Billions Are Going Down the Drain in This Steamy Medicaid Scandal – It’s Getting Hot!

California is using billions in federal taxpayer dollars to cover healthcare for illegal immigrants, according to a new study that exposes a controversial funding scheme.

“They are exploiting an existing loophole within law,” Paul Winfree, president and CEO of the Economic Policy Innovation Center (EPIC), told Fox News Digital.

A report from EPIC and the Paragon Health Institute claims California is leveraging Medicaid provider taxes to redirect federal funds. On paper, nearly $4 billion appears to be state-funded healthcare for illegal immigrants and other programs. However, the study argues that the money is actually coming from federal reimbursements to the state.

California officials pushed back against the findings, but Winfree suggested this could be a key area for cutting federal spending. House Republicans are seeking between $1.5 trillion and $2 trillion in savings to offset budget priorities under former President Donald Trump.

Under current law, states must pay Medicaid providers an amount equivalent to taxes collected. The federal government then matches 60% of those payments, helping states recoup costs.

“Medicaid spending is supposed to be jointly financed by the federal government and states. However, states are increasingly designing Medicaid money laundering schemes that result in massive federal expenditures without any state financial obligation,” the report stated.

The study accused California of working with insurance companies covering Medicaid beneficiaries to create one of the most “outrageous” schemes yet. The report alleges that, between April 2023 and December 2026, California will secure over $19 billion in federal money without contributing a dime of state funds.

According to the study, these funds are being used to expand Medicaid benefits to illegal immigrants and provide long-term care for the wealthy.

“This scheme enriches insurers, attracts illegal immigrants to the United States, and adds mountains to the federal debt, all at the expense of working Americans,” the report stated.

Winfree suggested that closing the loophole that allows California to raise its provider tax significantly could save up to $630 billion. He noted that Republicans are examining this as part of their broader push to trim at least $2 trillion from the federal budget.

House and Senate Republicans are using their majorities to advance a sweeping bill addressing border security, defense, energy, and tax policies under Trump’s vision.

Through the budget reconciliation process, they can pass legislation with a simple 51-vote majority in the Senate, bypassing the usual 60-vote threshold required to break a filibuster.

The House Republican budget framework, passed last month, assigned committees specific spending cut targets. The Energy and Commerce Committee, which oversees Medicaid and Medicare, is tasked with identifying $880 billion in reductions.

Republicans insist their goal is to eliminate waste, fraud, and abuse in government spending. However, Democrats argue the GOP is attempting to slash federal healthcare benefits for millions of Americans.

“One of the things that Congress is looking at right now is limiting the Medicaid provider tax loophole. It’s actually one of the most significant offsets that is within the Medicaid portfolio that the Energy and Commerce Committee and Finance Committee over in the Senate can look at while they’re putting together their reconciliation bill,” Winfree said.

He cited estimates suggesting closing the loophole entirely could save up to $630 billion but admitted that a complete shutdown is unlikely.

“It’s much more likely that they will reduce what’s called the safe harbor. So, in other words, what they’ll do is they’ll just reduce the amount of gaming that goes on, including this kind of gaming. And if that happens, it is more likely to affect some of the big blue states than it is the red states, simply because it’s the blue states that have really tested the upper limits of this kind of gimmick,” Winfree explained.

Even partial reforms could still save the federal government billions, according to the study.

A spokesperson for California’s Department of Healthcare Services dismissed the report as “misleading” and urged people to seek accurate information from the department’s website.