The Trump administration has extended its tough immigration policy to the public healthcare system, launching investigations into Medicaid spending in at least six Democratic-led states. These states provide comprehensive medical coverage to poor and disabled immigrants living in the country without permanent immigration status.
The Centers for Medicare and Medicaid Services (CMS) are examining payments that cover healthcare for undocumented individuals to ensure there is no misuse, fraud, or abuse, according to public records obtained by KFF Health News and The Associated Press.
While the federal government allows states to bill for emergency services and pregnancy-related care for these immigrants, federal officials have sent letters to state health agencies in California, Colorado, Illinois, Minnesota, Oregon, and Washington notifying them that they are reviewing state and federal payments for other medical services, such as prescription drugs and specialized care.
The federal agency informed states that they are reviewing these claims as part of their commitment to maintaining the financial integrity of Medicaid.
California is the primary target, after the state reported overcharging the federal government for services provided to immigrants without legal status, amounting to at least $500 million, prompting the threat of a lawsuit.
The investigations come as the White House and the Republican-controlled Congress cut public healthcare spending on immigrants through cuts in President Donald Trump’s tax and budget law passed this summer. The administration is also pushing to remove ineligible Medicaid enrollees to uphold citizenship requirements.
Health policy experts warn that these actions could hinder access to healthcare and leave hospitals, clinics, and other providers vulnerable from a financial standpoint.
States led by Democrats like California, Illinois, and Minnesota have already had to reduce or end their Medicaid programs for immigrants due to cost increases. Colorado is also considering cuts due to overspending.
At the same time, 20 states are suing the federal government for providing Medicaid data of millions of beneficiaries to immigration authorities. A federal judge temporarily halted this action. Rob Bonta, California’s attorney general, leading this challenge, argues that the Trump administration is launching a political attack on states that include immigrants in their Medicaid programs.
“The idea of waste, fraud, and abuse is fabricated,” said Bonta. “It’s a pretext. It’s a generic phrase they use to justify their predetermined anti-immigrant agenda.”
The Trump administration seems to be focusing exclusively on states that provide full Medicaid coverage to both children and undocumented adults. For example, Utah, Massachusetts, and Connecticut, which only cover immigrant children, have not received letters. CMS refused to provide a complete list of states under investigation.
Federal officials maintain that it is their legal right and responsibility to examine whether states are misusing Medicaid funds to cover immigrant healthcare and ensure that they are taking “decisive actions to stop it.”
“It’s a matter of national interest that some states have exceeded Medicaid law limits by offering extensive benefits to people illegally in the United States,” said Catherine Howden, CMS spokesperson, referring to the audit in specific states. This scrutiny aims to “ensure that federal funds are reserved for legally eligible individuals, not for political experiments that violate the law.”
Health policy researchers and economists argue that providing healthcare coverage to immigrants for preventive services and treatment of chronic illnesses can prevent future expenses. It also helps contain premium increases and reduces uncompensated care in hospitals and clinics.
Francisco Silva, President and CEO of the California Primary Care Association, warned that the Trump administration is jeopardizing access to healthcare services and increasing costs.
“The impact would be emergency rooms overcrowded, ambulances diverted, and people with real emergencies unable to get into the hospital, as well as public health risks like disease outbreaks,” said Silva.
California has adopted a “healthcare for all” approach and offers health coverage to 1.6 million immigrants without legal status. The expansion, implemented between 2016 and 2024, is estimated to cost $12.4 billion this year. Of that total, $1.3 billion is federally funded for emergency and pregnancy-related services.
During the expansion implementation, California incorrectly billed the federal government for services provided to immigrants without legal status, according to previously unreported details shared by former federal officials with KFF Health News and The Associated Press. The state erroneously charged for services such as mental health and addiction treatment, prescription drugs, and dental care.
Jacey Cooper, who was the Medicaid director in California between 2020 and 2023, detected the error and reported it to federal regulators. Cooper stated that the state has been working to reimburse at least $500 million identified by the federal government.
“Once I identified the problem, I believed it was very important to report it, and we did,” said Cooper. “We take waste, fraud, and abuse very seriously.”
It is unclear if that money has been repaid. The state Medicaid agency says it does not know how CMS calculated the improper payments or “what is included in that amount, what period it covers, and whether it has been repaid or not,” said spokesperson Tony Cava.
California has an extremely complex Medicaid program, serving the largest population in the country—nearly 15 million people—with a budget of almost $200 billion for this fiscal year.
Matt Salo, a national Medicaid expert, said these types of errors occur nationwide, as the program is filled with overlapping rules between state and federal governments. Salo and other analysts agree that states have the authority to manage their Medicaid programs as they see fit and correct the misuse of federal funds.
Michael Cannon, director of health policy studies at the libertarian Cato Institute, stated that the Trump administration’s actions “target a minority that is unpopular with those in power.”
“The Trump administration cannot claim that this effort is about maintaining the financial integrity of the Medicaid program,” said Cannon. “There are much bigger threats to the financial integrity of Medicaid, so that argument does not hold water.”
Nationally, Republicans have targeted healthcare spending for immigrants from various angles.
The Republican Party’s budget law, which Trump calls the “Great and Beautiful Law,” will reduce reimbursements to states starting in October 2026. For example, in California, the federal reimbursement for emergency services for immigrants without legal status will drop to 50%, compared to the current 90% for the Medicaid expansion population, according to Cava.
The Trump administration is also reducing Medicaid coverage for immigrants with temporary legal status who were previously covered and announced in August that it will send monthly reports to states highlighting beneficiaries whose immigration status has not been confirmed by the Department of Homeland Security.
“Every dollar wasted is a dollar taken away from a vulnerable and eligible person who needs Medicaid,” said Mehmet Oz, CMS administrator. “This action underscores our firm commitment to the program’s integrity, protecting public resources, and ensuring benefits are only granted to those eligible by law.”
The states under review claim they are complying with the law.
“Spending money on an authorized medical benefits program that helps people receive emergency treatments for cancer, dialysis, and anti-rejection medications for organ transplants is by no means waste, fraud, or abuse,” said Mike Faulk, deputy communications director for Washington State Attorney General Nick Brown.
Records show that Medicaid officials in Washington have received many questions from CMS about federal payments covering emergency care and pregnancy-related services for undocumented immigrants.
Emails reveal that officials in Illinois met with CMS and requested an extension to share their data. The entity denied their request and warned that their funding could be withheld.
“Thousands of Illinois residents rely on these programs to receive critical medical care without fear of deportation,” said Melissa Kula, spokesperson for the Illinois Department of Health and Human Services, indicating that any federal cuts would be “impossible” for the state to offset.
This story was produced by Kaiser Health News, which publishes California Healthline, an editorially independent service of the California Health Care Foundation.
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