Republicans say California utilizing loophole to get fed funds for immigrant healthcare

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Democrats wish to take away a provision of Trump's One Large Lovely Invoice Act (OBBA) earlier than reopening the federal government, however Republicans argue the road merchandise they need eliminated is permitting California to make use of a "loophole" to attract down funds from the federal authorities to assist pay for the state's ballooning value of healthcare for unlawful immigrants.

The White Home launched a memo on Wednesday through the first day of the federal government shutdown battle indicating Democrats wish to repeal Trump reforms in his "massive, stunning invoice" that aimed to shut this alleged backdoor tactic. Nonetheless, California Gov. Gavin Newsom's workplace and left-leaning well being coverage specialists insist claims that California is utilizing this tactic are usually not true.

"When Democrats say, as they hold saying, that there isn't a federal cash or any taxpayer cash going for unlawful immigrant healthcare as a result of it is unlawful and barred by federal legislation, it is merely not true," stated Steve Hilton, a former Fox Information host now working to switch Newsom as governor of California.

Hilton claimed that California has been utilizing a posh Medicaid provision often called a "supplier tax" to acquire matching federal {dollars}, which then will get pooled into the cash utilized by the state to pay for its healthcare provided to undocumented immigrants.

WHITE HOUSE MEMO SAYS DEMOCRATS' PLAN COULD SPEND $200B ON HEALTHCARE FOR ILLEGAL IMMIGRANTS

<source media="(min-width: 768px) and (max-width: 1023px)" srcset="https://a57.foxnews.com/static.foxnews.com/foxnews.com/content/uploads/2025/08/672/378/illegal-immigrants-health-care-benefits-public-immigration.jpg?ve=1&tl=1, https://a57.foxnews.com/static.foxnews.com/foxnews.com/content/uploads/2025/08/1344/756/illegal-immigrants-health-care-benefits-public-immigration.jpg?ve=1&tl=1 2x" height="378" width="672"><source media="(min-width: 1024px) and (max-width: 1279px)" srcset="https://a57.foxnews.com/static.foxnews.com/foxnews.com/content/uploads/2025/08/931/523/illegal-immigrants-health-care-benefits-public-immigration.jpg?ve=1&tl=1, https://a57.foxnews.com/static.foxnews.com/foxnews.com/content/uploads/2025/08/1862/1046/illegal-immigrants-health-care-benefits-public-immigration.jpg?ve=1&tl=1 2x" height="523" width="931"> California is being accused of using a Medicaid "loophole" to attract down federal funds to assist pay for the ballooning value of unlawful immigrant healthcare. (Getty/iStock)

"If [federal dollars] are funding non-emergency healthcare for ineligible immigrants, the only real trigger is supplier taxes," Michael Cannon, a well being coverage skilled on the CATO Institute instructed Fox Information Digital.

Cannon, nonetheless, advised Republicans shot themselves within the foot by selecting solely to restrict the scope of eligibility round supplier tax funds within the OBBBA, saying no extra might go to states offering unlawful immigrants healthcare, and they need to have simply quashed them altogether.

"What they did was that Republicans preserved the flexibility of states to make use of supplier taxes to fund healthcare for undocumented immigrants utilizing Medicaid," he argued.

Nonetheless, Newsom's workplace insisted to the Los Angeles Occasions that the declare California is using a supplier tax "loophole" to fund illegal immigrant healthcare is just not true. It's successfully unattainable to make a dedication by hook or by crook as a result of states don't hold information on how supplier tax funds from the federal authorities are spent.

"That is false — CA doesn't do that," Gardon stated in a one-line e mail to the LA Occasions. Newsom's workplace didn't reply to Fox Information Digital's request for remark in time for publication.

FED AUDIT, EMERGENCY MEDICAID UNDERCUT DEMS ON ILLEGAL IMMIGRANT HEALTH COVERAGE

California Gov. Gavin Newsom throughout a invoice signing occasion associated to redrawing the state’s congressional maps Aug. 21, 2025, in Sacramento, Calif. (Justin Sullivan/Getty Pictures)

Different healthcare coverage specialists agree as nicely that this isn't occurring.

"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 take care of undocumented immigrants," Jennifer Tolbert, a healthcare skilled on the nonprofit healthcare analysis 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 take care of undocumented immigrants."

Chris Pope, a well being coverage skilled from the Manhattan Institute, argues California can also be utilizing emergency care claims to attract down much more funds to assist pay for its ballooning value of being the primary state within the nation to supply complete healthcare protection for anybody no matter their immigration standing.

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Supporters of single-payer well being care march in Sacramento, Calif. (Wealthy Pedroncelli, File/AP Photograph)

Federal legislation doesn't allow federal funds for use for non-emergency medical take care of unlawful immigrants, however it doesn't prohibit them from getting used for emergency take care of these people.

"The large and open-ended discretion Medicaid offers states to assert federal funding makes it exhausting for the feds to make sure that this system’s expenditures are reserved for its supposed functions," Pope wrote in an Op-Ed for the New York Publish Friday. "Till that modifications, the Democratic declare that federal cash isn’t getting used on unlawful immigrants is just not true."