California’s Massive Medicaid Shortfall Would Disappear If It Quit Paying $8B For Illegals’ Health Care
Strange as it sounds, Hillary Clinton was right. In 1993, the then-first lady testified before Congress about the health care package her task force developed and said this about providing benefits to migrants:
We do not think the comprehensive health care benefits should be extended to those who are undocumented workers and illegal aliens. We do not want to do anything to encourage more illegal immigration into this country. We know now that too many people come in for medical care, as it is. We certainly don’t want them having the same benefits that American citizens are entitled to have.
California, among other blue states that have in recent years extended government-funded health coverage to those in the country illegally, has recently found out the truth of Clinton’s words from over three decades ago.
Newsom’s Multibillion-Dollar Bailout
Recently, California Democrat Gov. Gavin Newsom informed the legislature that the state would need to borrow $3.44 billion — the maximum amount permitted by law — to tide the Medicaid program over through the end of March. Days later, Newsom said he would need to raid the state’s general fund by another $2.8 billion to cover the Medicaid shortfall between now and the end of California’s fiscal year. That’s a total of $6.2 billion in Medicaid bailouts just to help carry the program until the end of June.
Newsom’s office claimed the spike in Medicaid costs relates more to broader national trends than to the immigrant program specifically. (States do not receive federal Medicaid matching funds to cover illegal immigrants, except for emergency care, but they can finance these populations with state funds.) Those arguments don’t hold up to close scrutiny on multiple levels.
For starters, other problems that led to the Medicaid overruns — difficulty managing cash flow “because of changes to a tax on certain health care plans,” and much of the increased enrollment by seniors — came from a thinly veiled scam to expand the welfare state in California. As others have explained elsewhere, the state came up with a “creative” and arguably illegal financing mechanism designed largely to bilk the federal government out of additional matching funds. It has used those dollars to finance a removal of Medicaid asset tests — which allow seniors with significant financial assets to receive care on the taxpayers’ dime — and (indirectly) fund the coverage of illegal migrants.
The coverage of migrants accounts for nearly half, or $2.7 billion, of the total $6.2 billion Medicaid shortfall. More to the point: With the migrant coverage now costing a total of $8.4 billion, if California did not cover individuals illegally present in this country, its Medicaid shortfall would not exist at all. All of which raises two obvious questions: Why is California spending $8.4 billion this fiscal year, and an estimated $7.4 billion in the next, to serve as a magnet for unlawful immigration? And will costs really go down next year, as California seems to assume?
Need for Common-Sense Policies
Another deep-blue state, Illinois, has gone in the opposite direction, at least to a certain extent. With costs for its own migrant coverage program skyrocketing, Democrat Gov. J.B. Pritzker froze some new enrollments for taxpayer-funded care in 2023, has imposed copayment requirements, is implementing eligibility redeterminations beginning April 1, and will change eligibility criteria for some “documented” immigrants, resulting in about 6,000 individuals becoming ineligible for the program. (Legally present immigrants can qualify for federally funded Exchange subsidies, so by making them ineligible for state-run Medicaid, Pritzker is effectively shifting costs for some immigrants from Illinois to federal taxpayers.)
The lessons seem obvious: Providing those illegally present with “free” taxpayer-funded benefits results in skyrocketing costs to states, not to mention exacerbating stress at the border. Instead of ending up with a financial mess on their hands, states would be much better off not going down this path in the first place.
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