|
The California Legislature adjourned the second year of the 2025–26 regular session at 11:59 p.m. on August 31, 2026, closing out a two-year cycle in which health care access, workforce, and affordability issues, including several measures directly affecting healthcare districts, moved through to the Governor's desk. The final weeks of session were dominated by budget-trailer cleanup, and hundreds of bills needing to clear both houses before the deadline. ACHD was actively engaged through the end of session on a number of high-priority issues.
With the legislative session concluded, all bills passed by the Legislature now move to Governor Newsom for action. The Governor has until September 30, 2026, to sign or veto bills sent to him in the closing days of session; any bill not acted on by that date becomes law without his signature. ACHD will issue a Governor's Signature/Veto recap once final action is known on the bills below.
Bills of Note:
AB 1811 (Rogers) — Health Professional Shortage Areas - ACHD CO-SPONSOR
AB 1811, ACHD’s co-sponsored bill, passed both houses with unanimous support. AB 1811 would preserve Health Professional Shortage Area (HPSA) designations that were in place as of January 1, 2025, including roughly 285 designations that had been proposed for withdrawal, through January 1, 2035. HPSA status drives state prioritization for loan repayment, workforce placement, and other programs relevant to rural and underserved districts.
AB 2282 (Alanis) — Health Facilities: Emergency Medical Services - ACHD SUPPORT
AB 2282, sponsored by Del Puerto Health Care District, would authorize the CA Department of Public Health to issue a special permit allowing Del Puerto to operate a rural emergency stabilization and care unit in Patterson (Stanislaus County), waiving certain general acute care hospital licensure requirements. The district must maintain transport/transfer agreements with every licensed ED within a 30-mile radius; the permit sunsets once a general acute care hospital with an operating ED is licensed in the area. The bill is currently awaiting Governor action.
To join ACHD in supporting Del Puerto Healthcare District in their efforts, please utilize this link to send a letter of support to the Governor and encourage his signature.
AB 2311 (Schiavo) — Health Care Districts: Employment - ACHD SPONSOR
ACHD-sponsored bill, passed the Legislature nearly unanimously and is pending Governor’s action. AB 2311 establishes a ten-year pilot to allow district hospitals meeting specified conditions to directly employ physicians and surgeons and bill for their services. Like other pilots in this space, the bill is accompanied by guardrails prohibiting interference with clinical judgment and requiring new positions to supplement, not displace, existing medical staff.
SB 947 (McNerney) — Employment: Automated Decision Systems - ACHD OPPOSE
SB 947, also known as “No Robo Bosses Act”, is the reboot of SB 7 last year, which ACHD successfully helped defeat. The modified version now sits in front of the Governor for signature or veto.
Beginning July 1, 2027, the bill would require meaningful human review before an automated decision system can finalize employment actions such as discipline or termination, require notice to affected workers, and restrict predictive use of certain employee-monitoring data. However, the bill is nuanced in its definitions and applicability, making it problematic and difficult to comply with from an employer standpoint.
AB 2575 (Ortega) — Health Care Services: Artificial Intelligence – ACHD OPPOSE
AB 2575 would require health facilities to maintain and disclose an inventory of clinical decision support system (CDSS)/AI tools in use, protect clinicians' ability to override AI-generated recommendations without retaliation, and bar AI developers from using a clinician's failure to override as a liability defense. ACHD is part of a broad coalition opposed to the bill alongside the California Hospital Association and California Chamber of Commerce.
2026-27 State Budget:
Governor Newsom signed the main 2026–27 Budget Act on June 29, 2026. The enacted budget for the Department of Health Care Services totals $226.3 billion ($45.7 billion General Fund), with the overall Medi-Cal budget at $222.4 billion ($48.8 billion General Fund), covering an estimated 14 million Californians. Rather than implementing the deepest Medi-Cal reductions immediately, the Legislature and Governor largely delayed the most painful decisions — including cuts to dental benefits for adults with unsatisfactory immigration status (UIS), reinstatement of the asset test, and reduced clinic payment rates — to July 1, 2027, leaving them for the next Governor and Legislature to resolve.
-
Medi-Cal solutions adopted in the 2025–26 budget continue to ramp up, growing from roughly $4.7 billion in savings in 2025–26 to a projected $8.6 billion by 2028–29 — with many of the larger solutions first taking effect in 2026–27.
- The budget sets aside $300 million to support increased Covered California subsidies as enhanced federal premium tax credits expire, and roughly $2 million for an HR 1 Navigators for Clinics Program to support Medi-Cal outreach and enrollment.
