NEW YORK, NY September 25, 2007 —Governor Spitzer says the Bush administration was wrong to overrule a state policy that used federal emergency Medicaid funds to pay for chemotherapy for illegal immigrants. They are only eligible for Medicaid on an emergency basis.

REPORTER: The Bush administration says that excludes cancer treatment, but that's not how Spitzer reads the law.

SPITZER: When a statute passed by congress specifically excludes certain treatments as congress did in regards to organ transplant, but does not exclude others it leaves to the discretion of an attending doctor what constitutes an emergency.

REPORTER: Spitzer says he will sue the federal government if necessary, and in the meantime, the state will reimburse hospitals for cancer care for illegal immigrants.

Between 2002 and 2005, Medicaid paid about 6 million dollars a year for cancer care classified as "emergency." The state had to pay it back.

That's a small fraction of the 45 billion spent annually on Medicaid in New York.