Vice President JD Vance made a sweeping announcement Wednesday that has sent shockwaves across the country: the Trump administration is halting federal funding cuts for Minnesota totaling $259.5 million in Medicaid reimbursements, citing what officials describe as rampant fraud in the state’s health care safety net programs. The move, unveiled alongside Centers for Medicare and Medicaid Services (CMS) Administrator Dr. Mehmet Oz, marks the most aggressive step yet in the administration’s self-declared “war on fraud.”
The announcement came just one day after President Donald Trump, during his State of the Union address, tasked Vance with leading a nationwide crackdown on what the White House calls systemic abuse of taxpayer-funded programs. Within 24 hours, Minnesota became the first — and most high-profile — target.
If you live in Minnesota or rely on Medicaid, this decision could affect your access to health care. Read on to understand what’s happening and what comes next.
What Vance and Oz Actually Announced
Standing at a White House press event, Vance made the administration’s position blunt and direct. “We have decided to temporarily halt certain amounts of Medicaid funding that are going to the state of Minnesota in order to ensure that the state of Minnesota takes its obligations seriously to be good stewards of the American people’s tax money,” he said.
Dr. Mehmet Oz, who now leads CMS, put a dollar figure on it: $259.5 million in Medicaid reimbursements will not be paid to the state this month. That figure, Oz explained, is based on an audit covering the final three months of 2025. The audit found approximately $243.8 million in potentially fraudulent or unsupported claims, plus another $15.4 million in claims tied to individuals who lacked satisfactory immigration status.
Oz was unsparing in his language. He called those committing fraud “self-serving scoundrels” and made clear the blame falls on Minnesota’s leadership, not its residents. “This is not a problem with the people of Minnesota,” Oz said. “It’s a problem with the leadership of Minnesota and other states who do not take Medicaid preservation seriously.”
Governor Tim Walz, a Democrat, was notified of the decision as the press conference was underway. He fired back swiftly on social media, writing, “This has nothing to do with fraud. These cuts will be devastating for veterans, families with young kids, folks with disabilities, and working people across our state.”
The Bigger Picture: How We Got Here
Minnesota did not arrive at this moment overnight. The state has been under federal scrutiny for years, following a series of large-scale fraud cases involving social service programs. One of the most notable was a nonprofit called Feeding Our Future, accused of stealing approximately $300 million in pandemic-era school meal funds. Federal prosecutors have since secured dozens of convictions tied to various welfare and social services fraud cases in Minnesota, with estimated losses now exceeding $1 billion.
In December 2025, the administration froze $185 million in child care funds to the state. Just last month, it announced it was freezing $10 billion in funding for social service programs across five Democratic-led states, including Minnesota. Wednesday’s Medicaid freeze is the latest and largest in that series of actions.
Trump himself spotlighted Minnesota during his State of the Union address, saying “pirates” have “ransacked” the state — pointed language aimed squarely at what the administration frames as decades of lax oversight.
A report that surfaced around the same time found internal vulnerabilities in how Minnesota’s Department of Human Services handled fraud prevention, dating back as far as the 1970s. Former agency workers described a culture that prioritized “compassion over compliance,” which critics say created openings for exploitation.
What Programs Are at Risk
CMS identified 14 Medicaid programs in Minnesota that it now considers high-risk for fraud. Those programs include autism care services and non-medical transportation — services that many vulnerable residents, including children and people with disabilities, depend on daily.
Officials warned that if Minnesota does not satisfy federal requirements, the state could lose up to $1 billion in federal Medicaid funding over the next year. CMS said Governor Walz has 60 days to respond with a comprehensive corrective action plan. If he does not, the financial consequences could deepen significantly.
Akeiisa Coleman, a senior program officer for Medicaid at the Commonwealth Fund, described the action as a “highly unusual step” for the federal government. She cautioned that if the state runs short on its own funds, it may be forced to pause payments directly to health care providers — which would disrupt care for the 1.2 million Minnesotans currently enrolled in Medicaid.
Minnesota Pushes Back — Hard
State officials are not staying quiet. Minnesota Attorney General Keith Ellison said his office has secured more than 300 Medicaid fraud convictions since he took office in 2019. He argued the state has already taken meaningful steps to address fraud and accused the federal government of using a “cut first, ask questions later” approach that courts have repeatedly ruled illegal.
“If the federal government is unlawfully withholding money meant for the 1.2 million low-income Minnesotans on Medicaid, we will see them in court,” Ellison said in a statement.
Ellison also introduced legislation Wednesday calling for 18 new staff members to be added to the state’s Medicaid Fraud Control Unit, which would bring its total workforce to 50. Minnesota Democrats simultaneously proposed 13 new bills focused on fraud oversight and prevention — moves that appear designed to undercut the federal government’s argument that the state is doing nothing.
Minnesota’s Department of Human Services Commissioner Shireen Gandhi said the administration’s actions “significantly harm the state’s health care infrastructure” and accused federal officials of ignoring “more than a year of serious and intensive work to fight fraud.”
The National Implications
Vance and Oz made no attempt to hide the fact that Minnesota is just the beginning. Oz said similar announcements targeting other states are coming “soon,” and specifically named Florida, New York, and California as potential future targets. CMS also announced a separate pause on new Medicare enrollment for durable medical equipment suppliers for six months, citing more than $1.5 billion in suspected fraudulent billing that it stopped in that sector last year.
The administration also launched a new crowdsourcing effort, soliciting tips from American citizens on how to detect and report fraud — a signal that the “war on fraud” is being framed as a public participation campaign, not just a government enforcement push.
Legal challenges are already being mounted. At least one federal judge has previously blocked similar administration funding freezes and ordered payments to resume for Minnesota and four other states. Attorney General Ellison’s threat to sue suggests the courts may once again become the arena where this fight is settled.
What Happens Next
Governor Walz has 60 days to submit a corrective action plan to CMS. If he does not, or if the plan is deemed insufficient, the administration has indicated it could withhold up to $1 billion in total Medicaid funding from the state over the following year. Federal agencies including the Justice Department and Treasury Department are also involved in the broader fraud investigation, with Vance noting they would be examining tax records as part of the crackdown.
The administration expressed confidence that Minnesotans will not immediately lose access to care, pointing to the state’s rainy-day fund as a financial cushion. State officials, however, dispute that characterization and say the stakes for patients are very real.
What’s clear is that the federal funding battle over Minnesota’s Medicaid program is far from over. With court challenges likely, a 60-day deadline looming, and billions of dollars potentially on the line, every development in the coming weeks will matter enormously for patients, providers, and policymakers alike.
What do you think about the federal government’s decision to freeze Minnesota’s Medicaid funding? Drop your thoughts in the comments below and share this story with someone who needs to stay informed.
