No state has more Medicaid and Medicare Advantage enrollees than California: Nearly 14.5 million Californians are receiving Medicaid benefits—more than a third of the state’s total population, and more than 3.4 million people are enrolled in Medicare Advantage. That means the funding cuts and administrative costs in the One Big Beautiful Bill Act (OBBBA) will hit California especially hard.

OBBBA is anticipated to reduce nearly $1 trillion in federal Medicaid spending nationwide over 10 years. In California, it is projected to cut $30 billion a year in federal funding from Medi-Cal, and up to 3.4 million residents could lose coverage, according to the California Health Care Association. While the impacts on Medicare Advantage are more difficult to predict, the squeeze is coming there as well.

Here, SafeRide Health looks at OBBBA factors impacting California healthcare costs over the next decade, and how healthcare partners like SafeRide Health can help managed care organizations mitigate the impact of these cuts through intelligent utilization management and cost controls.

OBBBA Is Creating a Multi-Year Cost Squeeze for California Payers

Over the next decade, the new federal legislation will impact state Medicaid and Medicare funding across the nation, including California (an ACA expansion state), in several ways:

• The law limits provider taxes that states use to fund Medicaid services and prevents them from establishing new provider taxes or increasing existing taxes. In California, it will freeze the managed care organization tax and hospital quality assurance fee and require a reduction of those rates from 6% to 3.5% in 2028 — a major reduction.

• In ACA expansion states, it mandates that adults eligible for Medicaid meet work and reporting requirements, adding a significant administrative burden to state Medicaid agencies.

• OBBA revises the payment limit for state-directed payments from the federal government.

• The law requires ACA expansion states to determine Medicaid eligibility twice a year, instead of once annually, creating an additional administrative hurdle.

• The budget deficit created by OBBBA is likely to trigger automatic federal spending cuts that could impact Medicare reimbursements starting in 2026.

As OBBBA phases in, Medi-Cal plans will manage care for a more complex population as thousands of healthier enrollees drop out due to work requirements and increased eligibility checks. At the same time, MCOs face fewer federal dollars, higher administrative expectations, and more volatility in enrollment. The California Department of Health Care Services will be under pressure to hold enrollment steady, reduce supplemental payments, and push greater accountability onto the plans.

Medicare Advantage plans face potential funding hits as well if federal MA reimbursements are cut to help balance the federal budget, and DSNP plan could see impacts to home- and community-based services due to the pressures on both Medicaid and MA.

How NEMT Can Be a Cost Stabilizer v. Cost Center

In an environment where plans must demonstrate clear ROI on every dollar, transportation becomes one of the few levers that directly influences avoidable high-cost utilization.

Healthcare stakeholders are increasingly realizing that transportation is care; when someone can’t make it to their appointments, the consequences can be both figuratively and literally costly. Effective non-emergency medical transportation can help stabilize the outpatient journey for exactly the members who remain in coverage — the ones who are highest risk, highest cost, and most dependent on reliable access. Transportation failures almost always show up as medical losses: higher readmissions, higher ED utilization, and worsening chronic conditions. SafeRide Health helps remove one of the biggest root causes of this avoidable cost.

NEMT providers like SafeRide also reduce volatility generated by eligibility churn by ensuring that complex members don’t fall out of care simply because they can’t get to it. With a 99% fulfillment rate and 97% on-time rate in 2025, SafeRide has performance metrics that have fueled industry-leading growth, ensuring that 12 million health plan members receive the care they need every year.

Health Plans Need Partners that Reduce Friction and Control Utilization

With tighter budgets, plans that cannot control avoidable utilization will face more scrutiny. That holds true for medical costs as well as benefits such as transportation. SafeRide’s platform integrates detailed mobility requirements as well as each person’s benefit rules for every scheduled ride, ensuring each member receives the most appropriate ride for them.

SafeRide also reduces operational load by delivering a fully managed, data-forward transportation program. Every step we automate — scheduling, verification, real-time trip monitoring, reporting — helps plans absorb new administrative demands without increasing our internal headcount. Technology and scale have driven impressive cost savings, with a 60% reduction in the cost to deliver a ride compared to SafeRide’s 2022 baseline. Specific initiatives include:

• Automated trip eligibility and modality routing

• Real-time analytics supporting DHCS and NCQA reporting

• Proven reduction in call center load and manual scheduling

• Integrations that reduce plan-side administrative touch

SafeRide’s efforts to reduce fraud, waste, and abuse (FWA) have also become more sophisticated thanks to AI and machine learning, which can identify unusual utilization patterns before they result in improper payments or misuse of benefits. For higher-risk cases, SafeRide can conduct pre- and post-appointment checks to verify medical necessity and prevent FWA. Our industry-leading waste-reduction efforts have helped participating clients reduce total program spend by more than 10%.

Supporting Medi-Cal’s Strategic Priorities

Even amid looming financial pressure, DHCS remains committed to the goals of CalAIM. SafeRide directly supports the agency’s highest-priority strategic pillars with:

• Enhanced Care Management (ECM): Transportation ensures ECM care teams can reliably move high-need members to services.

• Community Supports: Access to housing services, substance abuse disorder centers, postpartum care, and behavioral health care depends on reliable transportation, when approved.

• Equity: Transportation is a top social determinant of health in low-income communities, and addressing this need directly supports DHCS’s equity metrics. These barriers could worsen as family budgets are stretched by higher healthcare costs.

• Quality & Withholds: Adherence to preventive care, postpartum care, chronic care follow-up are all tied to mobility. Effective NEMT moves the needle on these STARs/HEDIS-linked measures.

OBBBA will make every healthcare dollar work harder. SafeRide Health is one of the few partners that can reliably reduce medical loss while also reducing operational burden. We help plans stay financially stable in an era of tighter reimbursement, higher acuity, and greater accountability.

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