California Faces Scrutiny Over $19 Billion Medicaid Loophole, Requests $3.44 Billion Loan for Medi-Cal Expansion

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Updated Mar 13, 2025, 04:26 PM

California has been accused of exploiting a Medicaid funding loophole to finance healthcare for undocumented immigrants and long-term care for wealthy residents. A study by the Economic Policy Innovation Center (EPIC) highlights the use of Medicaid provider taxes to secure $19 billion in federal reimbursements from April 2023 to December 2026 without state contributions. This includes $9.5 billion raised through provider taxes to address shortfalls. The expansion of Medi-Cal, California's Medicaid program, to undocumented residents began in January 2024 and was initially estimated to cost $3 billion annually. However, costs have exceeded expectations, prompting Governor Gavin Newsom's administration to request a $3.44 billion loan to cover a funding shortfall. The policy made California the first state to offer universal healthcare access, including for undocumented individuals. Critics, including EPIC's Paul Winfree, argue that the policy exploits federal resources and removes asset tests for long-term care, allowing wealthier individuals to benefit from Medicaid. Congressional Republicans are exploring reforms to close the Medicaid provider tax loophole, which could save up to $630 billion over the next decade.

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#California #Medicaid #Economic Policy Innovation Center #EPIC #Gavin Newsom #Paul Winfree #Congressional Republicans

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Sources

foxnews.com(2)bizpacreview.com breitbart.com

Mike Netter

@nettermike

California will have to borrow $3.4 billion to address a Medicaid funding shortfall — and that’s bringing fresh scrutiny to the state’s coverage of undocumented patients whose care is costing more than anticipated The Newsom administration laid out the fiscal problem in a letter… https://t.co/Rgr8UojLOO

𝙿𝚊𝚞𝚕 𝚆𝚒𝚗𝚏𝚛𝚎𝚎

@paulwinfree

Congress can close this loophole, through which California is laundering federal money to cover illegal immigrants, in the reconciliation bill. Eliminating states ability to tax Medicaid providers would reduce spending by at least $630 billion over the next 10 years. https://t.co/5SU9eQfZ0d https://t.co/nrJ6wa8PPi

Breitbart News

@BreitbartNews

Democrats running out of other people's money: not a question of if, but when. The State of California must borrow $3.44 billion dollars to cover a shortfall in Medi-Cal, the state’s Medcaid program — a year after expanding it to offer free health care to illegal aliens. https://t.co/0BkF1klbWo