By Andrea Shalal and Ryan Patrick Jones
WASHINGTON, Feb 25 (Reuters) – The Trump administration is withholding more than a quarter of a million dollars of Medicaid funding from Minnesota, saying the state allowed the theft of federal funds intended for social-welfare programs in the state.
U.S. Vice President JD Vance and Dr. Mehmet Oz, who oversees the Medicaid healthcare program for low-income households, announced the temporary halt at a joint press conference on Wednesday, where they criticized Minnesota Governor Tim Walz’s administration for not doing enough to combat fraud.
“We are stopping the federal payments that will go to the state government until the state government takes its obligations seriously,” Vance said.
Walz fired back on social media, accusing the administration of attempting to punish Democratic-run states.
“This has nothing to do with fraud,” he said in a post on X. “This is a campaign of retribution. Trump is weaponizing the entirety of the federal government to punish blue states like Minnesota.”
Republican President Donald Trump’s administration has used fraud allegations in Minnesota as part of its justification for a months-long immigration crackdown in the state, during which federal agents shot and killed two U.S. citizens, and for freezing funds meant for social programs.
Administration officials have pointed to a scandal that began during the COVID-19 pandemic, when the Department of Justice indicted 47 people for allegedly defrauding $250 million from a federally funded child nutrition program.
Walz, a Democrat, said the latest withholding of Medicaid funding would be devastating for families, veterans and people with disabilities.
GOVERNMENT WITHHOLDS $259 MILLION IN MEDICAID FUNDS
Oz said the federal government had paused the payment of $259 million of deferred Medicaid payments to Minnesota following an audit, and would hold on to the funds until the state government proposes “a comprehensive corrective action plan.” He added that Walz had 60 days to respond.
Vance and Oz also announced a six-month nationwide moratorium blocking durable medical equipment suppliers – including for prosthesis, orthotics and other items – from enrolling in Medicaid, saying such suppliers had become a source of fraud.
Oz, citing an estimate from the non-profit Kaiser Family Foundation, said $300 billion a year is spent nationwide on healthcare that is “fraudulent, abusive or wasteful.” Of that, the federal portion is around $100 billion, he said.
The administration will soon announce additional actions targeting other states, he said, citing issues with healthcare fraud in southern Florida, California and New York.
Trump has tapped Vance to spearhead an administration “war on fraud” and created the new role of assistant attorney general for national fraud enforcement to lead the Justice Department’s investigation and prosecution of fraud that affects the federal government and federally funded programs.
Trump has repeatedly attempted to withhold funding from Democratic-led states, although such cuts have frequently been blocked by federal judges who found the actions potentially retaliatory or legally flawed.
Human rights advocates and Trump critics say the administration is using fraud allegations as an excuse to target immigrants and political opponents.
(Reporting by Andrea Shalal in Washington; Writing by Jasper Ward and Ryan Patrick Jones; Editing by David Ljunggren and Edmund Klamann)
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