Commonsense and Popular Reforms to Preserve and Strengthen Medicaid for Future Generations

Republicans Are Rooting Out Waste, Fraud, and Abuse to Preserve Critical Programs Like Medicaid

“It shouldn’t be available for illegal immigrants. There are people who are ineligible. There are people, able-bodied males who are of working age, there ought to be a work requirement attached to it. These are all reforms to a program that was desperately in need of reform.” – Senate Majority Leader John Thune (R-S.D.)

IN THEIR QUEST TO EXPAND ACCESS TO MEDICAID FOR THOSE WHO ARE NOT ENTITLED TO IT, DEMOCRATS HAVE MADE THE PROGRAM UNSUSTAINABLE

“The Biden administration has enacted several major Medicaid rule changes with giant fiscal costs,” including a rule finalized in 2024 that keeps people on Medicaid “when they are no longer eligible,” while restricting the times “when states may verify changes in eligibility.” (Paragon Health Institute: Biden’s Medicaid Changes: High Costs, Misguided Policy – 11/6/24)

“Per the Congressional Budget Office, federal outlays on the program have been positively soaring, from $409 billion in 2019 to $615 billion in 2023, and projected to hit $655 billion in 2025. That’s a 50% jump from 2019 to 2023, and 60% to 2025.” (New York Post: Editorial: ‘Deadly’ GOP ‘cuts’ don’t even touch Medicaid’s 50% growth since 2019 – 6/3/25)

“Over the last decade, Medicaid has outpaced the growth of the other two largest federal entitlement programs: Social Security and Medicare.” (Cato Institute: Medicaid Is Driving Deficits: Republicans Are Scarcely Tapping the Brakes – 5/13/25)

The federal Medicaid program spent $1.1 trillion in improper payments from 2015 to 2024, according to the Paragon Health Institute and the Economic Policy Innovation Center. (Paragon Health Institute: $1.1 Trillion of Federal Medicaid Improper Payments Over Last Decade – 3/5/25)

Following Democrats’ expansion, Medicaid enrollment and costs have exploded:

(Paragon Health Institute: Medicaid is No Longer for the Poor – accessed 6/15/25)

SENATE REPUBLICANS’ RECONCILIATION BILL PUTS MEDICAID ON A MORE FISCALLY STABLE TRAJECTORY SO IT WILL BE THERE FOR AMERICANS WHO NEED IT

Republicans’ bill establishes work requirements for able-bodied adults who don’t have dependent children 14 years of age or younger, or a disabled individual in their care. (U.S. Senate Committee on Finance: Chairman Crapo Releases Finance Committee Reconciliation Text – 6/16/25)

The bill roots out waste, fraud, and abuse by removing ineligible enrollees and addresses the provider tax, which has ballooned the cost of Medicaid by allowing states to game the system and inflate costs. (U.S. Senate Committee on Finance: Chairman Crapo Releases Finance Committee Reconciliation Text – 6/16/25)

“In its final year, the last Administration approved four waivers that exploit this tax loophole, submitted by California, Michigan, Massachusetts, and New York. Together, these four states are responsible for more than 95% of projected federal taxpayer losses under the loophole.” “A CMS estimate shows that if just two more states adopt these schemes each year, excess federal costs could balloon more than $74 billion over 5 years.” (Center for Medicare and Medicaid Services: CMS Moves to Shut Down Medicaid Loophole—Protects Vulnerable Americans, Saves Billions – 5/12/25)

Republicans’ reconciliation bill removes noncitizens from Medicaid and addresses the issue of illegal immigrants receiving state Medicaid coverage. (U.S. Senate Committee on Finance: Chairman Crapo Releases Finance Committee Reconciliation Text – 6/16/25)

“Medicaid is not, and cannot be, a backdoor pathway to subsidize open borders. States have a duty to uphold the law and protect taxpayer funds. We are putting them on notice—CMS will not allow federal dollars to be diverted to cover those who are not lawfully eligible.” – U.S. Centers for Medicare & Medicaid Services Administrator Dr. Mehmet Oz

