California is projected to spend nearly $10 billion on health benefits for illegal aliens during the 2025–2026 budget period, an amount 28 times greater than what the state plans to allocate for its own law enforcement agencies, according to a new report from the Legislative Analyst’s Office (LAO).
Governor Gavin Newsom’s finalized state budget sets aside $348 million for law enforcement while designating billions in Medi-Cal funding for illegal immigrants.
The LAO’s findings, released in October, show the cost of providing full health benefits to illegal aliens has surged 35% higher than the $7.4 billion figure Newsom cited in his January 2025 budget proposal.
The report estimates that 1.7 million illegal immigrants are enrolled in Medi-Cal, California’s joint state-federal Medicaid program, representing about 11% of total participants.
These enrollees receive full medical, dental, vision, and prescription coverage.
Illegal aliens’ health care benefits now account for roughly one-fourth of all state Medi-Cal spending.
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Diana Crofts-Pelayo, a spokesperson for Governor Newsom, defended the administration’s spending priorities in a statement to the Daily Caller News Foundation, saying, “The Governor is committed to effective crime reduction, which is why California’s crime rate has been rapidly declining in recent years.”
She added that most law enforcement budgets are “funded primarily through local funding,” citing a February 2025 report that detailed city and county spending on police.
The new figures arrive amid ongoing national debates over taxpayer-funded health care for illegal immigrants and heightened legal disputes surrounding President Donald Trump’s decision to deploy National Guard units to major U.S. cities, including Los Angeles, to protect Immigration and Customs Enforcement (ICE) facilities from escalating threats.
Governor Newsom, a vocal critic of President Trump, has long promoted California’s expansive Medicaid policies.
In 2022, he made California the first state to extend full-scope Medicaid coverage to all immigrants meeting income requirements, regardless of legal status.
At the time, Newsom described the move as achieving “universal access to health coverage.”
– $11 insulin
– $20 minimum wage for fast food workers
– $25 minimum wage for healthcare workers
– Universal Pre-K
– Free school meals
– 600,000 new apprenticeship programs
– Largest civil service program in the country
– Universal healthcare
– Improved test scores across the… pic.twitter.com/oqUPxD9U1v— Gavin Newsom (@GavinNewsom) October 28, 2025
However, the LAO report indicates that the state’s expansion of Medi-Cal to illegal aliens of all ages has caused program costs to more than double from earlier projections.
While the state is legally required to fund these benefits using state dollars, California has reportedly leveraged complex federal reimbursement mechanisms to secure additional Medicaid funding.
Policy analyst Niklas Kleinworth of the Paragon Health Institute told the Daily Caller News Foundation that the state took advantage of loopholes in federal rules to draw extra Medicaid matching funds.
“What they did was technically legal, so you can’t call it defrauding the government, but it really was an abuse of the intent of the policy,” Kleinworth said.
“They got very crafty.”
Paragon Health Institute, a non-partisan policy organization founded by Brian Blase, a former economic policy adviser to President Trump, reported that even the Biden-Haris administration’s Centers for Medicare and Medicaid Services (CMS) had warned California that its policy was inconsistent with the “intended design” of federal rules.
President Trump’s One Big Beautiful Bill, signed into law in July 2024, placed new limits on states’ ability to obtain federal Medicaid dollars through such accounting methods, forcing California to find new revenue sources.
The LAO report notes that Newsom and legislative Democrats spent months negotiating budget adjustments to contain rising costs.
By June 2025, Democrats finalized a plan to freeze new Medi-Cal enrollments for illegal adult residents starting in January 2026.
The plan will also eliminate dental coverage and reduce payments to certain medical clinics. Beginning in July 2027, California will impose a $30 monthly premium for illegal immigrant enrollees — a figure that analysts say remains heavily subsidized compared to the average $650 monthly cost for Californians with employer-sponsored health insurance.
To maintain funding for the expanded Medi-Cal program, the LAO suggested imposing a new tax on uninsured residents, estimated at $900 or more per person annually.
Kleinworth described the proposed premium structure as unrealistic for the broader population.
“The only way a $30 premium exists is through the heavily subsidized Obamacare plans,” he said.
In an interview with Bloomberg in October, Governor Newsom dismissed mounting criticism of the state’s budget priorities, describing it as “California derangement syndrome.”
California’s final 2025–2026 budget underscores a continued divide between the state’s healthcare ambitions and its public safety allocations, as policymakers weigh how to sustain rising costs tied to programs covering noncitizens while facing growing fiscal strain.
