States providing healthcare to immigrants face financial pressures

By Shalina Chatlani, Stateline
May 22, 2026

Budget constraints are forcing liberal-leaning states that spend their own money on healthcare for noncitizens to scale back that aid, as they grapple with federal Medicaid cuts and the expiration of federal subsidies that helped people buy Obamacare plans.

Under federal law, immigrants who are in the country illegally are not eligible for federally funded health coverage.

But as of last month, six states — California, Colorado, Illinois, New York, Oregon and Washington — plus the District of Columbia were spending state dollars to cover some income-eligible noncitizen adults regardless of their immigration status. A total of 14 states plus the district provide state-funded coverage to noncitizen children whether they are here legally or not. And three states — Colorado, New Jersey and Vermont — cover pregnant women regardless of their immigration status.

In addition, 40 states have taken up options in Medicaid and the Children’s Health Insurance Program, known as CHIP, to provide coverage to lawfully present children and/or pregnant women who are not citizens.

But the sweeping tax and spending bill President Donald Trump signed into law last summer cuts federal spending on Medicaid, the joint federal-state health insurance program for low-income people. It also places new eligibility restrictions on lawfully present immigrants, including refugees and asylees, who are enrolled in a variety of government-subsidized health programs, including Medicaid, CHIP, Medicare and plans available on the insurance marketplaces created under the Affordable Care Act, better known as Obamacare.

And Congress at the end of last year failed to renew federal subsidies that helped people buy Obamacare plans.

With less federal money to provide health benefits, at least five states (California, Colorado, Illinois, Minnesota and Washington) plus the District of Columbia have already scaled back or announced plans to scale back state-funded health benefits for immigrants. Other states also may have to pull back as budget pressures continue.

“The federal government shifted much more of the financial burden of providing those services to states. And so states are taking a holistic view at their healthcare budgets and trying to figure out where they can cut,” said Medha Makhlouf, a law professor and the founding director of the Medical-Legal Partnership Clinic at Penn State Dickinson Law, who studies immigrants’ access to healthcare.

“Historically and currently, as we’re seeing, immigrants are going to be the first to be cut, for a variety of reasons. They don’t have political power in the same way citizens do.”

States try ‘public option’ Obamacare plans to reduce coverage costs

Drishti Pillai, director of immigrant health policy at KFF, a health policy research group, warned that the state cuts, combined with the federal changes, “will likely increase uninsured rates and reduce access to care among immigrants and their children, most of whom are U.S. citizens.

“Over the long-term, these changes could lead to worse health outcomes that could be more complex and expensive to treat,” Pillai said.

But Cooper Smith, director of homeland security and immigration at the America First Policy Institute, a conservative think tank that has worked on policy development with the current Trump administration, said that when budgets tighten, policymakers should prioritize U.S. citizens.

“Taxpayers pay into a system,” Smith said. “I think it’s reasonable to expect that those who have paid into the system should be the primary beneficiaries of public benefit.”

California has traditionally provided some of the most generous benefits. But last June, Democratic Gov. Gavin Newsom signed a state budget that barred immigrants who are here illegally from newly enrolling in the state’s Medicaid program, known as Medi-Cal. In addition, current enrollees between the ages of 19 and 59 will have to pay a new $30 monthly premium beginning in July 2027. And this July, the state will eliminate dental care for noncitizens.

Newsom’s budget plan for next year proposes scaling back Medi-Cal coverage for some immigrants living in the country lawfully, including an estimated 200,000 asylees, refugees, and others with certain immigration statuses.

California Democratic state Sen. María Elena Durazo is pushing legislation this session that would undo the enrollment freeze and restore access to full-scope Medi-Cal coverage for adults living in the U.S. illegally.

“California immigrants are not going to go away,” Durazo said. “We need them. They’re agricultural workers, they’re food workers, they’re construction workers.

“Are we going to not provide the minimal basic healthcare coverage and think that somehow it’s not going to come back to haunt us through emergency rooms and other counties and public hospitals?”

Some states are helping to make Obamacare plans more affordable

Hannah Orbach-Mandel, a policy analyst at the nonprofit California Budget and Policy Center, said the state should find alternatives to the cuts, such as raising corporate taxes. She said scaling back coverage puts immigrants “in a really vulnerable position that ultimately can result in people dying.”

Colorado made a similar choice.

Using state money, Colorado’s SilverEnhanced Savings program allows immigrants who are here illegally to buy Obamacare plans with zero premiums. But budget constraints prompted the state to lower the enrollment cap for the program to 6,700 from 12,000.

Now the state is poised to downsize another program. Last year, the state launched Cover All Coloradans to provide state-funded health coverage for low-income children and pregnant women who would be eligible for CHIP or Medicaid if not for their immigration status. But a bill the legislature sent last month to Democratic Gov. Jared Polis would scale back some of the benefits available under the program and cap enrollment to help close a roughly $1 billion state budget gap driven in part by ballooning Medicaid costs.

When the law creating the program was enacted in 2022, financial analysts estimated it would cost $14.7 million this fiscal year and cover almost 3,700 children and pregnant women. Instead, the program ended up serving almost 28,000 people at an estimated cost of $104.5 million.

Colorado Republican state Rep. Rick Taggart, a member of the Joint Budget Committee, called the changes to the program “a painful compromise.”

“It’s impossible to separate the human side from the financial side in this area,” Taggart said in a phone interview. “We are talking about children, and we’re talking about pregnant women, and they have very real needs … the children, in most cases, didn’t have anything to do with the decision about immigrating to the U.S. and to Colorado.”

But other Colorado lawmakers said providing services to children who are here illegally ends up depriving the children of legal residents.

“When we come up here compassionately talking about kids, let’s talk about all the kids in our state,” Republican state Rep. Brandi Bradley said during debate on the House floor last month. “There’s plenty of kids whose parents are working a ton of jobs to just keep up with inflation and the price of groceries in the state, while we continue to grow programs like this.”

1.4M lawfully present immigrants could lose subsidized health coverage

According to a 2001 court ruling, the New York Constitution bars the state from distinguishing between citizens and legal immigrants in providing Medicaid. Legal immigrants include people who have temporary and humanitarian status or might be here under the Deferred Action for Childhood Arrivals program, known as DACA, and would be income-eligible for Medicaid.

But even New York has had to make changes. Because of federal funding cuts, the state says, it is narrowing the income eligibility rules for its state-run Essential Plan, which provides zero-premium coverage for people who are here legally but do not qualify for Medicaid.

Beginning in July, the program will no longer cover households making between 200% and 250% of the federal poverty level. The change will end coverage for an estimated 450,000 New Yorkers.

“Our priority continues to be protecting coverage for as many New Yorkers as possible and ensuring people have information and assistance during this transition,” said Danielle De Souza, a spokesperson for the New York State Department of Health.

Stateline reporter Shalina Chatlani can be reached at schatlani@stateline.org

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