Visit just about any major government agency webpage and you’ll get a message that the “Radical Left has shut down the Government.” The President and his allies say it’s because Democrats want to give free healthcare to undocumented people (or, in their parlance, illegal aliens, even if many have provisional status).
The heart of the matter:
- Deep cuts to Medicaid enacted in 2025 — tighter eligibility, reduced federal support, and added red tape;
- The potential end of enhanced Affordable Care Act (ACA) subsidies, which help millions of Americans afford health insurance.
Democrats argue that both measures will lead to skyrocketing costs and coverage losses for working- and middle-class families. Independent analysts — including the Congressional Budget Office (CBO) and the Kaiser Family Foundation (KFF) — largely back up those warnings.
Millions of Americans have already been notified by their insurance providers that their premiums will dramatically increase to unstainable levels.
But the debate has also been clouded by a wave of misinformation, particularly claims that Democrats are trying to give “free health care to illegals.” That talking point has little basis in fact.
1. The Real Impact of Medicaid Cuts
The Republican reconciliation law known as the “One Big Beautiful Bill Act” (OBBBA), passed on July 4, 2025, slashes over $1 trillion from Medicaid and the Children’s Health Insurance Program (CHIP) over ten years, according to the CBO.
Analysts estimate that between 7.8 and 10.3 million people are projected to lose Medicaid coverage by 2034, depending on how states respond:
Many of those who lose coverage still technically meet eligibility rules but get tripped up by new work-reporting or documentation requirements — procedural “drop-offs” that states are not equipped to handle efficiently.
Rural hospitals, which depend heavily on Medicaid reimbursements, face what Axios calls a “one-two punch” of funding cuts and coverage losses. Several could close outright.
The Medicare Rights Center estimates these changes could lead to tens of thousands of additional deaths per year due to reduced access to care.
1A. Context: The Current October 2025 Shutdown
To clarify the present fight: OBBBA is already law. The current October 2025 government shutdown has big triggered by its fallout. As the law’s healthcare provisions began to take effect, millions started receiving notices about coverage loss or higher premiums.
In response, Democrats are refusing to approve new government funding — via a continuing resolution (CR) or budget package — unless it restores or delays OBBBA-driven Medicaid cuts and extends ACA subsidies. Republican leaders have insisted the OBBBA reductions remain in place. That standoff is what has shut down large parts of the federal government this month.
In short, this is a funding fight over whether to reverse or uphold OBBBA’s Medicaid and ACA subsidy changes.
2. The ACA Subsidy Rollback: Premium Shock
Even for those not on Medicaid, another looming threat is the expiration of the enhanced ACA premium tax credits, which were expanded during COVID and later extended through the Inflation Reduction Act. If they lapse, millions will see monthly premiums jump sharply — in many cases double or more:
- The CBO projects that 4.2 million additional people would lose insurance if these subsidies expire.
- KFF’s modeling shows an average 75% increase in out-of-pocket premiums.
- Some states could see hikes exceeding 100%, according to insurer filings reported by Health System Tracker.
In other words: the claim that ending these subsidies would “soar insurance costs for millions” is not hyperbole — it’s consistent with the best available data.
3. Are the Democrats Right?
On balance, yes. Projections from nonpartisan and centrist sources largely support their case: OBBBA’s Medicaid cuts and allowing enhanced ACA subsidies to expire are likely to lead to millions losing coverage and sharply higher costs for those who remain insured.
Exact outcomes depend on implementation — e.g., whether states cushion the blow with their own funds, whether Congress delays certain provisions, or how strictly administrative burdens are enforced — but the trendlines are clear and unfavorable for low- and middle-income households.
Even FactCheck.org, which scrutinizes partisan claims, finds that these warnings are “largely consistent with independent projections.”
4. The “Free Healthcare for Illegals” Myth
One of the more charged talking points is that Democrats are fighting to give “free health care” to undocumented immigrants. That’s a myth.
What the law actually says:
- Undocumented immigrants are barred from Medicaid, Medicare, CHIP, and ACA subsidies under federal law. (KFF explainer)
- The enhanced ACA subsidies Democrats want to preserve do not apply to undocumented immigrants; they benefit U.S. citizens and lawfully present immigrants. (Georgetown CCF fact check)
- A few state-funded programs (e.g., in California, Illinois, New York) offer limited coverage to undocumented residents — but those are state initiatives, not federal policy.
So why the myth? Because it’s effective politics. By implying that “illegals” are receiving taxpayer-funded benefits, opponents distract from the actual content of the bills — which overwhelmingly affect citizens and legal residents. As The Guardian notes, the strategy is to pivot away from coverage losses toward resentment-driven sound bites.
5. What’s Really at Stake
At its core, this is a fight over priorities:
- Do we fund healthcare access for low- and middle-income families, or redirect those funds toward tax cuts and deficit trimming?
- Do we sustain programs that reduced uninsured rates to historic lows, or accept millions losing coverage to save on federal spending?
In the context of Trump-era tax cut agendas and GOP fiscal goals, there is a deeper tension at play: the drive to lower taxes (especially for high earners) often requires offsetting cuts somewhere, and social programs like Medicaid and ACA subsidies are frequent targets.
The CBO, KFF, and other independent watchdogs have made the tradeoffs plain. One side warns of fiscal restraint (while cutting taxes for higher earners); the other warns of human cost and of the unsustainable systemic cost of millions of people losing coverage.
It’s hard to imagine arguing in favor of the former at the expense of the latter under the guise of fiscal responsibility.
What’s certain is this: the outcomes won’t be abstract. They’ll show up in hospital closures, family budgets, and community health — not in the scare stories about “free care for illegals.”
Related Reading
Chris Cocca 