The Trump administration has extended its immigration crackdown into the health care safety net, launching Medicaid spending investigations in at least six Democratic-led states that cover poor and disabled immigrants living in the U.S. without legal status.
The Centers for Medicare & Medicaid Services (CMS) is reviewing payments made for immigrants without legal status to ensure there is no waste, fraud, or abuse, according to public records obtained by KFF Health News and the Associated Press.
Federal Review Targets Blue States
Officials acknowledged that states may bill the federal government for emergency and pregnancy care provided to immigrants without legal status. Still, federal letters to state agencies in California, Colorado, Illinois, Minnesota, Oregon, and Washington confirm CMS is reviewing claims for broader medical services such as prescription drugs and specialty care.
California faces the most scrutiny after self-reporting that it had overbilled the federal government by at least $500 million for health care provided to immigrants without legal status, prompting the threat of a federal lawsuit.
In a March 18 letter, CMS warned:
“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, CMS will diligently pursue all available enforcement strategies, including reductions in federal financial participation and possible referrals to the Attorney General of the United States.”
Political and Financial Fallout
The probes come as the White House and a Republican-controlled Congress slashed federal spending on immigrant health care through Trump’s new tax-and-spending law. The administration is also pushing to remove immigrants without authorization from Medicaid rolls.
Health policy experts warn that cuts will burden safety net hospitals and clinics financially. Some states — including California, Illinois, and Minnesota — have already scaled back Medicaid programs for immigrants due to rising costs. Colorado is also considering reductions.
Meanwhile, 20 states are suing the administration for sharing Medicaid data with deportation officials. A federal judge has temporarily blocked the move.
California Attorney General Rob Bonta, who led the challenge, called the investigations politically motivated:
“The whole idea that there’s waste, fraud, and abuse is contrived. It’s manufactured. It’s invented. It’s a catchall phrase that they use to justify their predetermined anti-immigrant agenda.”
Immigrant Coverage at Risk
Immigrants without permanent legal status cannot enroll in full Medicaid, though states may bill the federal government for emergency and pregnancy-related services.
-
14 states and Washington, D.C. use state funds to cover low-income immigrant children.
-
7 states and D.C. extend full coverage to some adult immigrants as well.
The Trump administration appears to be targeting states offering full coverage to both children and adults. States like Utah, Massachusetts, and Connecticut, which only cover immigrant children, have not received letters.
CMS said the review is necessary to protect taxpayers.
“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,” said CMS spokesperson Catherine Howden.
California at the Center
California provides Medicaid coverage to 1.6 million immigrants without legal status, costing $12.4 billion this year. The state billed the federal government for services beyond emergency and pregnancy care, such as mental health, prescription drugs, and dental services, leading to the $500 million repayment dispute.
Former state Medicaid director Jacey Cooper admitted discovering and reporting the error:
“Once I identified the problem, I thought it was really important to report it and we did. We take waste, fraud, and abuse very seriously.”
It remains unclear whether California has repaid the money.
Broader Medicaid Concerns
Experts note that overlapping federal and state rules make Medicaid billing complex. Matt Salo, a national Medicaid expert, said mistakes occur in many states, but emphasized that states have authority to administer their own programs.
Critics argue the Trump administration’s actions are political. Michael Cannon, a health policy expert at the libertarian Cato Institute, said:
“The Trump administration cannot maintain that this effort has anything to do with maintaining the fiscal integrity of the Medicaid program. There are so much bigger threats to Medicaid’s fiscal integrity, that that argument just doesn’t wash.”
GOP Push for Cuts
Republicans continue targeting immigrant health care spending. Trump’s “One Big Beautiful Bill” will lower reimbursement to states starting October 2026. In California, reimbursement for emergency care for immigrants without legal status will drop from 90% to 50%.
CMS Administrator Mehmet Oz defended the crackdown:
“Every dollar misspent is a dollar taken away from an eligible, vulnerable individual in need of Medicaid. This action underscores our unwavering commitment to program integrity, safeguarding taxpayer dollars, and ensuring benefits are strictly reserved for those eligible under the law.”
State Resistance
States under review insist they are complying with the law.
-
Washington officials said CMS has inundated them with questions about payments for emergency and pregnancy care.
-
Illinois officials requested more time to share data, but CMS denied the extension and warned that funding could be withheld.
Melissa Kula, spokesperson for Illinois’ Department of Healthcare and Family Services, said cuts would devastate residents:
“Thousands of Illinois residents rely on these programs to lawfully seek critical health care without fear of deportation. Any federal cut would be impossible for the state to backfill.”
Leave a Reply