $27 billion shortfall or cut benefits. As the state is already expected to have a $12 billion shortfall, it will be difficult for the state to fill the gap.
- Family Impacts: A family of three could lose $244 monthly, hitting low-income folks the hardest.
California’s 6.8 million Medicare beneficiaries face risks from the bill’s $3–$4 trillion deficit increase, triggering 4% ($500 billion) in automatic payment cuts starting in 2026. This threatens access in rural areas where providers are likely to exit. A provision allows working seniors on Medicare Part A with high-deductible plans to contribute to Healthcare Spending Accounts.
California’s high-tax, high-cost environment amplifies impacts. The CBO projects the poorest 10% will lose 4% of resources, while the top 10% will gain 2%, worsening inequality (13% poverty rate). The bill’s 0.8% boost to Gross Domestic Output (GDP) may benefit urban hubs like Los Angeles or San Francisco but not rural or low-income areas like parts of Riverside County.
In sum, the bill offers California seniors modest tax relief, yet falls short of Social Security tax elimination. Medicaid and SNAP cuts risk coverage losses and food insecurity, hitting low-income and immigrant communities hardest. Medicare faces hidden cuts, and deficit-driven fiscal risks loom. Official estimates may understate impacts, and political rhetoric obscures trade-offs.
California’s budget and healthcare system face unprecedented strain.
Haddon Libby is the Founder and Chief Investment Officer of Winslow Drake Investment Management, a state-registered Fiduciary RIA firm. When it comes to money management, RIA firms are better than brokerage firms as we only make the money that we disclose in monthly statements. Brokers do not do that. Come see the difference with a no cost investment portfolio review. www.WinslowDrake.com.