EVEN BLUE STATES ARE REALIZING PROVIDING BENEFITS TO ILLEGAL IMMIGRANTS IS UNSUSTAINABLE

“If this is cruel, then Democrats should also haul up Gavin Newsom and J.B. Pritzker. Those California and Illinois Democrats are seeking to scale back their health coverage for illegals because of ballooning costs, and free health insurance is a welfare magnet.” (The Wall Street Journal: Editorial: The Mediscare Campaign, CBO Version – 6/5/25)

Last month, California Gov. Gavin Newsom (D) moved to freeze enrollment of illegal immigrants in the state’s health care program due to budget issues: “Gov. Gavin Newsom… called for California to scale back health care coverage for undocumented immigrants to help balance the state budget, retrenching on his desire to deliver ‘universal health care for all.’” (The New York Times: Newsom Proposes Scaling Back Health Care for Undocumented Immigrants in California – 5/14/25)

“Newsom’s plan in his 2025-26 budget has called for freezing enrollment for undocumented adults to receive the full scope of the state’s Medicaid program, known as Medi-Cal.”

(NBC News: Democratic governors seek to roll back state-funded health care for undocumented immigrants – 6/11/25)

“Gov. JB Pritzker’s positioning of Illinois as a sanctuary state, a welcoming port for immigrants from across the globe, hit the hard reality of state budgeting this spring.” (The Associated Press: Illinois mulls ending a health program for some immigrants living in the US illegally – 5/19/25)

“[F]acing a budget shortfall for the upcoming fiscal year, Pritzker’s proposed $55.2 billion fiscal plan would cut part of a four-year-old program providing health coverage to some adults regardless of immigration status.” (The Associated Press: Illinois mulls ending a health program for some immigrants living in the US illegally – 5/19/25)

“In proposing to end the program, Pritzker noted the working-age adults that it covers can get jobs with employer-sponsored health benefits.” (Capitol News Illinois: State on track to end health coverage program for immigrant adults – 5/13/25)

Progressive governors around the country have extended state-funded healthcare to undocumented immigrants, aiming to get closer to universal insurance coverage.

Now, some are being forced to roll back or freeze the programs because of budget woes and unexpectedly high enrollment.

California Gov. Gavin Newsom has proposed freezing enrollment of undocumented adults into the state’s Medicaid program for the poor and disabled. Instead of receiving essentially free coverage, those already enrolled would be required to pay $100 monthly premiums starting in 2027. Newsom floated his proposal after the state program, Medi-Cal, went $6.2 billion over budget this year.

Illinois Gov. JB Pritzker recently signed off on a state budget that cut funding for health coverage of undocumented adults ages 42-64. Benefits will end for that group at the end of June. The program was initially expected to cost $112 million annually, but quickly ballooned to a projected $800 million a year that was “unsustainable,” a spokesman for Pritzker said.

Minnesota Gov. Tim Walz, the former Democratic vice presidential nominee, agreed to end a health insurance program for undocumented adults in a deal with state Republicans to pass a new budget this month.

And in Washington, D.C., Mayor Muriel Bowser has proposed phasing out coverage for undocumented people over the age of 21.

After ambitiously expanding health programs to undocumented adults during the pandemic, some states are grappling with far higher-than-expected costs and dwindling budget reserves that had been buoyed by federal dollars related to Covid-19.

“State leaders are responding to a sort of dire fiscal uncertainty,” said Leonardo Cuello, a research professor at Georgetown University McCourt School of Public Policy’s Center for Children and Families. “I don’t think any of these states have changed their policy goals or what they value—I just think they are in a kind of economic perfect storm.”

Medicaid programs are funded by a mix of state and federal dollars. But states are barred by law from using federal funds to cover undocumented immigrants, placing the entire burden for covering them on states. And unlike the federal government, which often relies on deficit spending, states have to balance their budgets, leaving less wiggle room in tight economic times.

Some governors blamed President Trump’s economic policies, such as tariffs, for slowing down their economies. Meanwhile Medicaid is on the table in the tax-and-spending bill known as the “One Big Beautiful Bill Act” with the Senate proposing even deeper cuts than the House version. The bill would also cut federal matching funds for states that provide health benefits to undocumented immigrants.

