Trump Administration Defers $1.3 Billion in Medicaid Payments to California

The Trump administration announced on Wednesday a decision to withhold $1.3 billion in Medicaid payments to California. The main reason cited for this move is that the state has not done enough to address issues related to fraud.

During a White House event, Vice President JD Vance stated that the primary cause behind this decision is California’s lack of seriousness regarding fraud prevention. This announcement comes as part of a wider governmental effort to combat health care fraud across the nation.

Vance elaborated, mentioning that California taxpayers—as well as American taxpayers—are losing out due to insufficient action on the state’s part. He noted that people in California are being prescribed unnecessary medications, indicating a troubling trend where fraudsters promote false prescriptions and inappropriate medication use.

Vance also mentioned that all 50 states have been informed that if the Medicaid Fraud Enforcement Agency does not actively pursue fraud cases, they may face funding cuts.

Dr. Mehmet Oz, the administrator of the Centers for Medicare and Medicaid Services (CMS), also weighed in, stating that if states like California refuse to engage with the federal government in efforts to save taxpayer money, they will face consequences.

In response, California’s Democratic Governor Gavin Newsom’s office did not immediately comment. However, the state’s press office expressed disdain for fraud while suggesting that the administration’s focus might be misplaced, arguing that the programs under attack actually help vulnerable populations such as the elderly and disabled.

An anonymous government official declared that Americans are witnessing high levels of fraud in California, emphasizing that the Trump administration will not condone such behavior.

California spends roughly $150.4 billion on Medicaid for the fiscal year 2024, leading the nation in total Medicaid expenditures. In that same year, California received over $92 billion from CMS.

Earlier, on April 30, the administration had already decided to halt $91 million in Medicaid funding to Minnesota because of similar fraud concerns. Additionally, the administration announced a temporary suspension of new enrollments in Medicare for home health and hospice providers.