WASHINGTON — The Trump administration is ramping up oversight of state Medicaid programs over concerns that some are using federal funds to cover undocumented immigrants, a move officials say violates longstanding federal law.
Dr. Mehmet Oz, administrator of the Centers for Medicare & Medicaid Services (CMS), announced Tuesday that the agency will more closely scrutinize states suspected of misusing Medicaid dollars. The effort comes as the Senate prepares to debate a sweeping Republican bill that would reshape Medicaid and solidify former President Donald Trump’s economic and immigration priorities.
“Medicaid is not, and cannot be, a backdoor pathway to subsidize open borders,” Dr. Oz said in a statement. “States have a duty to uphold the law and protect taxpayer funds.”
While CMS did not identify specific states, Dr. Oz said jurisdictions “are on notice.” The crackdown follows a directive from a February executive order signed by Trump, titled “Ending Taxpayer Subsidization of Open Borders.” The order mandates federal agencies to review and revise any programs providing benefits to undocumented immigrants in violation of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996.
Tighter Oversight Measures
A “dear colleague” letter dated May 27 from CMS Deputy Administrator Drew Snyder outlined the administration’s strategy to increase financial audits and compliance reviews of state Medicaid spending. States found to be in violation could be forced to repay federal funds.
The agency is also urging states to reassess their eligibility systems and tighten internal controls to ensure only legally eligible recipients are enrolled.
According to the Kaiser Family Foundation, eight states and the District of Columbia—California, Colorado, Illinois, Minnesota, New York, Oregon, Washington, and D.C.—use state funds to expand Medicaid coverage for certain undocumented immigrants based on income eligibility. While federal Medicaid funds are restricted to emergency services for noncitizens, these states have opted to supplement care with state resources.
Immigrants who are in the U.S. legally must still wait five years after obtaining qualified status before enrolling in Medicaid.
A New Chapter in Medicaid Reform
The oversight announcement comes as House Republicans advance a major Medicaid reform bill, dubbed the “big, beautiful bill” by Trump. Passed earlier this month, the legislation would impose significant new requirements on Medicaid recipients, including:
An 80-hour monthly “community engagement” requirement for able-bodied adults without dependents, which may include work, education, or volunteer service.
A cap denying Medicaid eligibility to individuals who own homes valued over $1 million.
Twice-yearly eligibility verifications instead of the current annual process.
The nonpartisan Congressional Budget Office estimates that the proposed changes would result in 8.6 million people losing health coverage by 2034. Medicaid currently covers approximately 78 million Americans.
In a recent interview with Fox News, Dr. Oz reiterated his focus on eliminating “waste, fraud, and abuse” at the agency, stressing that stricter enforcement is essential to preserving Medicaid’s integrity and sustainability.
Political Implications
The enforcement push is part of a broader strategy by the Trump administration to tie immigration and economic policy together ahead of the 2024 election. The Medicaid reforms, including restrictions on undocumented immigrants, reflect a wider Republican effort to prioritize program integrity while appealing to conservative voters concerned about immigration and fiscal responsibility.
The Senate is expected to begin debate on the Medicaid overhaul in the coming weeks.
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