A new federal audit reveals that five states have spent a total of more than $1 billion providing Medicaid benefits to illegal immigrants.
According to Dr. Mehmet Oz, administrator of the Centers for Medicare and Medicaid Services (CMS), “If you live in Texas or Florida, and you’re paying U.S. federal taxes — most people do — your money is being diverted to places like California who have robust benefits for illegal immigrants.”
The Trump administration has vowed to claw back these misspent public funds.
It’s against federal law to provide Medicaid benefits to people living in the country illegally. States have flouted the spirit and letter of that law for years. It’s about time the federal government put a stop to such behavior.
First, some background:
Medicaid was established alongside Medicare in 1965 by legislation signed by President Lyndon Johnson as part of his “Great Society” program.
Medicaid is jointly funded by the federal government and the states.
For every dollar states spend on the entitlement, they receive at least one dollar in matching funds from the federal government.
How are states getting away with directing those dollars to illegal immigrants?
Mostly by exploiting a number of loopholes — chief among them something called “emergency” Medicaid.
This component of the program was created to fund life-saving hospital care for uninsured people who are ineligible for the program because of their immigration status.
It’s a noble goal.
If a person without insurance comes into the emergency room having been struck by a car, treating them immediately is the only humane option.
The money for that care needs to come from somewhere.
But in recent years, states have managed to increase their emergency spending dramatically in order to provide more and more care to illegal immigrants through Medicaid.
The problem is far more widespread — and costly to taxpayers — than the new federal audit might suggest.
One recent analysis by the Foundation for Government Accountability found that, in 2024 alone, states spent north of $6 billion in federal “emergency” Medicaid funds providing care to illegal immigrants.
That’s up from an already sizable $2 billion in 2020.
My home state of California is by far the biggest offender, spending $4.5 billion in federal “emergency” money delivering healthcare to illegal immigrants via Medicaid.
Emergency Medicaid is but one workaround states have employed.
Undocumented residents who meet certain specific requirements — for instance, if they have been paroled for at least a year — can also receive something called “qualified alien” status. This, too, gives states leeway to provide these immigrants with Medicaid benefits.
Similarly, states might classify some illegal immigrants — such as asylum seekers and those granted deferred enforcement status — as “lawfully residing,” which can also justify the provision of Medicaid benefits.
Some states — most notably, California — have decided to provide Medicaid benefits directly to illegal immigrants.
They claim they’re spending “state” money on this largesse — and so are not violating federal law.
But they can only afford to spend those nominally state dollars because of the generous federal match they receive.
And they can boost that match further by taxing healthcare providers, remitting the proceeds back in the form of higher reimbursements, and claiming federal funds to match that manufactured spending.
These kinds of funding games give states the fiscal breathing room to extend Medicaid benefits to illegal immigrants.
Medicaid was created as a safety-net program for the least well-off.
It has since expanded into the single largest health insurer in the country, covering more than one in five Americans.
That astounding growth has not only made the entitlement unsustainable — it has crowded Medicaid with people who ought to be able to care for themselves.
In so doing, it has made it harder for genuinely destitute people to get care.
What’s needed, more than ever, are reforms that return Medicaid to its original mission of looking after those who genuinely need — and are legally entitled to — federal assistance.
By using dubious legal workarounds to bring a growing number of illegal immigrants onto Medicaid’s rolls, leaders in states like California, Illinois, Colorado, and Oregon are moving the program in the wrong direction. And they’re flouting federal law in the process.
Sally C. Pipes is President, CEO, and Thomas W. Smith Fellow in Health Care Policy at the Pacific Research Institute. Her latest book is “The World’s Medicine Chest: How America Achieved Pharmaceutical Supremacy — and How to Keep It.” Follow her on X @sallypipes. Read more of Sally Pipes’ reports — here.
© 2025 Newsmax. All rights reserved.
