The GOP Obamacare reform legislation slated for a vote in the Senate on Thursday includes two provisions that would make it cost-prohibitive for states to provide Medicaid to low-income illegal immigrants, even without using federal dollars.
The bill introduced by Sens. Mike Crapo (R-ID) and Bill Cassidy (R-LA), which is aimed at preventing Affordable Care Act enrollees from seeing major premium hikes from the expiration of added subsidies, includes two immigration-related provisions from the House’s version of the Republican One Big Beautiful Bill Act that did not survive Senate scrutiny this summer.
If passed as is, the Crapo-Cassidy bill would cut nearly $12 billion in funding over the next 10 years for the 14 states and Washington, D.C., that use state Medicaid funds to cover insurance costs for illegal immigrants and lawfully present non-citizens.
The Crapo-Cassidy bill, introduced earlier this week, is meant to be the GOP’s response to the expiring enhanced premium tax credits for Obamacare marketplace enrollees, which were signed into law as a temporary measure by President Joe Biden in 2020 and 2021.
Members of Congress have been debating for months on what to do about the expiring tax credits for the more than 20 million Obamacare enrollees who receive subsidies to lower their premiums. Without the COVID-19-era subsidies, average premiums paid by enrollees are set to double on average, with early retirees and small business owners taking the biggest hit.
The Crapo-Cassidy proposal takes inspiration from President Donald Trump’s call to send subsidies directly to patients, rather than to insurers, by giving enrollees health savings accounts if they opt for high-deductible Obamacare insurance plans.
But two key provisions changing Medicaid will have sizable effects for illegal immigrants and lawful residents awaiting status verification, said Samantha Artiga of the nonprofit health policy organization KFF.
Both provisions affect the amount of money that the federal government chips into the low-income Medicaid insurance systems, which are managed separately by each state.
One provision in the Crapo-Cassidy bill would reduce the federal matching percentage that states receive if they choose to use state funds to cover illegal immigrants.
Artiga described this provision as effectively “a penalty for providing that coverage” that would punish states for using state funds to cover immigrants who are otherwise ineligible under federal rules.
“The potential impacts there are, either those states would lose significant amounts of federal dollars, or they would eliminate their coverage programs so that they would not be subject to the penalty on the match rate,” Artiga said. “So then, in that case, immigrant families would be losing access to health coverage, largely children covered through those programs.”
KFF estimates that more than 1.9 million people would lose health coverage if states chose to eliminate their state-funded Medicaid coverage for immigrants, regardless of their immigration status, to avoid the penalty. That includes Children’s Health Insurance Program coverage for nearly 300,000 immigrant children.
The other section of the Crapo-Cassidy bill addresses Medicaid coverage for immigrants awaiting verification documents for their legal status. Under current law, there is a so-called “reasonable opportunity period” of 90 days during which states can use federal money to provide Medicaid coverage to immigrants who meet all other eligibility requirements until they can prove their legal status. The new provision in the Crapo-Cassidy bill would make such reasonable opportunity coverage optional and punish states if they provided Medicaid coverage to immigrants who turned out not to be eligible for the program.
“What this provision would do would make it optional for states to provide coverage during that period when someone’s trying to document their status, and also would remove federal funding to states if they choose to provide coverage during that reasonable opportunity period and then ultimately someone is not found eligible or unable to actually satisfactorily document their status,” Artiga said.
Both of these provisions are nearly identical to those passed by the House in May in its version of the One Big Beautiful Bill Act, but they did not survive review by the Senate Parliamentarian under the rules governing what can be included in the expedited process that Republicans used to skirt the filibuster.
Including these sections would save the federal government billions of dollars in deficit spending over the next decade, according to the Congressional Budget Office’s estimates of the One Big Beautiful Bill Act from this summer.
Reducing the federal matching percentage for states that cover the Medicaid costs of undocumented immigrants would lower deficit spending by roughly $11 billion between 2026 and 2035, according to the CBO. Penalizing states for providing Medicaid during the immigration status verification period for enrollees would save the federal government an additional $844 million over the next decade.
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The CBO has not yet released a full estimate of the cost of implementing the Crapo-Cassidy Obamacare reform proposal. It is unclear whether the savings from Medicaid cuts would offset the new Obamacare costs through the Crapo-Cassidy HSA system.
Senators are expected to vote on Thursday on a Democratic proposal that would extend the existing enhanced premium tax credit structure for the next three years. The CBO estimated on Wednesday that enacting the Democrats’ bill would cost $83 billion, spread over the next 10 years.
