The Trump administration initiated investigations into Medicaid spending in at least six states, all led by Democrats, focusing on healthcare coverage provided to immigrants without permanent legal status. The Centers for Medicare and Medicaid Services (CMS) is reviewing payments to ensure compliance with federal regulations. While acknowledging that emergency and pregnancy care for undocumented immigrants is federally reimbursable, the agency is examining a wider range of services.
California is a primary target, having self-reported over $500 million in potential overcharges to the federal government for healthcare services provided to undocumented immigrants. This self-reporting triggered the federal scrutiny and the threat of legal action. The CMS stated it would pursue all available enforcement options, including funding reductions and potential lawsuits, if it determines funds were misused.
The investigations coincide with the Trump administration’s efforts to reduce taxpayer spending on immigrant healthcare. Budget cuts enacted this summer, alongside efforts to remove undocumented immigrants from Medicaid rolls, have raised concerns among health policy experts. These actions, they argue, could jeopardize healthcare access and leave safety-net providers financially vulnerable. Several states, including California, Illinois, and Minnesota, have already reduced their Medicaid programs for immigrants due to rising costs. Colorado is also considering similar cuts.
Simultaneously, twenty states are challenging the administration’s actions in court, arguing against the release of Medicaid data to deportation officials. A federal judge temporarily blocked this data transfer. California Attorney General Rob Bonta criticized the administration’s actions, calling them a politically motivated attack on immigrant-friendly states. He suggested the claims of waste, fraud, and abuse were fabricated to justify an anti-immigrant agenda.
While comprehensive Medicaid coverage isn’t available to undocumented immigrants, states can bill the federal government for emergency and pregnancy care. Fourteen states and Washington, D.C., expanded Medicaid coverage using state funds for low-income children without legal status. Seven of these, along with Washington, D.C., provide full coverage to some adult undocumented immigrants. The Trump administration appears focused on states offering full coverage for both children and adults, excluding those providing coverage only to children. CMS declined to release a complete list of targeted states.
CMS spokesperson Catherine Howden defended the agency’s actions, stating that it’s legally obligated to ensure federal funds are used appropriately. She characterized the agency’s actions as necessary to prevent the misuse of taxpayer money on individuals not legally eligible for Medicaid. However, health policy researchers contend that providing preventative and chronic care to immigrants ultimately reduces long-term healthcare costs.
Francisco Silva, president and CEO of the California Primary Care Association, warned that the administration’s actions could increase healthcare costs and limit access to care, potentially leading to overcrowded emergency rooms and public health risks. California‘s healthcare-for-all approach covers 1.6 million undocumented immigrants, with an estimated cost of $12.4 billion this year, including $1.3 billion in federal reimbursement for emergency and pregnancy care.
Jacey Cooper, California‘s former Medicaid director, revealed that the state had mistakenly billed the federal government for services not covered under existing regulations. This included mental health, addiction treatment, prescription drugs, and dental care. Cooper reported the error, estimating the overpayment at at least $500 million. The current status of this repayment is uncertain.
Matt Salo, a Medicaid expert, acknowledged that such errors can occur due to the complex interplay of federal and state regulations. He and other analysts emphasized that states have the right to manage their Medicaid programs effectively. Conversely, Michael Cannon, of the Cato Institute, characterized the administration’s actions as politically motivated, arguing that the focus on immigrant healthcare overlooks larger threats to the Medicaid program’s fiscal stability.
The Trump administration’s approach to immigrant healthcare is also reflected in other policies. The “One Big Beautiful Bill” reduces federal reimbursement to states, affecting coverage for undocumented immigrants. The administration is also implementing monthly reports identifying Medicaid enrollees whose legal status is unconfirmed. CMS Administrator Mehmet Oz emphasized the commitment to program integrity and safeguarding taxpayer dollars.
States under investigation maintain their adherence to the law. Mike Faulk, deputy communications director for Washington state Attorney General Nick Brown, refuted the claim of waste, fraud, and abuse, arguing that providing necessary medical care is not wasteful spending. Illinois officials met with CMS to request a data-sharing extension, a request that was denied. Melissa Kula, spokesperson for the Illinois Department of Healthcare and Family Services, highlighted the reliance of thousands of residents on these programs and the impossibility of replacing any potential federal funding cuts.
Related
