By the Unified Savers Editorial Team
This article covers proposed federal legislation that has not yet been enacted. IHSS recipients and providers should monitor official DHCS communications for confirmed program changes.
A California Department of Health Care Services analysis released this month estimates that a federal Medicaid per-capita cap proposal moving through congressional budget reconciliation could force reductions in IHSS authorized hours for approximately 85,000 care recipients statewide — roughly one in twelve of the program’s 1.1 million beneficiaries.
The proposal, included in draft reconciliation language circulated by House Budget Committee Republicans in late June, would replace the current open-ended federal Medicaid match with a fixed per-enrollee dollar cap starting in fiscal year 2028. California, as a state with above-average Medicaid benefit levels, would face disproportionate losses under such a formula.
DHCS estimates California’s total Medicaid funding loss at approximately $8.4 billion annually by fiscal year 2030 if the cap is implemented at the rates described in the June draft. The state’s IHSS program, which cost roughly $19 billion in combined state and federal funds in fiscal year 2025-26, receives approximately $9.5 billion of that from federal Medicaid matching funds.
How the Cap Would Affect IHSS
IHSS is jointly funded by the federal government (roughly 50 percent), the state (roughly 35 percent), and counties (roughly 15 percent). If federal contributions decline, the state would face a choice: reduce IHSS services, increase state and county contributions to make up the gap, or some combination of both.
DHCS modeling presented to the Legislature in June identified three scenarios:
- Scenario A: The state absorbs 50 percent of the federal cut, resulting in approximately $200 million in IHSS reductions annually by 2030 — translating to average hour cuts of 5-8 percent for affected recipients.
- Scenario B: The state absorbs 25 percent of the cut, resulting in approximately $400 million in IHSS reductions — average hour cuts of 10-15 percent for the highest-need recipients.
- Scenario C: No state backfill, with the full $800 million reduction applied to IHSS — projected to eliminate services entirely for approximately 42,000 lower-needs recipients.
DHCS noted that any actual reductions would require state legislative action and public notice — they would not happen automatically or immediately.
Legislative Response in Sacramento
Assembly Health Committee Chair Assemblymember Mia Bonta (D-Oakland) convened an emergency informational hearing on July 9 at which DHCS Director Michelle Baass testified that the state was actively lobbying the California congressional delegation to oppose per-capita cap language in any final reconciliation package.
“IHSS is not a luxury program,” Baass told the committee. “It keeps elderly and disabled Californians out of nursing homes and hospitals, at a fraction of the institutional cost. Cuts to IHSS cost the federal government more in the long run.”
The California congressional delegation sent a joint letter to Senate Finance Committee leadership on July 14 urging removal of per-capita cap language from any final reconciliation bill. All 40 California Democratic House members signed the letter; no California Republican members signed.
What Recipients and Providers Should Know Right Now
The federal reconciliation process is ongoing and the legislation has not passed. Key points for IHSS participants:
- No cuts have been enacted. Current IHSS authorizations remain in effect.
- The earliest any federal change could take effect is federal fiscal year 2028 (October 2027), based on the current draft timeline.
- California would be required to provide advance notice before reducing any individual’s IHSS hours — typically 10 days’ written notice with the right to request a fair hearing.
- Advocacy matters. SEIU 2015, Disability Rights California, and county IHSS consortiums are organizing public comment and congressional outreach campaigns. Contact information for California’s congressional offices is at california.house.gov.
The DHCS analysis is available through the Legislative Analyst’s Office at lao.ca.gov. Recipients with questions about their current authorized hours should contact their county IHSS social worker.
Related IHSS Policy Resources
For earlier analysis of how federal Medicaid proposals affect California IHSS funding, see Federal Medicaid Cuts and IHSS California: What Providers Must Know.
IHSS recipients who want to understand their current rights — including the right to appeal any future hours reductions — can review the IHSS Caregiver Rights Guide and How to Appeal an IHSS Hours Reduction.