Republicans in Congress are threatening to withhold billions of Medicaid expansion dollars from 14 states that offer state-funded health insurance to undocumented immigrants.
The proposal, included in a spending bill that was advanced Wednesday by the House Energy and Commerce Committee, would force state leaders to choose between backfilling those dollars — perhaps by raising taxes or raiding other parts of the budget — and ending coverage for undocumented people.
The threatened cuts would leave state leaders with huge budget holes they would struggle to fill, health policy experts say.
“It’s a huge cost shift onto states,” said Gideon Lukens, director of research and data analysis for the health policy team at the Center on Budget and Policy Priorities, a left-leaning think tank based in Washington, D.C.
The plan to withhold federal funds to states comes as the Trump administration cracks down on immigration and seeks to block grant funding to states, localities and nonprofits that provide services to people without legal status or that do not fully cooperate with federal immigration enforcement.
Undocumented immigrants do not qualify for Medicaid, the public health insurance program for low-income people jointly funded by states and the federal government.
But 14 mostly Democrat-led states use their own tax dollars to fund comprehensive coverage for undocumented children, according to a recent survey by KFF, a health policy research nonprofit, and the Georgetown University Center for Children and Families. Seven states offer some level of coverage to adults.
The tax and spending package Congress is pursuing through a process called reconciliation would pressure states to scrap those programs by cutting funding for an unrelated group: people covered by Medicaid expansion. That’s adults, mostly citizens, who earn up to 138% of the federal poverty level and were ineligible for Medicaid before Congress raised the income eligibility threshold in 2010.
The federal government currently covers 90% of the cost of health care services provided under Medicaid expansion. Under the bill that advanced Wednesday, starting in 2027 the federal share would drop to 80% in states that either provide undocumented immigrants with comprehensive health benefits or help pay their health insurance bills.
“This would exactly double the Medicaid expansion group costs for states,” Lukens said, “and it would come at a time when states are going to be facing all these other cuts that are proposed in the reconciliation bill.”
California could lose $27.4 billion in federal Medicaid funding in the seven years after the provision kicks in, according to an analysis by Lukens and his CBPP colleagues. New York could lose $15.5 billion over the same period. Smaller states such as Maine and Vermont could lose hundreds of millions of dollars.
And the cuts could end Medicaid expansion entirely in Illinois and Utah, the analysis found. Those states have laws on the books that would end coverage for adults covered under expansion if the federal government reduced its cost share.
About a third of California’s almost 15 million Medicaid enrollees are covered under Medicaid expansion, said Paulette Cha, a research fellow at the Public Policy Institute of California, a think tank based in San Francisco.
“Can we pay double for them? I am going to say it will be hard, and it will be painful,” Cha said.
As state budgets tighten, many state leaders on the right and left are already questioning whether they can afford to continue funding health care coverage for residents who lack legal status.
Expanding coverage to undocumented people has been far more expensive than lawmakers in states such as California, Colorado and Illinois initially anticipated.
California Gov. Gavin Newsom (D) proposed freezing new enrollment of undocumented immigrants in the state’s Medicaid program to help balance the state’s budget.
Illinois Gov. J.B. Pritzker (D) this year proposed ending state-funded coverage for undocumented adults aged 42 to 64 as part of his plan for closing the state’s $3 billion deficit.
“These are people of working age … and have the ability, in many cases — and we’ve seen it — to get a job that has health care associated with it,” Pritzker said in February, according to the Chicago Sun-Times.