In an extraordinary act of financial mismanagement, California Governor Gavin Newsom, a prospective 2028 presidential candidate, is taking out $6.2 billion in loans from the state’s general fund to meet a Medicaid funding shortfall – a direct consequence of his decision to add 1.6 million illegal aliens to the program.
While “borrowing” money might cover the gap in the short run, the true problem is that overloading welfare with millions of illegal aliens is financially unsustainable. Even worse, federal taxpayers are now on the hook for California’s far-left excess thanks to a Biden-approved scheme that lets the state take in billions of extra dollars from the federal government to fund Medicaid expansion.
The problems began in 2022 when Newsom and the state legislature celebrated becoming “the first state in the nation to provide universal access to affordable health coverage for lower-income individuals by providing coverage for Californians ages 26 to 49, regardless of immigration status.” This followed a 2019 decision to expand the taxpayer-funded health insurance plan to all residents 26 years old and younger, even illegals.
“California is tackling the cost of health care head on,” Newsom said in 2022. “Doubling down on our actions to reduce costs for middle-class families and expand access to important services, this proposal is a transformative step towards strengthening the health care system for all Californians. Everyone is healthier when everyone has access to quality, affordable care.”
The changes officially took effect in 2024. Just over a year later, they have led to an enormous, entirely predictable financial headache for the state. Unsurprisingly, providing free healthcare led to more people taking advantage of it. The state originally predicted “an estimated 764,000 undocumented immigrants” would enroll. However, the actual figure has been more than double that – and is growing by the day.
There are now “roughly 1.6 million immigrants without legal status,” enrolled in Medi-Cal, the state’s Medicaid program, according to Cal Matters. This has caused a surge in costs above even what many critics of the program predicted, and Newsom now must keep going back to taxpayers to make up the difference. He first asked for a $3.4 billion loan last month, followed by another $2.8 billion in April.
The cost of the loans is almost exactly the same as the price tag for providing health insurance to 1.6 million illegal aliens as part of the state’s $157 billion annual Medi-Cal budget, according to California Healthline.
Additionally, describing the funding requests as “loans” seems dubious at best – the Medi-Cal program will never truly “pay” those funds back into the state’s general fund. It’s a bailout, plain and simple – even as the state’s current debt stands at $273 billion. The $6.2 billion transfer merely keeps the program afloat temporarily until the next inevitable funding shortfall arises.
Republican leaders argue the expansion should be scaled back to put the program on stronger financial footing. “We must stop new enrollments of illegal immigrants and rein in this unsustainable program before it collapses entirely,” California Republican state Senate Minority Leader Brian Jones said.
“Democrats and the governor are picking priorities, and they’re prioritizing people that have come into our country illegally over people who immigrated here legally, people that are citizens,” Jones added.
Republican Assembly Minority Leader James Gallagher has similarly criticized Newsom’s mismanagement. “What has been the biggest driver of cost to the medical system?” Gallagher asked in March. “It’s been adding illegal immigrants to those rolls.” With a Democrat supermajority in the California state legislature, however, Golden State Republicans can do little besides look on in disgust.
But Republicans at the national level might be able to do something to stop the rest of the country from funding California’s handouts for illegal aliens – namely ending a Biden-era program that effectively allows California Democrats to launder federal tax dollars for unrestricted Medicaid expansion.
As the Paragon Health Institute, a conservative think tank, explained in a blog post last month, in 2023 the Biden Centers for Medicare and Medicaid Services (CMS) approved California’s plan to massively expand its tax on insurers. (Thanks to a regulatory loophole, states are allowed to tax Medicaid insurers to help pay for Medicaid.)
Under California law, the state must pay Medicaid providers the same amount as the taxes it collects. In this case, California’s increased provider tax was expected to raise about $16.7 billion in additional revenue – all of which would be paid back to providers at no cost to the state.
But the federal government pays a 60 percent match on all Medicaid funds. This means that California can now take in an extra $9.5 billion per year – all of which is paid for by taxpayers nationwide. Those funds then go toward programs like Medicaid for illegal aliens.
In other words, it’s a shell game designed to hide the fact that federal taxpayers are footing the bill for illegal aliens to receive government healthcare.
Even more concerningly, as Paragon has noted, other states such as New York may now be looking to follow suit. Taxpayers in conservative strongholds could soon be forced to pay for liberal Medicaid-for-all schemes in the bluest states in the country.
California notably has sky-high taxes and by far the largest economy in the nation – if the state were its own country, it would have the 5th largest economy in the world. Yet still, it can’t pay for left-wing priorities without raiding the pockets of American taxpayers nationwide.
That should be a warning sign to the rest of the country – and an incentive for Republicans in Washington D.C. to end the ability of blue states to game the system and send Medicaid costs ever-higher.
Matt Lamb is a contributor for AMAC Newsline and associate editor for The College Fix. He previously worked for Students for Life of America, Students for Life Action, and Turning Point USA. He previously interned for Open the Books. His writing has also appeared in the Washington Examiner, The Federalist, LifeSiteNews, Human Life Review, Headline USA, and other outlets. The opinions expressed are his own. Follow him @mattlamb22 on X.
Read the full article here