SACRAMENTO BUSINESS JOURNAL: PROPOSED MEDICAID CUTS THREATEN SACRAMENTO JOBS, BUSINESSES AND REAL ESTATE, HEALTH LEADERS SAY

Standing before a packed room at WellSpace Health’s Alhambra Community Health Center, U.S. Rep. Doris Matsui warned that proposed Medicaid cuts could send shockwaves through Sacramento’s economy, disrupting businesses, health care facilities and real estate development.

“These cuts are not just about health care — they affect the entire economic structure of our community,” said Matsui, D-Sacramento. "Medicaid is the backbone that keeps our workforce healthy and our businesses stable."

Under the proposed budget reconciliation package, federal Medicaid funding would be slashed by nearly a trillion dollars, putting the state’s Medi-Cal program, which serves more than 320,000 people in California’s 7th Congressional District, in jeopardy. Across the state, more than 15 million individuals rely on Medi-Cal for their health care, including seniors, low-income families and people with disabilities.

Sacramento business leaders may not immediately see Medicaid as a key player in the regional economy, but health care executives at Friday's news conference said the effects of Medicaid cuts would extend beyond hospitals and clinics.

“Many local employers don’t realize how many of their workers are on Medicaid. When people lose coverage, it doesn’t just mean more ER visits — it means businesses dealing with a workforce that is sicker and less productive,” said Francisco Silva, CEO of the California Primary Care Association. "We’ve seen this before. Without health coverage, absenteeism rises and productivity plummets."

Health care job losses could further disrupt the economy. Jonathan Porteus, CEO of WellSpace Health, said 85% of his organization’s revenue comes from Medicaid. Any significant reduction in funding could trigger hiring freezes or even layoffs in Sacramento’s health care sector.

“If we can’t keep our economic engine running, we will have to trim staff,” Porteus said. “This isn’t just about doctors and nurses — this affects the medical assistants, emergency responders and administrative staff who keep these facilities operational.”

Sacramento’s commercial real estate sector could also face consequences. Health care providers are tenants in medical office buildings, and any funding instability could slow the development of new clinics and hospitals.

“These cuts would be an existential threat — not only to the sustainability of the health system but also to the infrastructure that’s been built over the last 15 years,” Silva said. “We saw a 30% growth in hospitals, health centers and rehabilitation facilities in that time. This would erase much of that progress."

Matsui emphasized that shrinking health care facilities wouldn’t just inconvenience patients — it could reshape entire neighborhoods. “These clinics and medical centers don’t just provide care; they anchor communities, create jobs, and drive economic activity,” she said.

Health care represents a significant portion of the local economy. The top three private employers in the Sacramento region are health systems Kaiser Permanente, Sutter Health and Dignity Health, according to Business Journal research.

“WellSpace Health is one of the top 20 employers in Sacramento County,” said Ben Avey, chief public affairs officer for WellSpace. “People don’t often realize that community health centers are economic engines. We employ 1,000 people in high-wage jobs. If Medicaid funding is slashed, that economic activity slows down."

Health systems like Kaiser Permanente — Sacramento County’s second-largest Medicaid provider —also stand to be affected. “If Medicaid is undermined, prevention services drop, conditions become uncontrolled and suddenly we have more people flooding emergency rooms,” Porteus said. “That affects wait times and costs for everyone, even those with private insurance.”

Matsui urged Sacramento’s business community to advocate for Medicaid funding, emphasizing that the consequences would be felt in workforce stability, commercial development and the broader economy.

“This is not just about a budget line item,” she said. “It’s about the future of Sacramento’s economy."

Link to article here.