States Face Billions in Losses Under Deportation-Focused Federal Budget Bill

The House-passed budget measure threatens to gut Medicaid funding for states covering undocumented immigrants, while New Jersey cities battle DOJ lawsuits.

WASHINGTON — The Trump administration is escalating its crackdown on states and cities that provide services to immigrants without legal status, advancing a two-pronged effort to reshape national immigration policy through both federal legislation and the courts.

On Capitol Hill, House Republicans narrowly passed a sweeping budget bill last week that would penalize states for using their own funds to insure unauthorized immigrants through Medicaid. The measure — dubbed the “One Big Beautiful Bill” — would slash federal Medicaid reimbursements to 15 states and Washington, D.C., by billions of dollars unless they roll back benefits for immigrants lacking legal status.

At the same time, the U.S. Department of Justice filed suit Thursday against four Democratic-led New Jersey cities, alleging that their “sanctuary” policies obstruct federal immigration enforcement and violate the Constitution’s supremacy clause.

Together, the moves underscore the administration’s renewed focus on curtailing …