Pritzker “believes that healthcare is a right and we should protect the most vulnerable,” but that “passing a balanced budget required the difficult decision that reflects the reality of Trump and Republicans tanking our national economy and attempting to strip away healthcare,” a spokesman for the governor said.

Minnesota’s Walz has told reporters that ending the program for adults was the only way Republicans would agree to a budget deal after a special election in March split control of the state’s House of Representatives evenly between the Democratic–Farmer–Labor Party and Republicans. He has also taken credit for exempting children from the cuts, which he said was a red line for him.

The late Rep. Melissa Hortman—former speaker of the House who was murdered in her home this weekend—was the only House DFL member to vote with Republicans in repealing coverage for undocumented adults under the state’s MinnesotaCare program. She had said she voted in favor of it despite continuing to support the program, but had her hand forced by Republicans threatening to shut down the government.

“It’s inhumane and counterproductive from a cost standpoint,” Hortman said in an interview last week, adding that providing health insurance would save money in the long run by reducing the amount of uncompensated hospital care that the state pays for.

When Minnesota expanded coverage in 2023, the state had an $18 billion surplus, but by the beginning of this year was looking at a long-term deficit of $6 billion. The state originally estimated that 7,700 undocumented people would sign up once it went into effect Jan. 1, 2025, but as of April 24, more than 20,000 people had signed up, says Rep. Jeff Backer, the Republican co-chair of the Minnesota House’s health finance and policy committee.

“Our healthcare system in Minnesota, just like a lot of states, is fragile,” Backer said in an interview. “We need to prioritize our law-abiding, taxpaying Minnesotans first.”

Illinois began extending health insurance to undocumented people in 2020, starting with seniors aged 65 and older and by 2023 it was covering adults aged 42 and up. In 2023, enrollment reached nearly 69,800, or double what originally projected, according to the state’s auditor general. Spending from 2021 to 2023, was $897.6 million, or 2.5 times original projections.

“As the budgets tightened, this was crowding out other programs,” said Illinois Republican and Senate Minority Leader John Curran, who opposes coverage of undocumented immigrants, in an interview.

California expects its general fund spending on undocumented healthcare to be $10.8 billion in its next fiscal year, up nearly 50% from the governor’s original budget. About 1.7 million undocumented immigrants are covered under the program.

Some public opinion polls show shrinking support among Californians for covering undocumented immigrants amid the state’s budget crunch. A recent poll by the Public Policy Institute of California found that 58% of adults oppose providing the coverage, whereas majorities had supported the idea in surveys from 2015 to 2023.

“At the top of everyone’s mind is how expensive it is to live in the state,” Republican California State Sen. Suzette Martinez Valladares said in an interview. “My constituents feel like California is not prioritizing the needs of working families, and when it comes to spending money on healthcare for undocumented immigrants, a lot of my constituents tell me that they don’t think it’s fair. ”

Newsom’s proposal to freeze the program is opposed by immigrant-rights groups and some lawmakers who have proposed finding funding for the program by instituting new taxes.

“There is no way to make these cuts without hurting people,” said Amanda McAllister-Wallner, executive director of Health Access California, a nonprofit group that has campaigned for the undocumented expansion.

Write to Joseph Walker at joseph.walker@wsj.com

A trio of states with Democratic governors viewed as potential 2028 presidential candidates have taken steps in recent weeks to freeze or cut government-funded health care coverage for undocumented immigrants.

Democratic Govs. Gavin Newsom of California, JB Pritzker of Illinois and Tim Walz of Minnesota have largely attributed the proposals to budget shortfalls stemming from original plans to expand health care to immigrants without legal status.

But the moves also occur against the backdrop of broader debate within the Democratic Party over how to handle immigration, an issue that dragged it down in the last election and that President Donald Trump and the GOP have continued to try to capitalize on.

The plans, which would scale back health care coverage for undocumented immigrants in the three Democratic-led states just years after it was expanded, have angered progressives and immigrant advocacy groups, who warn the party risks alienating its base — particularly as protests against Trump’s deportation plans break out around the country.

The latest development came in Minnesota on Tuesday, after both chambers of the Legislature passed a bill to end state-funded health care for undocumented adults.

