Report: Illegal Immigrants Collected $7 BILLION in Medicaid Payments

Washington is once again at a standstill, but this shutdown is not about budget math or routine partisan squabbles.

At its core, the fight centers on one question that should be obvious: Should Medicaid, a safety-net program designed for low-income Americans, be stretched to cover illegal immigrants? 

Democrats have answered yes, Republicans no—and the standoff has left taxpayers caught in the middle.

The fight began with the passage of the Big Beautiful Bill earlier this year. One of its most important provisions closed a Medicaid loophole that allowed states to pass the cost of illegal immigrant health care onto federal taxpayers. 

That reform required states to fund those services themselves instead of exporting the bill nationwide. 

Democrats are now demanding that this provision be undone, and their refusal to compromise has kept the shutdown going.

California illustrates how large the abuse has become. 

In 2023, the state set aside $3.9 billion in Medicaid funds for medical services for illegal immigrants. 

Because the federal government typically reimburses around 70% of Medicaid spending, taxpayers across the country ended up footing most of that bill. 

To squeeze even more money from Washington, California raised provider taxes on hospitals and nursing homes, then cycled the revenue back through inflated Medicaid payments. 

On paper, the state appeared to spend billions more. In reality, it was a budgetary trick designed to capture federal dollars and shift costs to the rest of the country.

New York followed the same playbook, allocating $2.4 billion in 2024 to extend full Medicaid benefits to illegal immigrants under 65. 

Illinois expanded coverage to noncitizens over 42. 

The strategy is consistent: inflate Medicaid spending, collect federal reimbursements, and redirect money to people who are not legally eligible. 

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