Last week, President Donald Trump issued an executive order barring illegal immigrants from accessing welfare benefits. His action opens the door to a thorough reevaluation of how the federal government treats states that give generous benefits to unlawful residents.
In particular, the Department of Health and Human Services should stop approving Medicaid waivers for states that provide free health insurance for illegal aliens. Following President Trump’s order, Health & Human Services secretary Robert F. Kennedy Jr. should sunset key Medicaid waivers to states, such as New York and California, that cover illegal migrants.
To achieve President Trump’s goal, Kennedy would rely on an often-overlooked policy mechanism: waivers issued under Section 1115 of the Social Security Act. These waivers grant states special permission to expand or restrict Medicaid eligibility beyond standard federal requirements. That lets states experiment with ways to reduce costs or improve care, like imposing work requirements on welfare recipients.
States have also used Section 1115 waivers to bypass federal eligibility guidelines—including those that prohibit coverage of illegal immigrants. Fourteen states now offer Medicaid or Children’s Health Insurance Program benefits to at least some people living in the United States illegally, and 12 of those states have an approved Medicaid waiver. Five states with waivers cover illegal immigrants of all ages and categories.
State dollars fund Medicaid coverage for illegal migrants, not federal subsidies. But while states have the right to use their budgets as they please, the federal government is equally free to withhold additional flexibility that states request under Medicaid waivers, and to let preexisting waivers expire, until they bring their spending into alignment with federal priorities.
Such a shift would have multiple positive effects. First, it would deter additional Democrat-led states from using state funds to cover illegal immigrants under Medicaid. Second, if these states stop covering them, some illegal immigrants would self-deport or find more productive jobs.
Finally, ending some waivers would reduce the burden on federal taxpayers, who foot much of the bill for expanded Medicaid coverage under the (non-immigration-related) waivers. To ensure savings, HHS should sunset only waivers that expand Medicaid eligibility, rather than those that restrict it. California’s waiver, for example, allowed the state to disregard the maximum-assets ceiling to qualify for Medicaid, and Illinois received a waiver allowing reinstatement of Medicaid coverage even in cases where paperwork is submitted months late.
Critics will argue that millions of innocent people will suffer or even die if the government doesn’t take care of them. But Medicaid coverage of illegal immigrants is a new phenomenon. Even California didn’t do it until after the Covid-19 pandemic, and illegal immigrants have lived there for decades. At least one study even found that Medicaid coverage has no significant effect on health outcomes, though it did increase health care use and spending. Pressuring states to revert to their previous policies is about restoring common sense and being a good steward of taxpayer dollars.
Sunsetting these Medicaid waivers would protect federal and state taxpayers from footing the bill for state expansions and discourage states from handing out welfare to illegal immigrants. While some Trump immigration policies remain contentious, not giving welfare to illegal immigrants is nearly universally popular. It’s time to align one of the largest federal welfare programs with the president’s agenda by preventing it from becoming a magnet for unauthorized migration.
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