The bipartisan effort advanced through the state House, which is evenly divided, and the Democratic-controlled Senate as part of attempts to balance the state budget. It now goes to Walz, who has said he’ll sign it.

The bill would end undocumented adults’ eligibility for MinnesotaCare — the state-funded health insurance program for low-income residents — effectively reversing one of the signature policy wins Walz secured during a landmark legislative session in 2023, when Democrats were in full control of state government. Undocumented children would remain eligible to enroll in the program under the legislation.

In California, Newsom unveiled a budget plan last month that would cut back on health care benefits for undocumented immigrants — a stark reversal from his promises of universal health care for all the state’s residents, regardless of their immigration status.

Newsom’s plan in his 2025-26 budget has called for freezing enrollment for undocumented adults to receive the full scope of the state’s Medicaid program, known as Medi-Cal. Newsom’s office has said the changes would apply only to new applicants over age 19, that existing enrollees wouldn’t be kicked off their plans and that the freeze, which would begin next year, wouldn’t apply to people enrolled in limited plans.

Newsom’s proposed changes also included a new $100 monthly premium for adults 19 and older with “unsatisfactory immigration status” beginning in 2027.

His expansion of Medi-Cal has cost far more than his administration anticipated. Newsom has said the changes will help to balance the state’s budget, which has run a multibillion-dollar shortfall that he has blamed on Trump’s tariffs, as well as growing costs from higher enrollment in Medi-Cal.

Meanwhile, Illinois remains on track by the end of the month to end a program — called Health Benefits for Immigrant Adults — that provides state-funded health care coverage for more than 30,000 low-income adults who are living in the state without documentation.

Similarly, the program in Illinois was more expensive than expected when it was created in 2021. Pritzker’s latest budget, which the Democratic-led Legislature passed last month, proposed eliminating it by July 1.

At least four other states offer some type of health care coverage to adults, regardless of their immigration status. Several more offer health care coverage for children, regardless of their immigration status, as California, Illinois and Minnesota will continue to do if the new plans go into effect.

While the moves would help California, Illinois and Minnesota states recalibrate their budgets, a sweeping Trump-backed domestic policy bill moving through Congress proposes slashing Medicaid funding for states that provide health care coverage to undocumented immigrants. Trump also signed an executive order this year targeting undocumented immigrants’ access to government assistance programs.

In response to questions from NBC News, Newsom spokesperson Elana Ross reiterated his statement in his initial announcement of the changes last month that “instead of rolling back the program — meaning cutting people off for basic care — we’re capping it.”

Pritzker’s office said in an email that “this year, passing a balanced budget required the difficult decision that reflects the reality of Trump and Republicans tanking our national economy and attempting to strip away healthcare.”

A Walz spokesperson didn’t respond to questions about Minnesota’s plan, which was the result of a compromise after Republican lawmakers had pushed to end the entire MinnesotaCare program.

“No one got everything they wanted,” Walz said last month after he reached a tentative deal with Republicans on the budget, which was finalized in a special session this week. “There were very difficult conversations about issues that were very dear to each of these caucuses. But at the end of the day, we were able to come to this agreement.”

Blowback from the left

Immigrant advocacy groups have panned the moves, saying they risk further imperiling the broader health care system, and blasted Democrats for succumbing to Trump’s attacks.

“We urge state leaders to build on their progress, rather than placing the health of their residents at risk,” said Tanya Broder, the senior counsel for health and economic justice policy at the National Immigration Law Center. “Particularly as extremist politicians scapegoat and target immigrants, we are counting on state officials to do the right thing and hold the line.

“As states increasingly have recognized, a community’s health and well-being depend on ensuring that everyone has access to health care. Immigrants pay billions of dollars in federal, state and local taxes, yet many are excluded from critical health care programs,” she added. “Terminating state coverage for immigrants will compromise our collective health, as well as the health care infrastructure that serves all of us.”

Some progressives questioned whether the moves were part of a broader strategy by the three governors to move to the right on the broader issue of immigration, which polling has shown still remains one of Trump’s strongest issues.

They said they could face a backlash from their base by departing from positions on supporting immigrant communities and expanding health care.

