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FIRST ON FOX: The Trump administration is planning to claw back over $1 billion in federal Medicaid dollars it says are being spent by blue states on healthcare for illegal immigrants, including some with violent criminal records for murder and rape.
A preliminary audit by the Centers for Medicare and Medicaid Services found that, over the last few years, mostly during 2024 and 2025, California; Washington, D.C.; Illinois; Washington; Colorado; and Oregon improperly spent a combined $1,351,204,127 in federal Medicaid funds to help pay for healthcare for illegal immigrants.
While federal Medicaid dollars are supposed to be prohibited broadly from being used to cover healthcare for illegal immigrants, they can be used by states for emergency treatment regardless of a patient’s citizenship or immigration status.
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States can also legally cover health insurance for illegal immigrants as long as it is only done with state tax dollars. But, according to some experts, Democrats are utilizing loopholes in the federal laws that allow them to provide comprehensive health benefits to illegal immigrants.
“Protecting Medicaid from waste, fraud and abuse isn’t optional. It’s the law. Every dollar misspent on illegal healthcare spending is a dollar taken from vulnerable Americans,” CMS spokesperson Emily Hilliard told Fox News Digital.
“Federal law forbids using Medicaid funds for illegal immigrants, yet several Democrat-led states did it anyway. The Trump administration won’t tolerate it. CMS is auditing aggressively, recovering every dollar and holding states accountable.”
One day after the current government shutdown, the Trump administration released a memo arguing Democrats want to repeal GOP reforms in the “big, beautiful bill” that aimed to close alleged backdoor loopholes allowing blue states to use federal dollars to pay for illegal immigrant healthcare. (Getty/iStock)
California was far and away the biggest culprit, spending over $1 billion in federal Medicaid dollars on healthcare for illegal immigrants, according to CMS. The next largest violator was Illinois, which CMS said has improperly spent nearly $30 million, followed by Oregon, which the audit found improperly spent approximately $5.5 million.
California Gov. Gavin Newsom’s office has denied claims his state is improperly using federal funds to pay for illegal immigrant healthcare, telling the Los Angeles Times claims from Republicans are “false.”
But Steve Hilton, a former Fox News anchor and current Republican candidate running to be the next governor of California with Newsom term limited, has argued that California has been using a complex Medicaid provision known as a “provider tax” to obtain matching federal dollars, which then gets pooled into the money used by the state to pay for its healthcare offered to undocumented immigrants.
Chris Pope, a public health policy expert at the Manhattan Institute, has argued California is abusing federal provisions that allow states to use federal Medicaid dollars for emergency care for undocumented aliens.
California Gov. Gavin Newsom during a bill signing related to redrawing the state’s congressional maps Aug. 21, 2025, in Sacramento, Calif. (Justin Sullivan/Getty Images)
Fox News Digital reached out to Newsom’s office for comment on this story but did not receive a response.
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“Medicaid is by far the largest source of federal funding for states. It was originally intended to only provide aid for eligible beneficiaries, but, over time, states have figured out how to game the system, padding permitted expenses and diverting the profits to fund activities which are supposedly prohibited,” said Pope.
“Any claim that state healthcare expenditures don’t ultimately involve some form of federal funds should be regarded with suspicion.”
Jim O’Neill, the current acting director of the Centers for Disease Control and Prevention and a deputy secretary at the Health and Human Services Department, has also been highlighting that among the federal funds that are improperly going to illegal immigrants, some are even going to illegal immigrants with violent criminal pasts. O’Neill has been posting a daily “MorningMedicaidMugshot” with examples over the last several days.
Federal agents detain a person after attending a court hearing at the Jacob K. Javitz Federal Building July 1, 2025, in New York City. (Mostafa Bassim/Anadolu)
On Oct. 29, O’Neill highlighted Layth Kamil, a 24-year-old illegal alien from Iraq convicted of exposing himself to a 15-year-old, who, according to O’Neill, has received close to $16,000 in taxpayer-funded healthcare through Medicaid. The day before, O’Neill highlighted the story of Haissam Massalkhy, a 45-year-old illegal alien from Lebanon convicted after driving under the influence and killing an American citizen who was out jogging. Massalkhy has received over $30,000, according to O’Neill.
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Other illegal aliens O’Neill highlighted included people convicted of attempted murder and child rape.
“Democrats are demanding continued funding of this violent illegal alien’s Medicaid as a condition for reopening the government and paying the hardworking public servants at my department,” O’Neill lamented in one of his recent “MorningMedicaidMugshot” posts.
