More than $1 billion in federal Medicaid money for California and Minnesota is on hold, and both sides say they're the ones protecting taxpayers. Health and Human Services Secretary Robert F. Kennedy Jr. and Medicare/Medicaid chief Mehmet Oz said on Tuesday that the Trump administration has paused $867.5 million for California and $199 million for Minnesota over what they describe as suspect claims, including bills tied to dead patients and payments flagged by fraud analytics, reports the Wall Street Journal. "If [California] Gov. Gavin Newsom or [Minnesota] Gov. Tim Walz wants this funding released, all they have to do is provide basic documentation showing that these services are legitimate and not fraudulent," Kennedy said.
The health secretary added, per the AP: "We have a duty to stop the payments, demand answers, and then follow the evidence wherever it leads." Oz singled out California's in-home care costs for seniors and people with disabilities, which he said grew twice as fast as in most other states, and called the move a "very conservative approach" to stopping questionable spending, per the Journal. Democratic Govs. Newsom and Walz, meanwhile, accuse Washington of political payback disguised as oversight, arguing the freeze threatens care for children, seniors, and people with disabilities.
"This is about cutting healthcare for people they don't care about in their campaign of retribution," Walz noted. Minnesota officials say this is the third deferral they've faced this year and that they've already tightened anti-fraud measures, while criticizing federal officials for not explaining how the latest totals were calculated. An HHS spokesperson said the new action is separate from a $1.3 billion Medicaid pause announced by Vice President JD Vance in May. The New York Times notes that the funds being held back represent just a fraction of each state's overall Medicaid budget: In 2024, Minnesota spent $18.6 billion on its program, while the Golden State forked over $150 billion.
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