“It really feeds into the conservative narrative that undocumented immigrants are a drain on our communities,” said Jennifer Driver, a senior director at the State Innovation Exchange, a progressive legislative policy group. “This assumption that by moving more to the middle or to the right that you’re going to recruit some people back — I think it’s a miscalculation.

“The frustration that you’re seeing in the Democratic base is due to this kind of this waffling, this kind of idea that ‘OK, yes, we are progressive — but only in some moments,’” Driver added.

Other strategists suggested it remained too early to gauge whether a broader shift was in play as governors and other lawmakers positioned themselves for potential 2028 White House bids, and they emphasized that the threats blue states face from Trump are serious.

“The Trump administration is squeezing the hell out of states,” said Jeff Blodgett, a Minnesota-based Democratic strategist who was a campaign manager for the late Sen. Paul Wellstone and the state director for both of Barack Obama’s presidential campaigns. “There’s just a lot of concern about current and future budgets given what the federal government is doing to states.”

On May 23, Phil Galewitz and Christine Mai-Duc reported for KFF Health News that President Donald Trump’s signature budget legislation would penalize 14 states that offer health coverage to unauthorized immigrants. “The states, most of them Democratic led, provide insurance to some low-income immigrants, often children, regardless of their legal status. Advocates argue the policy is both humane and ultimately cost-saving.”

Galewitz and Mai-Duc wrote that the federal legislation would slash federal Medicaid reimbursements to those states by billions of dollars annually unless they roll back the benefits.

The bill narrowly passed the House on Thursday. It makes substantial spending cuts to Medicaid that congressional budget scorekeepers say will leave millions of low-income people without health insurance, KFF Health News noted.

“The cuts, if approved by the Senate, would pose a tricky political and economic hurdle for the states and Washington, D.C., which use their own funds to provide health insurance to some people in the U.S. without authorization.

Those states would see their federal reimbursement for people covered under the Affordable Care Act’s Medicaid expansion cut by 10 percentage points. The cuts would cost California, the state with the most to lose, as much as $3 billion a year, according to an analysis by KFF.”

Two states, Galewitz and Mai-Duc reported, Utah and Illinois, have “trigger” laws that terminate their Medicaid expansions if the feds reduce their funding match. That means unless those states either repeal their trigger laws or stop covering people without legal immigration status, many more low-income Americans could be left uninsured.

“The penalty for covering people in the country without authorization is one of several ways the House bill cuts federal Medicaid spending.

The legislation would shift more Medicaid costs to states by requiring them to verify whether adults covered by the program are working. States would also have to recertify Medicaid expansion enrollees’ eligibility every six months, rather than once a year or less, as most states currently do.”

Washington — House Republicans made a number of last-minute changes to the legislation containing President Trump’s second-term agenda in order to win over opposing factions in the GOP. And, after an all-night session, the measure, entitled the “one big, beautiful bill,” squeaked through by a single vote.

It’ll now go to the Senate, which will leave its own mark on the bill. But here’s what’s in the legislation that was passed by the House Thursday.

Tax cuts and extensions

At the center of the legislation — and accounting for its biggest expense — are the provisions extending Mr. Trump’s 2017 Tax Cuts and Jobs Act. With the cuts slated to sunset at year’s end, the extension and new tax cuts have been a key priority for congressional Republicans and the White House.

Beyond the 2017 tax cuts, the legislation includes a number of tax cuts that the president touted on the campaign trail. It includes no taxes on tips for workers in the service industry, like those who work at restaurants and bars, as well as people who work in the beauty industry. But it’s a temporary exemption that expires at the end of 2028. The package also includes no taxes on overtime through 2028. And the new legislation would allow tax deductions on up to $10,000 in interest on auto loans for cars assembled in the U.S. This provision would be in place until 2029.

The bill would also eliminate a longstanding $200 tax on gun silencers, which has been on the books since Congress passed the National Firearms Act in 1934.

And among the bill’s provisions is a temporary $500 increase in the child tax credit, bringing it to $2,500 through 2028.

