Gov. Gavin Newsom’s Medi-Cal expansion has sparked new controversy as reports reveal the cost of providing healthcare to illegal immigrants in California is being propped up by federal dollars from other states. Though federal law blocks illegal immigrants from enrolling in Medicaid, California has found a way around it — and it’s costing taxpayers everywhere.
Using a combination of provider taxes and inflated service charges, California has set up a system that triggers automatic federal matching payments. While the state appears to increase its Medi-Cal budget, the additional costs are passed on to insurers, who are then reimbursed, allowing the state to receive extra federal money without spending its own.
Gavin Newsom is literally bankrupting Medicaid in California. The annual cost of benefits for illegal immigrants has tripled to $9.5 billion, forcing Newsom to take out an emergency loan to cover this month's payments.
This is one of the biggest scandals in state history. pic.twitter.com/EqdcPQpK7s
— Kevin Kiley (@KevinKileyCA) March 25, 2025
Analysts at the Economic Policy Innovation Center say this financial tactic could bring in over $19 billion in federal dollars between 2023 and 2026. Their report calls the approach a form of Medicaid money laundering, with funds diverted toward programs that include long-term care for wealthy residents and health care for illegal immigrants.
Medi-Cal, the state’s version of Medicaid, now includes approximately 1.6 million undocumented individuals, out of 15 million total enrollees. The expansion cost was expected to reach $6.5 billion but has jumped to $9.5 billion. The state has requested $6.2 billion in loans to cover the difference.
So, business as usual? @GavinNewsom was caught trying to make U.S. taxpayers fund free California healthcare for Illegals.
As a result, California taxpayers must pay feds $53M over 'improperly' claimed reimbursements for noncitizens.
Nice Newscum! https://t.co/yxlJlGRHO4 https://t.co/IiFuTHu5cy
— Tony Seruga (@TonySeruga) March 25, 2025
Newsom admitted the cost of providing care to illegal immigrants is a factor in the state’s growing health budget. Still, his administration insists other states are facing similar financial pressures, naming Colorado, Indiana and Pennsylvania.
Rep. Roy on @MariaBartiromo on Medicaid reform: "It's really critical that people understand how Medicaid has been scammed by the Democrats, particularly in California, to give money to able-bodied and to give money to illegal aliens rather than the people for whom it was… pic.twitter.com/vDdsZFV3rE
— Rep. Chip Roy Press Office (@RepChipRoy) March 14, 2025
While California’s budget maneuvers have drawn attention, Oregon has also approved illegal immigrants to receive Medicaid through its state-funded plan. Neither state has been stopped by federal authorities.
New: Gov. Newsom’s Dept. of Finance notified CALeg it needs a $3.44 billion loan for Medi-Cal.
Letter doesn’t say it, but state leaders expanded Medi-Cal last year to provide health insurance to undocumented people.
The administration underestimated how much that would cost. pic.twitter.com/EoKEGsh5VC
— Ashley Zavala (@ZavalaA) March 13, 2025
In Congress, Republicans are moving to close the loophole. The House Energy and Commerce Committee has been tasked with identifying nearly $900 billion in cuts. Limiting the Medicaid match formula or removing the safe harbor rule could reduce the ability of states like California to shift the burden of illegal immigrant care onto federal taxpayers.
