As the first full day of the federal government shutdown concludes, a newly released White House memo outlines key policy demands from congressional Democrats in ongoing funding negotiations—chief among them, a push to repeal healthcare eligibility restrictions that would result in nearly $200 billion in federal spending on healthcare for non-citizens, including those in the country illegally, over the next decade.
The memo, circulated to media outlets Wednesday morning, details the administration’s position on the breakdown in budget talks that led to the lapse in federal funding. It centers largely on provisions in the Working Families Tax Cut Act (WFTCA), a healthcare and tax reform bill signed by President Trump earlier this year.
According to the memo, Democrats are seeking to repeal sections of the WFTCA as a condition for passing a short-term funding measure that would reopen the government.
White House: Democratic Repeal Efforts Would Cost $200 Billion Over 10 Years
The memo estimates that rolling back the WFTCA’s healthcare-related provisions would result in tens of billions in additional federal spending, primarily by expanding eligibility for Medicaid and other federal healthcare programs to illegal immigrants.
“Democrats are demanding these reforms be repealed as a condition of reopening the government,” the memo states. “This would result in the federal government spending nearly $200 billion on healthcare for illegal immigrants and non-citizens over the next decade—nearly enough to fund the entire Children’s Health Insurance Program (CHIP) over the same period.”
The memo includes several breakdowns of estimated costs associated with repealing specific parts of the law.
Focus on the “California Loophole”
A significant portion of the projected spending increase—$34.6 billion—comes from the proposed repeal of a WFTCA provision known as the closure of the “California Loophole.” This provision prevented states from using federal funds to subsidize state-level Medicaid benefits for undocumented immigrants.
“The WFTCA closes this loophole, through which nearly 80% of federal savings are derived from ending California’s exploitation of past policy,” the memo states.
“Repealing this provision would result in $34.6 billion in additional federal spending that would continue to primarily be used by California to fund healthcare for illegal immigrants.”
Ongoing Stalemate
The release of the memo comes as the federal government remains shut down following the failure of Congress to pass a funding bill before the September 30 deadline. Negotiations between the White House, House Republicans, and Senate Democrats have yet to yield a compromise.
While the memo outlines the administration’s position, Democrats have not publicly commented in detail on the healthcare-related provisions discussed. Party leaders have generally argued for broader access to healthcare and have opposed elements of the WFTCA that restrict eligibility based on immigration status, but they have not confirmed the specific funding requests outlined in the White House’s document.
Political and Fiscal Implications
The WFTCA, passed earlier this year, includes reforms to narrow eligibility for federal health benefits and redirecting savings to expand child tax credits and other domestic programs. The White House has described the bill as a cornerstone of its “America First” policy agenda, particularly in reducing misuse of federal funds.
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