California Poised to Provide Medicaid Coverage to Entire Illegal Alien Population

January 13, 2022

On Monday, California Governor Gavin Newsom unveiled his plan to provide taxpayer-funded health insurance to all low-income illegal aliens residing in the state.  The plan, released as part of Governor Newsom’s annual budget, calls on the state to pay approximately $2.2 billion per year to allow low-income illegal alien adults between the ages of 26 and 50 to enroll in the state’s Medicaid program, Medi-Cal.  If adopted, this plan will mark the final step in California’s mission to provide health care coverage to its entire illegal alien population. 

For those wondering how California is allowed to accomplish this, let’s connect the dots.

Congress created Medicaid in 1965 to provide basic health care coverage to low-income Americans and other disadvantaged populations.  (See generally Title XIX of the Social Security Act; 42 U.S.C. §§ 42 U.S.C. §§ 1396a–1396v, §§ 1301-–1320b21)  Medicaid was designed as a federal-state program, meaning it is administered by states in accordance with overarching federal requirements, and is funded jointly by states and the federal government.  Today, all states, the District of Columbia, and the U.S. territories have Medicaid programs.  However, because each state administers its Medicaid program differently, there are variations in Medicaid coverage across the country. (See, About Us, Program History)  Nationwide, these programs now cover more than 76 million people.

Medi-Cal is California’s Medicaid program. It provides health care coverage for individual and families of any age that reside in California and earn less than 138% of the federal poverty level.  For a family of four, this is roughly $36,156.  Californians are also eligible to enroll in Medi-Cal if they are: 65 or older; blind; disabled; under 21; pregnant; reside in a skilled nursing facility; or fall into several other categories. (California Department of Health Care Services (DHCS), Do you qualify for Medi-Cal Benefits?)

Federal law generally bars illegal aliens from receiving federal public benefits such as Medicaid.  That is because only “qualified aliens” are eligible for federal public benefits. (See 8 USC 1611)  Qualified aliens include: green card holders; refugees; asylees; paroled aliens living in the U.S. for over a year, and a few other small categories. (See 8 USC 1641

[Note: There are several discrete categories of illegal aliens who are considered “qualified aliens” under law. These categories include aliens who have applied for cancellation of removal or T nonimmigrant visas (trafficked aliens). It also includes battered spouses and children.]

Federal law also generally bars states from granting illegal aliens eligibility for state or local public benefits.  Specifically, 8 USC 1621 provides that an alien who is not a qualified alien, a nonimmigrant (temporary visa holder), or an alien paroled into the U.S. for more than one year “is not eligible for any state or local public benefit.” State or local benefit is defined to include, among other things, any health or welfare benefit for which payments or assistance are provided by an agency of a State or local government or by appropriated funds of a State or local government.

But despite this general ban, Congress created a major exception in the last paragraph of the law, which sanctuary states have used to funnel taxpayer dollars to illegal aliens.  Paragraph (d) provides that states may grant illegal aliens eligibility for any state or local public benefit if the state legislature enacts legislation that affirmatively provides such eligibility.  (See 8 USC 1621(d))  Thus, federal law does in fact allow states – upon the enactment of state legislation granting express authority– to use state tax dollars to provide Medicaid to illegal aliens. 

California first extended Medi-Cal eligibility to illegal aliens in 2015, through the passage of SB 75 and SB 4, which allowed illegal alien minors under 19 years old to receive full-scope coverage under Medi-Cal, provided they otherwise meet the eligibility criteria.  (See also, Los Angeles Times, Oct. 9, 2015)  The measures, which took effect in 2016, were expected to cover 170,000 aliens at an annual cost $132 million.

In 2019, the California Legislature passed SB 104, which expanded full-scope Medi-Cal coverage to illegal aliens 19-25 years-old, provided they otherwise met the eligibility criteria.  This provision, called the Young Adult Expansion, went into effect January 1, 2020.  The measure was estimated to cost $250 million each year.

Then, in 2021, the California Legislature passed AB 133 allowing illegal aliens 50 years or older to qualify for full-scope Medi-Cal coverage, if they otherwise meet the eligibility criteria.  The law, which will go into effect May 2022, is estimated to cover 235,000 aliens at a cost of $1.3 billion per year.

The proposal released Monday by Governor Newsom, if enacted, would complete Medi-Cal’s expansion to cover all of California’s illegal alien population.  According to the Legislative Analyst’s Office, expanding Medi-Cal eligibility to illegal aliens between 26 and 49 years of age will cover an estimated 930,000 at an annual cost of $2.2 billion when fully implemented in 2024.  The Legislative Analyst’s Office – which published the estimate – also noted that “ongoing costs likely would grow over time in line with medical inflation and also would be adjusted to reflect changes in caseload and utilization.” 

Despite the stark cost of providing Medi-Cal coverage to the state’s illegal alien population, California appears well-positioned to do just that, thanks to massive state budget surpluses over the past couple of years.  At the end of fiscal year 2020-2021, which spans July through June, California had a $76 billion dollar surplus.  And, as Governor Newsom announced with great fanfare this week, by the end of this fiscal year (2021-2022) he estimates the state will have a $45.7 billion surplus.  

While some attribute the surplus primarily to the strong stock market, which has increased capital gains and income tax revenues, multiple other analyses, even one from the Washington Post, detail how “blue states” are now flush with cash as a result of Covid relief packages and how Congress has formulated the states’ shares.    

California is certainly among them.  The state received over $9 billion in federal Covid relief funds from the CARES Act and another $27 billion in as the result of the American Rescue Plan.  In addition, in 2020, the federal government assumed a greater share (56.2 percent) of Medicaid costs through the Families First Coronavirus Response Act). This additional funding for Medicaid, previously split 50-50 between California the federal government, freed up at least $8 billion in state funds for other purposes.  All of this aid for California, targeted directly to the state, was in addition to billions federal dollars that flowed directly to local governments, businesses and individuals (such as the paycheck protection program, tax credits, etc.), all of which helped shore up state tax revenues.

Unfortunately, Congress failed to put any restrictions on how states could spend the Covid relief funds.  This may have been an oversight for those who oppose providing taxpayer-funded public benefits to illegal aliens.  Or, it could have been intentional by open borders advocates in Congress who knew the natural outcome of saying nothing would be to give states the flexibility to follow California’s lead.  

California has already blazed a trail in providing benefits to illegal aliens. In May 2020, California – home to roughly two million illegal aliens -- became the first state in the nation to provide state-funded COVID-19 relief to its illegal population by providing $75 million in one-time payments, ranging from $500 to $1,000, to an estimated 150,000 illegal aliens. California also expanded the state’s Earned Income Tax Credit to illegal aliens who have individual taxpayer identification numbers (ITINs) instead of social security numbers.  And, California issued stimulus payments, worth between $600 to $1,200, to illegal aliens with ITINs who otherwise qualify for the tax credit or who make under $75,000 a year. (Sacramento Bee, Apr. 15, 2021)  Now, whether average Americans agree with these policy choices or not, their federal tax dollars are being used to subsidize them.