Rep. Richard Hudson (R-NC) said that legislation he introduced in February would close the Medicaid loophole that some Democrat-leaning states exploit to provide Medicaid to illegal aliens.
“States are abusing a loophole to funnel federal funds toward Medicaid benefits for those in our country illegally at the expense of hardworking taxpayers. They’re jeopardizing care for our most vulnerable Americans – pregnant women, individuals with disabilities, and the elderly – while incentivizing more illegal immigration,” Hudson said in a written statement to Breitbart News. “It’s far past time Congress passes my Protect Medicaid Act to stop it. No more rewarding those who break our laws on American taxpayers’ dime.”
The Paragon Health Institute and the Economic Policy Innovation Center (EPIC) have explained how California and other Democrat states engage in “money laundering” tactics allowing them to to extend coverage to illegal aliens, despite federal law.
In 2024, California expanded its state Medicaid program, Medi-Cal, to expand coverage to illegal aliens between the ages of 26 and 49.
To cover its expanded population, California “resorted to a money laundering scheme to have federal taxpayers indirectly pay for the state’s largesse,” Paragon Health Institute noted:
California uses most of the $5.2 billion remaining from its money laundering scheme to pay the full cost of Medicaid coverage to illegal immigrants, resulting in health insurance plans wholly paid by the American taxpayer. Federal law prohibits federal Medicaid funds from covering illegal immigrants. Therefore, technically California must pay for this population using state money. However, as this scheme shows, the state directly increased capitation rates to offset the tax, the increased capitation rates are then fully covered by the federal government, and the state can use the equivalent amount of revenue to pay for costs such as Medicaid for illegal immigrants.
California’s Medicaid expansion has cost more than earlier projections because of the significant increase in illegal immigration during the Biden Administration. In 2020, the LAO estimated that expanding Medicaid benefits to illegal immigrants would cost about $3 billion per year and cover 1.15 million people. Today, the Migration Policy Institute estimates there are 2.74 million illegal immigrants in California – although the actual number is likely even higher.
“While the state originally projected it would cost $3 billion per year, California officials recently said the state expects to spend $9.5 billion for illegal immigrants’ Medicaid from FY 2024-2025,” Paragon and EPIC added. “Coincidentally, this is how much funding California has generated since 2023 from the federal government as a result of their enhanced Medicaid insurer laundering scheme.”
Hudson’s Protect Medicaid Act would clarify federal statute to ensure federal funds cannot be used by states to implement Medicaid coverage for illegal aliens.
Sean Moran is a policy reporter for Breitbart News. Follow him on X @SeanMoran3.
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