Millions of Americans across red states are unknowingly helping pay the medical bills for illegal immigrants living in California. Through a mix of state schemes and federal reimbursements, Gov. Gavin Newsom has turned California’s Medi-Cal program into a financial pipeline that reaches far beyond state borders.
California expanded Medi-Cal to cover roughly 1.6 million illegal immigrants, and the costs are surging. Originally projected to cost $6.5 billion, that figure has jumped to $9.5 billion. Newsom has already asked for $6.2 billion in loans to keep up with spending.
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
While California claims responsibility for funding the program, the state is using provider taxes and inflated insurance payments to trigger federal matches. Under the Federal Medical Assistance Percentage formula, Washington sends extra money based on what a state spends. But instead of footing the bill themselves, California taxes its insurers, inflates Medi-Cal costs, and then receives matching funds from the federal government — using other states’ taxpayers to cover the tab.
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
Health policy experts Paul Winfree and Brian Blase call it a money laundering scheme. According to their analysis, this trick could bring California more than $19 billion in federal reimbursements from April 2023 through the end of 2026 without any real state spending.
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
This arrangement violates the intent of Medicaid law, which prohibits illegal immigrants from enrolling in the program. But California has ignored that restriction by declaring immigration status irrelevant for Medi-Cal eligibility, and Washington hasn’t stepped in to stop it.
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
California isn’t the only state pushing this boundary. Oregon has also allowed illegal immigrants to enroll in its Medicaid system. But with California’s massive population and inflated budgets, its share of federal dollars far exceeds that of other states.
Republicans in Congress are now eyeing reforms to the provider tax loophole. Limiting the tactic could save up to $630 billion, according to estimates cited by Winfree. The House Energy and Commerce Committee has already been instructed to identify nearly $900 billion in savings as part of the Trump administration’s broader budget push.
Newsom defended the growing Medi-Cal costs by calling illegal immigrant coverage only a “partial” reason for the shortfall. Still, the governor admitted the state will continue seeking more funding as the crisis grows.
