Trump administration investigates Medicaid spending on immigrants in
Democratic states
[September 06, 2025]
By ANGELA HART/KFF Health News and DEVI SHASTRI/The
Associated Press
SACRAMENTO, Calif. (AP) — The Trump administration is taking its
immigration crackdown to the health care safety net, launching Medicaid
spending probes in at least six Democratic-led states that provide
comprehensive health coverage to poor and disabled immigrants living in
the U.S. without permanent legal status.
The Centers for Medicare and Medicaid Services is scouring payments
covering health care for immigrants without legal status to ensure there
isn’t any waste, fraud or abuse, according to public records obtained by
KFF Health News and The Associated Press. While acknowledging that
states can bill the federal government for Medicaid emergency and
pregnancy care for immigrants without legal status, federal officials
have sent letters notifying state health agencies in California,
Colorado, Illinois, Minnesota, Oregon and Washington that they are
reviewing federal and state payments for medical services, such as
prescription drugs and specialty care.
The federal agency told the states it is reviewing claims as part of its
commitment to maintain Medicaid’s fiscal integrity. California is the
biggest target after the state self-reported overcharging the federal
government for health care services delivered to immigrants without
legal status, determined to be at least $500 million, spurring the
threat of a lawsuit.
“If CMS determines that California is using federal money to pay for or
subsidize healthcare for individuals without a satisfactory immigration
status for which federal funding is prohibited by law,” according to a
letter dated March 18, “CMS will diligently pursue all available
enforcement strategies, including, consistent with applicable law,
reductions in federal financial participation and possible referrals to
the Attorney General of the United States for possible lawsuit against
California.”
The investigations come as the White House and a Republican-controlled
Congress slashed taxpayer spending on immigrant health care through cuts
in President Donald Trump’s spending-and-tax law passed this summer. The
administration is also pushing people living in the U.S. illegally off
Medicaid rolls. Health policy experts say these moves could hamper care
and leave safety net hospitals, clinics and other providers financially
vulnerable. Some Democratic-led states — California, Illinois and
Minnesota — have already had to end or slim down their Medicaid programs
for immigrants due to ballooning costs. Colorado is also considering
cuts due to cost overruns.
At the same time, 20 states are pushing back on Trump’s immigration
crackdown by suing the administration for handing over Medicaid data on
millions of enrollees to deportation officials. A federal judge
temporarily halted the move. California’s attorney general, Rob Bonta,
who led that challenge, says the Trump administration is launching a
political attack on states that embrace immigrants in Medicaid programs.
“The whole idea that there’s waste, fraud and abuse is contrived,” Bonta
said. “It’s manufactured. It’s invented. It’s a catchall phrase that
they use to justify their predetermined anti-immigrant agenda.”
Trump administration targets immigrants
Immigrants lacking permanent legal status are not eligible to enroll in
comprehensive Medicaid coverage. However, states bill the federal
government for emergency and pregnancy care provided to anyone.
Fourteen states and Washington, D.C., expanded their Medicaid programs
with their own funds to cover low-income children without legal status.
Seven of those states, plus Washington, D.C., have also provided
full-scope coverage to some adult immigrants living in the country
illegally.
The Trump administration appears to be targeting only states with full
Medicaid coverage for both kids and adults without legal status. Utah,
Massachusetts and Connecticut, which provide Medicaid coverage only to
immigrant children, have not received letters, for instance. CMS
declined to provide a full list of states it is targeting.
Federal officials say it is their legal right and responsibility to
scrutinize states for misspending on immigrant health coverage and are
taking “decisive action to stop that.”
“It is a matter of national concern that some states have pushed the
boundaries of Medicaid law to offer extensive benefits to individuals
unlawfully present in the United States,” CMS spokesperson Catherine
Howden said about the agency’s probe of selected states. The oversight
is intended to “ensure federal funds are reserved for legally eligible
individuals, not for political experiments that violate the law,” she
said.
Health policy researchers and economists say providing Medicaid coverage
to immigrants for preventive services and treatment of chronic health
conditions staves off more costly care for patients down the road. It
also tamps down insurance premium increases and the amount of
uncompensated care for hospitals and clinics.
