Santa Clara County's public hospital system faces a projected shortfall exceeding $1 billion by fiscal year 2027-2028, according to a county assessment published July 10.

The system, Santa Clara Valley Healthcare, handles nearly half of all emergency room visits in the county and 80% of trauma cases.

The assessment marks one year since President Trump signed H.R.1 into law on Friday, July 4, 2025, enacting what county officials call the largest cuts to Medicaid and food assistance in U.S. history. Santa Clara County expects to lose more than $1 billion annually in federal funding as a result.

"In no uncertain terms, this bill cuts a seismic tear into the social safety net of our country and poses a grave fiscal threat to the County of Santa Clara and Santa Clara Valley Healthcare," County Executive James R. Williams said.

SCVH operates four hospitals, 15 health centers, and two of the region's three trauma centers. Its flagship, Valley Medical Center, is one of only three dual burn-and-trauma centers between Los Angeles and the Oregon border. Every 11 minutes, someone in the county is taken by ambulance to one of those four hospitals.

How the county responded

Voters approved Measure A in November 2025 with 57% support, enacting a 0.625% sales tax increase that took effect in April 2026 and generates roughly $337 million annually. The Board of Supervisors cut $183 million from SCVH's budget in February 2026 through revenue increases, operational efficiencies, and service restructuring. In June 2026, the board adopted a balanced budget for fiscal year 2026-2027 that directs all Measure A revenue to the health system.

County leaders say the local fixes cannot keep pace with the federal losses.

What comes next for residents

One in four county residents rely on Medi-Cal. Starting January 1, 2027, H.R.1 requires able-bodied adults ages 19 to 64 without dependent children to prove they work at least 80 hours per month to keep coverage. State officials estimate up to 3.4 million Californians are at risk of losing Medi-Cal as a result.

County officials warn that as residents lose coverage under the new work requirements, uninsured patients will increasingly turn to emergency rooms, raising wait times across the system. Unhoused residents face particular risk: many lack the phones, internet access, or stable addresses needed to complete the new paperwork, according to AP News reporting on the statewide impact.

For Palo Alto residents, the county hospital system serves as the regional emergency and trauma backstop. SCVH's trauma centers and ambulance network are the same facilities that receive patients from across the county, including Palo Alto.

State response falls short on indigent care

Santa Clara County Supervisor Susan Ellenberg, who also serves as president of the California State Association of Counties, said the new state budget supports public hospitals and strengthens eligibility systems but allocated no funds to address indigent care. That gap will grow as Californians lose Medi-Cal coverage, Ellenberg warned, calling state lobbying efforts "partially fruitful."

California's new budget also reworks the managed care organization tax to comply with H.R.1. If federal regulators approve the plan, privately insured families of four could pay about $400 more per year in health insurance premiums.

A newly created citizen-led oversight committee will review all Measure A spending and report publicly. The next major fiscal pressure point: FY 2027-28, when the $1 billion-plus shortfall is projected to arrive, just as the January 2027 work requirements begin pushing residents off Medi-Cal rolls.