Of all of the finger-pointing and recriminations that include the present federal authorities shutdown, one of the putting components is that the Trump administration blames it on Democratic help for granting taxpayer-funded healthcare protection to undocumented immigrants. The White Home has known as out California particularly, saying the state exploits a authorized “loophole” to pay for that protection with federal {dollars}, and different states have adopted go well with.
“California utilized an egregious loophole — since employed by a number of different states — to attract down federal matching funds used to offer Medicaid advantages for unlawful immigrants,” the White Home mentioned in a coverage memo launched Wednesday as a funds stalemate compelled a shutdown of the U.S. authorities.
The administration mentioned that the Working Households Tax Reduce Act, which works into impact in October 2026, closes the loophole by prohibiting the usage of taxpayer cash to offer healthcare protection to undocumented immigrants and different noncitizens.
Within the memo, the White Home accused congressional Democrats of eager to repeal these coverage reforms as a situation to maintain the federal government operating.
Izzy Gardon, a spokeswoman for Gov. Gavin Newsom, mentioned there’s nothing to the administration’s underlying assertion that California and different states have discovered some kind of loophole that allows them to funnel Medicaid cash to noncitizens.
“That is false — CA doesn’t do that,” Gardon mentioned in a one-line e-mail to the L.A. Occasions.
Healthcare coverage specialists agree. California shouldn’t be exploiting a “loophole,” mentioned Adriana Ramos-Yamamoto, a senior coverage analyst on the California Price range & Coverage Heart, a nonprofit, nonpartisan group that research inequality.
“The state is making lawful, clear funds selections to spend money on well being protection with its personal {dollars},” Ramos-Yamamoto mentioned in a press release to The Occasions. “These investments enhance well being outcomes, strengthen communities, and decrease well being care prices in the long term.”
At challenge is Part 71117 of the Republican-backed “One Huge Lovely Invoice Act,” which imposes practically $1 trillion in reductions to federal Medicaid healthcare spending for low-income Individuals over the subsequent 10 years. The supply permits states “to finance the non-federal share of Medicaid spending via a number of sources, together with state normal funds, healthcare associated taxes (or ‘supplier taxes’), and native authorities funds,” so long as taxes on healthcare suppliers are imposed uniformly in order to not unfairly burden suppliers of Medicaid companies.
The underside line, analysts mentioned, is the administration is citing an issue with the legislation that doesn’t appear to exist, a minimum of not in California.
“The so-called California loophole references a provision within the legislation that ends a waiver of the uniformity necessities for supplier taxes — this provision has nothing to do with utilizing federal funds to pay for look after undocumented immigrants,” mentioned Jennifer Tolbert, a healthcare professional on the nonprofit healthcare analysis, polling and information group KFF.
“However the White Home makes the declare that California makes use of the cash they get from the supplier tax to pay for look after undocumented immigrants,” Tolbert mentioned.
Reality-checking the administration’s declare is all of the harder as a result of there aren’t any official knowledge on how states spend cash collected from supplier taxes, Alice Burns, one other KFF analyst, added. What’s extra, California is amongst a number of states that supply some stage of Medicaid protection to all immigrants no matter standing. And since California can’t be federally reimbursed for healthcare spending on people who find themselves not within the nation legally, these bills should be coated on the state stage.
The White Home memo goes on to say that if Democrats have been to succeed at repealing the provisions within the Working Households Tax Act, the federal authorities must spend an extra $34.6 billion in taxpayer cash “that will proceed to primarily be abused by California to fund healthcare for unlawful immigrants.”
This assertion additionally misconstrues the details, based on KFF.
“What we do know is that the $35 billion in financial savings that’s referenced within the White Home Reality Sheet refers back to the federal authorities’s estimated financial savings … ensuing from states making adjustments to their supplier tax methods,” KFF spokesperson Tammie Smith mentioned. That’s, the projected financial savings aren’t linked to healthcare for immigrants residing within the U.S. illegally.
Political squabbling apart, California’s method to medical protection for low-income, undocumented immigrants is about to endure a significant shift due to provisions within the 2025-26 state funds that the Democrat-led legislature and Newsom permitted in June.
Beginning on Jan. 1, adults “who don’t have Passable Immigration Standing (SIS)” will not be capable of enroll in Medi-Cal, California’s Medicaid program, based on the state’s Division of Well being Care Companies webpage. Those that have already got this protection can preserve it and proceed to resume their enrollment. And beginning on July 1, Medi-Cal enrollees who’re age 19-59, undocumented and never pregnant must pay a $30 month-to-month premium to maintain their protection.
The adjustments, which Newsom known as for within the spring to offset a ballooning Medi-Cal funds deficit, drew criticism from some immigrant rights teams, with the California Immigrant Coverage Heart describing the strikes as “discriminatory.”
“In gentle of the militarized mass immigration raids and arrests inflicting worry and chaos throughout California, we’re disenchanted that the governor and the management within the Legislature selected to undertake a state funds that makes our communities much more susceptible,” Masih Fouladi, the middle’s government director mentioned on the time.
Everybody in California who qualifies for Medi-Cal will nonetheless be eligible to obtain emergency medical and dental care, irrespective of their immigration standing.
