California’s decision to include illegal immigrants in its Medi-Cal program has set off a wave of criticism as billions in federal dollars pour into the state — with most of that money coming from outside California. Gov. Gavin Newsom’s plan now covers more than 1.6 million noncitizens, and taxpayers from across the country are footing much of the bill.
Newsom’s office has admitted that the exploding cost of Medi-Cal is partly due to the inclusion of people in the country illegally. The cost estimate jumped from $6.5 billion to $9.5 billion, with Newsom requesting two loans totaling $6.2 billion to keep the program afloat. Despite these increases, his administration insists it was anticipated in the January budget.
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
But critics say it’s more than just bad budgeting — it’s fraud. Health experts have outlined how California uses provider taxes to inflate its Medi-Cal expenditures. Insurers are taxed, then reimbursed, creating a paper trail that lets California demand larger matching payments from the federal government.
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
That match — under the Federal Medical Assistance Percentage formula — allows states to draw down federal funds based on how much they spend. But under this system, California can claim it’s spending money without actually using its own funds, instead getting Washington to foot the bill.
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
The Paragon Health Institute report called it a money laundering operation, noting that the funds are being used not just for coverage of illegal immigrants, but even long-term care for wealthy residents, now eligible after Newsom eliminated the Medi-Cal asset test.
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
Sen. Brian Jones, a California Republican, blasted the plan, calling it irresponsible and warning that legal residents are now facing reduced access to care because of the cost. He pointed out that former Gov. Jerry Brown refused to expand Medi-Cal to illegal immigrants for this very reason.
House Republicans are now reviewing proposals to close the loophole and block other blue states from following California’s lead. Even without full repeal, scaling back the practice could save billions.
So far, California and Oregon are the only states openly defying federal Medicaid rules to this extent, but watchdog groups warn others may try similar tactics if the loophole remains open.
