The Donald Trump administration is making headlines again, but this time it’s about Medicaid. The target is that the administration claims that over $1 billion in federal Medicaid money has been misused by some blue states to provide healthcare to illegal immigrants.
A preliminary audit by the Centers for Medicare and Medicaid Services (CMS) found that between 2024 and 2025, several states allegedly spent a combined $1.3 billion in federal Medicaid funds on healthcare for undocumented immigrants. The largest share reportedly came from California, which spent more than $1.3 billion of those federal funds on such services. Not far behind are Illinois, Oregon, Washington, D.C., and Colorado with tens of millions each.
It’s a hectic time with midterm elections looming. Dr. Mehmet Oz, who now runs CMS, told Fox Business:
“We’re actually clawing that money back from those states (…) but the fact (…) is very frustrating.”
Federal Medicaid funds are legally barred from covering non-emergency healthcare services for undocumented immigrants. However, emergency treatments are an exception as states can provide them regardless of a person’s citizenship status. Plus, many of these blue states have state-funded programs to cover healthcare services for undocumented residents, which don’t use federal money.
🚨 WOW! Dr. Oz, the new administrator of Medicare, says they’ve found BILLIONS in fraud already, and set up a war room to uncover it all
“If you thought USAID was bad… this will make you shiver.”
We need to do more than just cut the fraud. We must ARREST the fraudsters pic.twitter.com/gf17897He9
— Nick Sortor (@nicksortor) April 25, 2025
Emily Hilliard, a spokesperson for the Department of Health and Human Services (HHS), said,
“Protecting Medicaid from waste, fraud, and abuse isn’t optional—it’s the law. Every dollar misspent on illegal health care spending is a dollar taken from vulnerable Americans. (…) The Trump Administration won’t tolerate it.”
But as expected, California Governor Gavin Newsom‘s office has pushed back. They are saying that their programs are funded by the state (not federal Medicaid) and cover healthcare for illegal immigrants, which is very much allowed. So, this has now become a bipartisan political tug-of-war over healthcare and immigration policies.
RELATED: Dr. Oz Says ‘Prove You Matter’ to Get Medicaid, Critics Slam ‘Cruel’ New Work Requirements
Centers for Medicare and Medicaid Services Administrator Dr. Mehmet Oz on Wednesday questioned the legitimacy of Affordable Care Act coverage for many Americans, saying that “half” of the people enrolled in the subsidized health insurance plans “filed no claims last year.”…
— PBS News (@NewsHour) October 30, 2025
Now, for the unversed, Medicaid is a joint federal-state program for healthcare mainly to low-income Americans, children, the elderly, and disabled individuals. States decide how to run their programs within federal guidelines, including what benefits to offer beyond the mandatory ones (like hospital services, physician visits, and lab tests). But Medicaid’s rules and the states’ actions have created loopholes such as the ones criticized here. Experts believe states could exploit provider taxes and other funding mechanisms.
While the Donald Trump administration claims robust audits are underway, hundreds of millions have already been clawed back. CMS insists it’s holding states accountable, while Democrats label some of these claims as politically motivated. Regardless of the spin, this fight will remain a flashpoint in debates over immigration, healthcare, and funding.