Francisco Silva, president and CEO of the California Primary Care
Association, said the Trump administration is threatening to drive up
health care costs and make it more difficult to access care.
“The impact is emergency rooms would get so crowded that ambulances have
to be diverted away and people in a real emergency can’t get into the
hospital, and public health threats like disease outbreaks,” Silva said.
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California Attorney General Rob Bonta speaks during a news
conference in Ceres, Calif., April 16, 2025. (AP Photo/Noah Berger,
File)
California has taken a health-care-for-all approach, providing
coverage to 1.6 million immigrants without legal status. The
expansion, which was rolled out from 2016 to 2024, is estimated to
cost $12.4 billion this year. Of that, $1.3 billion is paid by the
federal government for emergency and pregnancy-related care.
As California rolled out its expansion, the state erroneously billed
the federal government for care provided to immigrants without legal
status — details that have not previously been reported and that
former state officials shared with KFF Health News and the AP. The
state improperly billed for services such as mental health and
addiction services, prescription drugs and dental care.
Jacey Cooper, who served as California’s Medicaid director from 2020
to 2023, said she discovered the error and reported it to federal
regulators. Cooper said the state had been working to pay back at
least $500 million identified by the federal government.
“Once I identified the problem, I thought it was really important to
report it and we did,” Cooper said. “We take waste, fraud and abuse
very seriously.”
It’s not clear whether that money has been repaid. The state’s
Medicaid agency says it does not know how CMS calculated the
overpayments or “what is included in that amount, what time period
it covers, and if or when it was collected,” said spokesperson Tony
Cava.
California has an enormously complicated Medicaid program: It serves
the largest population in the nation — nearly 15 million people —
with a budget of nearly $200 billion this fiscal year.
Matt Salo, a national Medicaid expert, said these types of mistakes
happen in states throughout the country because the program is rife
with overlapping federal and state rules. Salo and other policy
analysts agreed that states have the authority to administer their
Medicaid programs as they see fit and root out misuse of federal
funds.
And Michael Cannon, director of health policy studies at the
libertarian Cato Institute, said the Trump administration’s actions
“persecute a minority that’s unpopular with the powers that be.”
“The Trump administration cannot maintain that this effort has
anything to do with maintaining the fiscal integrity of the Medicaid
program,” Cannon said. “There are so much bigger threats to
Medicaid’s fiscal integrity, that that argument just doesn’t wash.”
Immigrants' Medicaid under attack
National Republicans have targeted health spending on immigrants in
different ways. The GOP spending law, which Trump calls the “One Big
Beautiful Bill,” will lower reimbursement to states around the
country in October 2026. In California, for example, federal
reimbursement for immigrants without legal status will go to 50% for
emergency services, down from 90% for the Medicaid expansion
population, according to Cava.
The Trump administration is also scaling back Medicaid coverage to
immigrants with temporary legal status who were previously covered
and announced in August that it would provide states with monthly
reports pointing out enrollees whose legal status could not be
confirmed by the Department of Homeland Security.
“Every dollar misspent is a dollar taken away from an eligible,
vulnerable individual in need of Medicaid,” CMS Administrator Mehmet
Oz said in a statement. “This action underscores our unwavering
commitment to program integrity, safeguarding taxpayer dollars, and
ensuring benefits are strictly reserved for those eligible under the
law.”
States under review say they are following the law.
“Spending money on a congressionally authorized medical benefit
program that helps people get emergency treatments for cancer,
dialysis and anti-rejection medications for organ transplants is
decidedly not waste, fraud and abuse,” said Mike Faulk, deputy
communications director for Washington state Attorney General Nick
Brown.
Records show Washington Medicaid officials have been inundated with
questions from CMS about federal payments covering emergency and
pregnancy care for immigrants without legal status.
Emails show Illinois officials met with CMS and sought an extension
to share its data. CMS denied that request and federal regulators
told the state that its funding could be withheld.
“Thousands of Illinois residents rely on these programs to lawfully
seek critical health care without fear of deportation,” said Melissa
Kula, a spokesperson for the Illinois Department of Healthcare and
Family Services, noting that any federal cut would be “impossible”
for the state to backfill.
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Shastri reported from Milwaukee.
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