Most shutdowns in Washington are about numbers on a spreadsheet or spending caps. This one is different. The current shutdown, now entering its second week, comes down to a single question: should American taxpayers be forced to pay for Medicaid benefits for illegal immigrants?
Democrats have answered yes. Republicans have answered no.
At the center of the fight is a provision of the Big Beautiful Bill, passed earlier this year, which closed one of Medicaid’s most expensive and abused loopholes. For years, states billed the federal government for Medicaid services provided to illegal immigrants, even though federal law makes them ineligible for the program.
By cutting off this pipeline, the law forced states to fund those services on their own. Democrats now want that provision reversed, and their refusal to compromise has kept the government shut.
California is the clearest example of how this loophole was abused. In 2023, the state budgeted $3.9 billion for health care for illegal immigrants through its Medicaid program. Because Washington reimburses 60-70% of all qualifying Medicaid expenses, federal taxpayers ended up subsidizing the vast majority of those costs.
The same year, California raised its provider taxes—fees on hospitals and nursing homes—by more than triple. Those taxes were immediately returned to the providers in the form of higher reimbursements, creating the appearance of billions in new Medicaid spending.
In reality, the state spent nothing. But on paper, it qualified for billions in federal matching funds, which were then redirected to cover illegal immigrants.
New York has followed the same path. In 2024, Albany approved $2.4 billion in its budget to provide full Medicaid coverage to illegal immigrants under the age of 65. Illinois announced a similar program, offering Medicaid-style benefits to noncitizens over 42.
These programs are funded through the same federal reimbursement structure, which means taxpayers in every state—whether or not they support these policies—are paying the bill.
According to the Centers for Medicare and Medicaid Services (CMS), at least 5 million people who are not eligible remain enrolled in Medicaid rolls nationwide. Improper Medicaid payments—covering everything from duplicate enrollments to ineligible individuals—have cost taxpayers about $30 billion annually.
Over the past decade, total improper payments have exceeded $1.1 trillion. A Wall Street Journal review found that between 2019 and 2021 alone, insurers collected at least $4.3 billion in duplicate payments for individuals enrolled in multiple states at the same time.
Much of the problem stems from the way states manage Medicaid enrollment. While federal law requires states to conduct regular eligibility checks, enforcement has been inconsistent. In many cases, individuals who moved out of state, gained new employment, or no longer met income requirements stayed on the rolls for years.
Audits have also shown that states sometimes lack the data-sharing systems needed to prevent people from receiving benefits in more than one state simultaneously. These gaps create fertile ground for waste, fraud, and abuse.
The Big Beautiful Bill attempts to fix these abuses by requiring strict enrollment integrity standards and preventing states from disguising Medicaid funds for use on illegal immigrants. It also tightens reporting requirements and placed new restrictions on how provider taxes could be recycled to inflate state reimbursements.
By linking federal reimbursement more closely to accurate eligibility verification, the reforms aimed to protect taxpayers while ensuring Medicaid remained available for those who truly qualified.
Democrats have framed their opposition as a defense of health care, but their position is narrower than they claim. The standoff is not about whether Medicaid should exist, but whether it should continue subsidizing health care for illegal immigrants. The Left’s refusal to pass a budget without reversing the law demonstrates that access to these benefits is their line in the sand.
Medicaid was designed to provide health care for low-income Americans, not to bankroll medical costs for those who entered the country illegally. At a time when the program already consumes $800 billion annually—more than 15% of federal spending—tightening eligibility is a basic step toward solvency. Allowing billions to be siphoned into benefits for noncitizens not only drains resources but also undermines public trust in the program.
Shutdowns are disruptive, costly, and politically damaging for both parties. Federal workers go unpaid, services stall, and markets suffer uncertainty. But allowing Medicaid to remain a back door for illegal immigrants is even more damaging in the long term.
When Democrats prioritize coverage for illegal immigrants over keeping the government open, they make clear where their allegiance lies.
Editor’s Note: The Schumer Shutdown is here. Rather than put the American people first, Chuck Schumer and the radical Democrats forced a government shutdown for healthcare for illegals. They own this.
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