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The Trump administration says it will cut more than $1 billion in federal Medicaid funds that officials claim were improperly used by Democratic-led states to pay for healthcare for illegal immigrants, including some with violent criminal records.
A preliminary audit by the Centers for Medicare and Medicaid Services (CMS) found that between 2024 and 2025, California, Washington, D.C., Illinois, Washington, Colorado and Oregon, misused about $1.35 billion in federal Medicaid funds. The audit determined the money went toward healthcare coverage for illegal immigrants, which is prohibited under federal law except for emergency medical treatment.
“Protecting Medicaid from waste, fraud and abuse isn’t optional. It’s the law,” CMS spokesperson Emily Hilliard told Fox News Digital. “Every dollar misspent on illegal healthcare spending is a dollar taken from vulnerable Americans. 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 stated that California accounted for the majority of the misspent funds, at over $1 billion, while Illinois improperly used approximately $30 million and Oregon misused $5.5 million.
State officials, including California Gov. Gavin Newsom, have rejected the administration’s findings. Critics of California’s program, however, argue that the state is exploiting Medicaid loopholes to secure matching federal funds through a “provider tax,” which enables local spending to be reimbursed by the federal government.
Jim O’Neill, acting director of the Centers for Disease Control and Prevention, has also highlighted cases of illegal immigrants with serious criminal records receiving taxpayer-funded healthcare. O’Neill has posted a series titled “MorningMedicaidMugshot,” citing examples including individuals convicted of child rape, attempted murder and vehicular homicide.
The Trump administration says it will continue auditing states and recovering misspent Medicaid funds, pushing back against the effort to enforce immigration law and reduce taxpayer waste.
The CMS warned states in March of the investigations and potential loss of funding.
“If CMS determines that California is using federal money to pay for or subsidize healthcare for individuals without a satisfactory immigration status for which federal funding is prohibited by law,” according to a report by The Hill, “CMS will diligently pursue all available enforcement strategies, including, consistent with applicable law, reductions in federal financial participation and possible referrals to the Attorney General of the United States for possible lawsuit against California.”