The package also includes a tax on remittances, imposing a tax on cash payments sent by non-U.S. citizens to family members in their home countries. Though the bill initially would have subjected individuals to a 5% excise tax, the managers amendment, which contained the updates to the bill, lowered the tax to 3.5%.

Medicaid restrictions

The legislation includes changes to Medicaid, a popular entitlement program that provides government-sponsored health care for low-income Americans — imposing work requirements for able-bodied adults without children, more frequent eligibility checks, cutting federal funds to states that use Medicaid infrastructure to provide health care coverage to undocumented immigrants and banning Medicaid from covering gender transition services for children and adults.

The amendment speeds up the implementation of the work requirements from Jan. 1, 2029, to no later than Dec. 31, 2026, a change sought by hardliners. The work requirements would apply to Medicaid recipients without disabilities between the ages of 19 and 64 who are childless.

Increasing the State and Local Tax Deduction, or SALT

Also included in the package is an increase to the cap on the State and Local Tax Deduction, which was imposed by the 2017 Trump tax law and currently stands at $10,000.

Before the rule, taxpayers could deduct all their state and local taxes from their federal taxes, which some policymakers have said mainly benefits wealthy homeowners in states with high taxes, such as New York and California. But advocates for increasing the caps argue that the $10,000 cap is increasingly impacting middle-class homeowners who live in regions where property taxes are rising.

The package initially included a $30,000 cap, but blue-state Republicans threatened to withhold their support, and they ultimately reached an agreement with leadership to increase the deduction to $40,000 per household for incomes up to $500,000.

Border security funding

Though the bulk of the funding allocated in the legislation goes toward tax cuts, it also includes resources for border security and defense. Among the bill’s provisions is $46.5 billion for the border wall, $4.1 billion to hire Border Patrol agents and other personnel and more than $2 billion for signing and retention bonuses for Border Patrol agents. It also includes an additional $1,000 fee for people who are filing for asylum in the U.S.

The amendment to the legislation added an additional $12 billion for expenses related to border security.

$1,000 “Trump accounts” for child savings

The legislation also creates $1,000 savings accounts for children, which were originally titled “MAGA accounts” — Money Accounts for Growth and Advancement. The name has been updated to “Trump accounts.” Under the plan, the federal government will contribute $1,000 to the accounts of children born between 2024 and 2028. Parents can contribute up to $5,000 a year. The funds, which can begin to be distributed once the child turns 18, can be used for higher education, job training and the purchase of their first home.

While income on the accounts can grow on a tax-deferred basis, distributions for qualified expenses, like those mentioned above, would be taxed at a long-term capital gains rate. Another type of education savings vehicle, 529 accounts, enables parents to save and grow the accounts on a tax-deferred basis, too, but the money can be withdrawn for specific education-related expenses tax-free.

Restrictions on food stamps

The package also raises the upper age requirement for able-bodied adults without children to qualify for benefits under the Supplemental Nutrition Assistance Program, also known as SNAP, or food stamps. Currently, in order to qualify, able-bodied adults between 18-54 must meet work requirements. The House bill would update the age requirement to 18-64 and would also shift more of the costs to states.

Rolling back clean energy programs

The bill would also roll back some of the clean energy tax credits under the Biden-era climate and health care law, like an earlier phasing out of a tax break for clean energy vehicles. A late addition to the bill would move up the timeline to end tax credits for new renewable energy power plants as well, requiring them to begin construction within 60 days of the enactment of the legislation and be in service by the end of 2028. The measure makes an exception for nuclear plants, which must be under construction by the end of 2028.

The legislation also adds annual federal registration fees for EV and hybrid car owners: $250 for electric vehicles and $100 for hybrids.

Addressing the debt limit

With a major deadline to address the debt limit on the horizon, the legislation would raise the debt ceiling by $4 trillion.

Treasury Secretary Scott Bessent has urged Congress to address the debt limit by mid July, warning that the U.S. could be unable to pay its bills as soon as August without action. Congressional Republicans added the debt ceiling to the larger budget package to bypass negotiating with Democrats on the issue, since the budget legislation can move forward in the Senate without support from across the aisle.

Editor’s note: This story has been updated to better reflect the terms of the Medicaid work requirements.