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Devastating. Life and death. A seismic tear in the social safety net.
These are just some of the ways that Santa Clara County officials explained the steep federal health care funding cuts to Palo Alto leaders Monday night.
As a result of President Donald Trump’s “One Big Beautiful Bill Act,” the county is facing a loss of at least $1 billion per year. County Executive James Williams said in his presentation to the Palo Alto City Council that 1 in 4 county residents rely on Medi-Cal, the state’s version of Medicaid, and another 133,000 residents rely on CalFresh.
“It’s fair to say that this is the largest, most significant challenge the county has faced fiscally,” Santa Clara County Supervisor Margaret Abe-Koga said. “These are very unusual times that call for unusual and extraordinary action.”
Santa Clara Valley Healthcare is the county’s delivery system for public healthcare, and Medicaid makes up more than half of its revenue, Williams said.
SCVH operates four hospitals in the county, including two of the three trauma centers and the only burn center. Williams explained that the cuts will reduce the public health system’s capacity and have ripple effects that will strain the county’s private and nonprofit health systems as well.
“I realized it was going to be bad,” said Vice Mayor Vicki Veenker. “I never imagined it would be this bad.”
For Palo Alto, the impacts will be felt hardest by the 10% of residents who are on Medi-Cal, Williams said. About 1,755 residents also rely on CalFresh and could see their benefits slashed over the next several years. Williams added that cuts at the county level will also impact disaster response and homeless services and funding.
County supervisors referred to Measure A as a potential mitigation, but Williams stressed that even that would not be enough to close the gap.
“We know we’re going to have to make a number of very painful choices and decisions as a county organization, and that’s regardless of Measure A,” Williams said.
Measure A would temporarily implement a five-eighths-cent sales tax hike that is expected to generate at least $300 million each year — if voters pass it in November. The initial language of the measure included explicit references to Trump and the Big Beautiful Bill, but a lawsuit earlier this year resulted in some tweaks to the text on the ballot. Plaintiffs first sued to prevent the measure from going to the ballot altogether, arguing in part that the revenue from the tax would go to the general fund instead of the health care system specifically.
Palo Alto council members were prevented from advocating for or against Measure A at Monday night’s meeting. But that did not stop several public commenters from urging the council to support it later on.
One commenter even suggested that the county should leverage tax hikes further to close the health care funding gap.
“Even though the cuts will be felt disproportionately by our county health care system, the crisis will touch each of us and this is because the health care ecosystem across the county is interconnected,” said Dr. Sara Cody, the former County Health Officer and a Palo Alto resident. “When one part fails or falters, every part feels it.”
Although council members were not allowed to stake out a position on Measure A during Monday’s meeting, they may do so next week. On the agenda for Oct. 6 is a council discussion of both Measure A and Proposition 50, with the option for the council to take a formal stance.
Based on the presentation from the county, council members expressed extreme concern about the imminent challenges facing the health care system countywide.
Every council member also expressed gratitude to the county officials who are trying to find ways to minimize the immediate impacts of the cuts.
“I’m really supportive of you thinking creatively how to be more cost-efficient, and at the same time be more effective in programs,” Council member Pat Burt told county officials. “A crisis like this really gets everybody thinking about how can we do things better.”
