States Move to Halt Immigrant Health Coverage to Rein in Costs

States that offer health coverage to low-income adult immigrants are taking steps to pause or end the programs, citing higher-than expected costs, as they confront budget shortfalls and a congressional proposal to drastically cut federal Medicaid support to these states.

The Minnesota Legislature voted June 9 to end undocumented adult immigrants’ eligibility for MinnesotaCare, the state’s publicly funded health insurance program for low-income individuals, starting in 2026. That same day, California legislative leaders unveiled a budget agreement backing Gov. Gavin Newsom’s (D) proposal to freeze enrollment for undocumented adults in its own state-funded health program.

In Illinois, the government has said state-funded health benefits for immigrants ages 42 to 64 will no longer be available after June. Governors and legislative leaders in each of the states attributed the cuts to program spending that surpassed initial projections and a need to address billions in budget deficits.

Policy analysts expect at least some of the other 11 states that, along with the District of Columbia, provide similar programs to weigh ending enrollment as they evaluate budgetary effects of programs, as well as the cost implications of Trump administration and congressional efforts to reduce federal support to states that provide health coverage to non-US citizens.

A total of 14 states and Washington, D.C., provide coverage for low-income immigrant children, and seven of these and the district have expanded coverage to also include eligible adults.

The US House-passed reconciliation bill includes a provision that would lower the federal Medicaid match rate for the Affordable Care Act Medicaid expansion population from 90% to 80% for states that provide coverage or financial assistance to purchase coverage to certain immigrants. If the Senate passes the bill and President Donald Trump signs it, responsibility for roughly $92 billion in Medicaid costs would be shifted to the states over the next 10 years, according to KFF estimates.

While there’s a chance the provision won’t make it into a final budget package, the Trump administration has made it a priority to crack down on illegal immigration. In February, Trump issued an executive order directing federal agencies to “ensure taxpayer resources are not used to incentivize or support illegal immigration.”

“It is quite likely that several states would consider eliminating these programs so as not to increase the costs that they incur for providing health coverage,” said Drishti Pillai, director of immigrant health policy and associate director of the Racial Equity and Health Policy Program at KFF.

Minnesota

With undocumented immigrants generally ineligible for traditional Medicaid, Democratic-led states have developed programs using state-only dollars to cover health care for populations regardless of immigration status.

But under the bill (HF 1) approved by the Minnesota Legislature June 9, “undocumented noncitizens who are age 18 years old or older” will be ineligible for MinnesotaCare beginning Jan. 1, 2026. Democrats and Republicans reached the compromise as they face a projected budget deficit of nearly $6 billion.

The Legislature expects the bill to save nearly $57 million in the next budget cycle. Roughly 17,000 Minnesotans who are noncitizen immigrants have enrolled in the program since Jan. 1.

Minnesota Gov. Tim Walz (D) said at a press conference June 10 that the bill was necessary to get a state budget agreement passed.

Others in the legislature see the cuts as inappropriate, with the House People of Color and Indigenous Caucus accusing Republicans of removing “healthcare away from our most vulnerable while handing millions in tax breaks to wealthy corporations.”

“Our communities deserve better than legislators who weaponize ‘fiscal responsibility’ as a smokescreen for discriminatory policies,” the caucus said in a statement.

California, Illinois

A California budget plan issued this week by top Democrats in the state Senate and Assembly would delay implementation of a new Medicaid monthly premium for undocumented immigrants from Jan. 1, 2027, to July 1, 2027, and would lower it to $30 from the $100 the governor proposed.

The plan would freeze Medicaid enrollment for undocumented immigrants age 19 and older starting next year as Newsom has made it a priority to address the state’s expected $12 billion deficit.

Top appropriators in the Legislature argued the delays give them time to revisit the issue if the state’s budget outlook improves.

“We’re not disenrolling anyone,” state Sen. Akilah Weber Pierson (D) told reporters, referring to Republican calls to end coverage for undocumented immigrants.

Senate leaders expect to vote on the plan before a June 15 deadline. But the issue has created a rift between Democrats in the Legislature as Trump deploys hundreds of troops to Los Angeles to respond to protests against immigration raids by federal authorities.

The budget proposal “goes back on the commitment to treat everyone safe, regardless of immigration status in our system,” Amanda McAllister-Wallner, executive director of Health Access California, said in an interview.

“These are folks who are paying taxes and our neighbors and classmates and colleagues and part of our community,” McAllister-Wallner said.

Earlier this year, Illinois Gov. JB Pritzker (D) pushed for the state to end its Health Benefits for Immigrant Adults program after higher-than-expected enrollment numbers. In fiscal 2023, nearly 54,000 individuals ages 42 to 64 enrolled in the state program—more than double the initial estimated total of 26,800, according to a February state auditor general’s report.

Pritzker’s office said in an emailed statement that the change helped Illinois pass a balanced budget, but noted the state plans to continue offering coverage to individuals 65 and older regardless of immigration status.