- Hospitals are slated to receive $340 million in grant funding as the state continues to respond to federal Medicaid reductions under H.R. 1, which is expected to strip roughly $800 billion in federal Medicaid funding nationally over the coming decade.
- The Managed Care Organization (MCO) tax — a major Medi-Cal funding source — faces continued uncertainty as federal rules under H.R. 1 push the state to restructure the tax, likely reducing the revenue it generates going forward.
- Beginning in 2026–27, the state discontinues federally funded coverage of Medicaid emergency services for UIS members delivered through managed care, a change scored as more than $600 million in budget-year savings; the state is providing transitional care-coordination funding as members move to fee-for-service Medi-Cal.
The Legislative Analyst's Office continues to caution that even with these solutions, the state faces sizable structural deficits in future years, meaning further Medi-Cal policy fights are likely in the 2027–28 budget cycle.
August Health Budget Package: AB 113 and AB 173
Beyond the main June budget act, the Legislature closed out session by passing a package of 16 additional budget bills on August 31, 2026, to finalize items that were budgeted in June but not yet appropriated, and to make technical and policy cleanup changes. Two of those bills are worth flagging for ACHD members: AB 113, the "Budget Bill Junior," and AB 173, the omnibus health budget trailer bill.
AB 113 Budget Act of 2026: Budget Bill Junior
A "Budget Bill Junior" is the informal term for any bill that amends the Budget Act itself, typically by adding, increasing, or reallocating appropriations that were agreed to in principle in June but finalized later in the year. AB 113 is this year's primary Budget Bill Junior. It increases General Fund spending by under $100 million above the June agreement (largely to cover an unexpected loss of federal funds at the Department of Rehabilitation), appropriates $2.66 billion in Proposition 4 climate bond funds, and appropriates $450 million in Greenhouse Gas Reduction Fund dollars, alongside a long list of one-time, district-specific, and program appropriations across nearly every policy area.
Health Items of Note:
-
Appropriates $1 million to support research on how House Resolution 1 (H.R. 1) implementation is changing insured/uninsured populations and health care utilization trends.
-
Increases General Fund authority from $1 million to $3 million for HCAI to administer the Uncompensated Care Program and Abortion Practical Support Program.
- Appropriates $10 million for HCAI to support gender-affirming care services for children and youth who lost federal Medi-Cal matching funds under recent federal rule changes.
- Appropriates $30 million from the 988 State Suicide and Behavioral Health Crisis Services Fund across CalHHS, DHCS, and Cal OES for 988 system oversight, interoperability, and crisis-line operations, including a dedicated LGBTQ+ "Press 3" option.
- allcove youth mental health centers: Item 67 of AB 113 specifies recipients of funding previously adopted in the 2026 Budget Act for allcove centers.
AB 173 is the companion health "trailer bill" to the budget. It doesn't move new money so much as it changes the underlying statutes needed to implement health provisions of the 2026 Budget Act. Most notably for ACHD members, AB 173 implements the statutory authority needed to facilitate the transfer of assets from Palomar Health District to the newly formed Palomar UC San Diego Health Authority, a district affiliation/transfer structure that other member districts exploring similar hospital partnership or governance transitions will want to watch closely as a potential model or point of comparison.
Other items of note:
- Expands DHCS provider-oversight authority in Medi-Cal, including the new ability to deny, suspend, or place a 180-day moratorium on provider enrollment to safeguard program integrity, with notice to the Joint Legislative Budget Committee.
- Requires DHCS and the California Department of Aging to study Community-Based Adult Services (CBAS) center closures and report back to the Legislature by March 1, 2029.
- Provides, effective October 1, 2026, coverage of medically necessary outpatient maintenance dialysis for individuals on restricted-scope Medi-Cal.
- Extends the existing nurse-to-patient staffing ratio penalty exemption — currently available to general acute care hospitals under specified circumstances — to acute psychiatric hospitals.
- Implements a series of 988 Suicide & Crisis Lifeline changes, including new interoperability, training, and governance requirements for how 911, 988, and mobile crisis teams coordinate calls.
- Makes technical changes to align Medi-Cal eligibility rules with federal H.R. 1 requirements and clarifies AIDS Drug Assistance Program (ADAP) rules.
Other News:
Yesterday, ACHD joined Assemblymember Juan Alanis and Del Puerto Health Care District leadership for a press conference at Del Puerto's Patterson campus in support of AB 2282, the district-sponsored bill to authorize a rural emergency stabilization and care unit on the west side of Stanislaus County. The press conference was an opportunity for Assemblymember Alanis and district trustees and administration to underscore why the bill matters well beyond Patterson.
| 
