Yes, Illegal Aliens Get Medicaid and ObamaCare—Protecting That is Why Democrats Shut Down the Government 

As much as the media and the Democrats try to spin it to be about health care, this ongoing federal government shutdown is about Democrats wanting to give welfare to illegal aliens and handouts to big insurance companies.

The truth hurts—the truly needy, that is.

You see, prior to the Republicans’ July 4^th law, states like New York and California were abusing Obama-era and Biden-era loopholes and providing billions of dollars in welfare to illegal aliens. As FGA’s Jonathan Ingram and Hayden Dublois outline in a new report, this wasn’t simply help at a hospital during a life-threatening emergency—this was full-fledged Medicaid coverage and ObamaCare subsidies, which diverted important resources away from truly needy people, wasted taxpayer money, and served as a magnet for illegal border crossings.

These are the loopholes that have enabled illegal aliens to get taxpayer-funded health coverage:

“Emergency” Medicaid Coverage

This covers hospital and urgent care costs regardless of immigration status. States can even receive a higher federal match rate for able-bodied adult illegal aliens than for the elderly and individuals with disabilities.

Federal spending on these services nearly tripled under President Biden, reaching an alarming $6.1 billion in 2024. California alone received more than $4.5 billion last year—nearly 75 percent of the entire national total.

Parole and Temporary Statuses

Illegal aliens granted temporary reprieve from deportation can qualify for full-scope Medicaid or ObamaCare subsidies—even though they are not legal immigrants.

Federal law expressly limits the Department of Homeland Security’s authority to grant parole to aliens only on a “case-by-case basis,” not en masse. Despite this, Ingram and Dublois note, Biden granted parole to nearly three million otherwise inadmissible aliens, including sweeping grants of parole to illegal aliens crossing the southwest border. In many cases, parole was granted to aliens without application or petition.

Temporary Coverage During Reasonable Opportunity Periods

Federal law requires states to verify citizenship or immigration status when determining Medicaid eligibility. States may provide a “reasonable opportunity period” for applicants to prove their citizenship, which typically lasts about 90 days.

Between 2019 and 2023, the number of reasonable opportunity periods granted by state Medicaid agencies increased by roughly 45 percent, and the number of these enrollees who were ultimately unable to prove citizenship or lawful immigration status spiked by more than 400 percent over the same period. In 2024, the Biden administration prohibited states from capping how many temporary coverage periods an illegal alien may claim consecutively.

Identity Theft and Eligibility Fraud

Another way illegal aliens enroll in Medicaid is through outright fraud, and their use of stolen identities is a well-known problem.

Earlier this year, U.S. Immigration and Customs Enforcement conducted a raid and identified more than 100 victims of identity theft due to illegal aliens using stolen identities at a single employer. Those stolen identities were used by illegal aliens to enroll in welfare programs, including Medicaid, food stamps, public housing, and unemployment. Some of them even used those stolen identities to vote.

As Ingram and Dublois note in their report, the exact extent of this fraudulent activity is unknown, but evidence suggests it is massive. Nearly 24 million Americans are victims of identity theft each year, while nearly one-quarter have had their identities stolen at least once in their lifetime.

The Social Security Administration maintains the Earnings Suspense File (ESF), a database of inaccurate W-2s. According to the agency’s inspector general, illegal aliens using stolen Social Security numbers (SSN) are the “chief cause” of these inaccurate W-2s. More than 27 million new wage records were added to this database in 2021 through 2023 alone.

Illegal aliens using stolen identities is a huge red flag for welfare programs like Medicaid.

Most states do not require proof of identity during the Medicaid application process, and in 2024, the Biden administration finalized regulations that prohibit states from requiring applicants to provide proof of their identity if the provided Social Security number is verified as a citizen’s. This is an open door to fraud. 

“State-Funded” Programs Paid for by Federal Taxpayers

Some states also offer illegal aliens full Medicaid benefits through so-called “state-funded” programs. In reality, those programs rely on federally funded Medicaid infrastructure and, in some cases, are completely paid for with Medicaid financing schemes.

How did Congress fix this?

Republicans’ new law paused Biden’s 2024 reasonable opportunity period cap rule. It ended the 90 percent federal matching bonus for “emergency” Medicaid for illegal aliens. It closed loopholes that let illegal aliens exploit temporary parole or fake “qualified” status to get benefits.

Once fully implemented, states will be required to check Social Security death records on at least a quarterly basis, and to submit the Social Security numbers of enrollees to the federal government monthly to avoid duplicate enrollment. It ended the money-laundering gimmicks that let states finance their programs for illegal aliens with federal dollars.

States with large numbers of eligibility errors now face financial penalties, further incentivizing states like California to get their act together.

So, what does the shutdown have to do with this?

Democrats want welfare for illegal aliens, but Congress closed the loopholes that allowed states to funnel federal dollars towards non-citizens. So, the Democrats decided to hold the country hostage, shut down the federal government, and demand that Republicans roll back these popular reforms.

If the Democrats get their way, loopholes will reopen, the preferential funding for illegal aliens will be restored, and American taxpayers will be right back on the hook—with nearly $200 billion flowing back towards illegal aliens.