Coupled with the financial burden of the county’s recent $150 million Regional Medical Center purchase, county leaders are desperate to find ways of addressing federal funding gaps.
More than 100 medical worker positions were deleted in the FY25-26 budget, but these cuts are separate and distinct from the federal funding cuts to Medicaid that the county is anticipating under H.R. 1, aka the Big Beautiful Bill, which passed on July 4.
County Executive James Williams confirmed that the Valley Healthcare system is projecting a larger budget deficit for the 2026-27 fiscal year as healthcare funding cuts take hold. About 30% of Santa Clara County’s $13.7 billion 2025-26 budget funding came from now-compromised programs like Medicare and Medicaid—distributed by the state as Medi-Cal.
“There’s a lot the state can do—they certainly should not be exacerbating the federal impacts,” Williams said. “The most recent budget adopted by the state layers its own medical cuts on top of federal cuts, and that is very concerning. The state needs to take care of its public hospital systems.”
Medicare is a federal health insurance program benefiting people older than 65 along with younger people with disabilities, while Medicaid provides benefits to low-income adults and children.
Medicaid is the single largest source of federal revenue for the County of Santa Clara, representing about $1.9 billion in funding. About 70% of the county’s public healthcare system is funded by Medicare and Medicaid.
Coupled with the financial burden of the county’s recent $150 million Regional Medical Center purchase, county leaders are desperate to find ways of addressing federal funding gaps.
Board of Supervisors President Otto Lee described the Big Beautiful Bill as a “reverse Robin Hood.”
“With the expansion of our health and hospital system after the acquisition of Regional Medical Center, we’re now serving more residents who are targeted by these cuts,” Lee told Metro Silicon Valley. “Medicaid cuts will impact our entire system of care and will be felt by everyone in our community—not just our Medicaid patients.”
Getting Ahead of the Ball
To offset the upcoming funding losses, county leaders recommended in the 2025-26 budget the elimination of 119.5 full-time Valley Healthcare jobs.
County supervisors also replaced $59.6 million in federal funding for supportive housing, public health and behavioral health services with local sources of funding to “prevent the federal administration from dictating cuts to those essential services.”
Supervisor Susan Ellenberg says the county is not in a place to make a statement on the potential impact of federal cuts on existing services.
“The loss of coverage does not mean we won’t provide care,” she said. “So we will not turn anyone away from an emergency room or urgent care, but we’re also aware that we will see far fewer reimbursements, either from the state or the federal government. We will have to reallocate money from our own finite budget to provide that care.”
Supervisor Betty Duong said she is worried the already anticipated $1 billion in federal cuts is just the tip of the iceberg, and the county will struggle to budget its way out of consistent blows to federal funding for local healthcare.
The county will lose federal healthcare cost reimbursements from 450,000 previously insured residents seeking treatment at facilities in Gilroy, Milpitas, Morgan Hill, San Jose and Sunnyvale as a result of the Big Beautiful Bill.
“We cannot shut down a billion dollars worth of services elsewhere in the county organization to backfill this—we’re not able to do that without causing irreparable harm for generations to come for our most vulnerable residents who rely on the county for a swath of services,” Duong said. “This is an existential crisis here at the County of Santa Clara and for all counties across the country.”
Darcie Green, CEO of the healthcare-focused nonprofit Latinas Contra Cancer, has lobbied county leaders throughout the year to call for more proactive identifications of alternative funding sources.
She says her organization along with local healthcare advocates are hosting a town hall Aug. 1 to discuss the upcoming impact.
“As a service provider and community-based organization, we know these federal and state cuts will hit hardest where people are already struggling to access care. We’re already seeing fear and confusion. People are unsure if they’ll still qualify, worried about new premiums, or facing impossible choices between paying for food, housing, or care,” Green said. “Now is the time for the community to rally around our public healthcare system, to demand bold solutions from Sacramento, and to ensure that those most impacted are leading the way.”
