Lawmakers from red states are looking to train oversight eyes on California as it aims to become the first state in the country to give low-income health benefits to undocumented adults.

Medicaid is run by the states, using a combination of their own money and federal dollars. California’s newly elected governor, Gavin Newsom (D), wants to use the state funds to extend health coverage to undocumented young adults. The state already gives Medicaid to undocumented children.

The proposal is raising eyebrows from several Republican senators who worry that California or other “liberal” states will find a way to “launder” federal dollars to cover undocumented immigrants, which isn’t allowed.

They can’t stop California from going forward, but they can ask the feds to keep a close eye on the money.

The goal, according to a spokesman for Sen. Bill Cassidy (R-La.), is to suss out “whether states providing health benefits to illegal immigrants use gimmicks that rip off the federal government, like provider taxes and intergovernmental transfers, to launder federal dollars to offset the cost of providing benefits to this population.”

Cassidy sponsors legislation, the Protect Medicaid Act (S. 131), “to ensure the long-term integrity of Medicaid by preventing liberal states like California from forcing American citizens in other states to subsidize state programs that expand Medicaid benefits to illegal immigrants.”

Cassidy’s bill would require a report from the Department of Health and Human Services Office of Inspector General on how states separate funding for undocumented Medicaid recipients and all other participants.

The report would look at the procedures states employ to ensure they’re in compliance with federal law. It also calls for description of states’ methods of financing Medicaid programs that provide health benefits to undocumented immigrants.

Even if the bill passes the Senate, it’s unlikely to find traction in the Democrat-controlled House. But Cassidy’s effort illustrates how Republicans can still use federal oversight channels to train eyes on how states run their Medicaid programs.

House Oversight Committee ranking Repubclian Jim Jordan (R-Ohio) and fellow arch-conservative Mark Meadows (R-N.C.) Jan. 23 asked the Centers for Medicare & Medicaid Services to look into another Medicaid issue: possible “integrity” problems with how certain managed care plans are run.

Republican Sens. John Barrasso (Wyo.), Marsha Blackburn (Tenn.), Cindy Hyde-Smith (Miss.), Jim Inhofe (Okla.), David Perdue (Ga.), and Roger Wicker (Miss.) have signed on as co-sponsors to Cassidy’s bill.

Limited Interference

“These programs all happen under a well-established legal principle that the federal government is allowed to attach strings to money that it provides to the states, but its ability to interfere with the states’ expenditure of their own money is much more limited,” Gabrielle Lessard, Los Angeles-based senior policy attorney for the National Immigration Law Center, told Bloomberg Law.

Today, Medicaid and Children’s Health Insurance Program eligibility exists for immigrants in the country legally, but that eligibility often comes with a five-year wait from the date when they got their visas or green cards.

States have the option to eliminate that waiting period for children and pregnant women who are otherwise eligible for Medicaid. About one-third of states have eliminated the waiting period for children, and 25 states made the exception for pregnant women. Six states, including California, and the District of Columbia provide medical coverage for children regardless of immigration status.

“States have historically made different decisions about who to cover with state-only funding,” often to fill in gaps for individuals who didn’t have coverage, Samantha Artiga, associate director for the Kaiser Family Foundation’s Program on Medicaid and the Uninsured, told Bloomberg Law.

Newsom’s budget proposal, released Jan. 10, would extend the state Medicaid program to people up to age 26 regardless of immigration status.

His request is likely to become a reality. This is the second time the state has pursued this kind of expansion of Medicaid eligibility. The California Legislature passed a similar bill last year, but then-Gov. Jerry Brown blocked it.

Cassidy says this kind of activity is only possible because states “already receive millions of dollars from the federal government,” according to a release.

States can raise money for their share of Medicaid by taxing hospitals and other inpatient facilities, but they must follow strict rules in doing so. All states must move money from agency to agency to pay their bills, which in theory could allow federal money to slip into areas that only state funds should cover. Those are the behaviors Cassidy wants to keep an eye on.

Will Undocumented Sign Up?

Even if California is able to implement its planned expansion of Medicaid coverage, the political climate around undocumented immigrants in the U.S. may be reaching a point where those that need health care are too fearful of deportation or other consequences to sign up, Artiga said.

“At the federal level, many of the broader immigration policy changes that have happened over the last two years are increasing fear and uncertainty in immigrant families,” Artiga said, causing them to “turn away” from Medicaid program even when they are eligible.

In September 2018, the Trump administration proposed that immigration officials take into account a foreign resident’s use of public safety-net programs like Medicaid or food stamps in determining whether to extend a visa or grant a green card.

Since then, fears of actions that will bring immigration status into question are especially heightened, Lessard said. “People who are completely eligible under existing law are avoiding access to services.”

For example, she said, green-card holders are avoiding benefit programs even though they’re exempt from the “public charge test.”