Clinics had been staying afloat using the state's $2 billion emergency fund, but it has run dry.
Some doctors said they'll cut back services and hope they won't have to shut down.
"We're going to end up with skeleton coverage, and the care is going to be minimized," said Dr. Agusto Sy of Las Palmas Health Clinic. "Patients are going to suffer."
Ceceilia Savala's family is on Medi-Cal. The budget deadlock has forced her to go to four clinics because many won't take new patients as long as the state isn't paying.
She worries this clinic might close its doors.
"We don't have the finances if she gets sick or anything," Savala said about her young daughter. "So she'll stay sick, I guess. It's sad."
Budget negotiations have been painstakingly slow. Democrats want to raise taxes to help save them.
"While recognize the great pain in the clinics not getting the payments they need and deserve, it's a worse outcome to eliminate the clinics," said Calif. Sen. Darrell Steinberg (D-Sacramento).
But Gov. Arnold Schwarzenegger refuses to entertain proposals that raise taxes during this recession.
"As soon as the Legislature passes a budget that we can sign that does not include taxes, then we'll be able to make those payments," said the governor's spokesperson, Rachel Arrezola.
That stand causes further delay in fixing the Medi-Cal problem and hurt Californians who aren't part of the budget process.
"We're the ones that are lower poverty, the ones that get the short end of the stick," Savala said.
The state controller and the state treasurer on Monday told the Legislature that public schools that are supposed to get $2.5 billion in September will not receive the money if there is no stage budget. The latest state budget was Sept. 23rd.