Vice President JD Vance just slammed the door on $259.5 million in Medicaid funds to Minnesota, exposing rampant fraud and illegal immigrant claims that hardworking American taxpayers have funded for too long.
Story Highlights
- Trump administration defers $259.5M in federal Medicaid payments to Minnesota over unsupported claims and immigration status violations.
- Includes $243.8M for questionable claims and $15.4M tied to individuals without proper immigration status.
- Part of national “war on fraud” led by VP Vance, following President Trump’s State of the Union directive.
- Minnesota’s Democrat leaders cry “retribution” while pushing a bipartisan bill to expand their understaffed fraud unit.
- Potential for $1B more in withholdings if state fails to prove program integrity.
Trump Administration Takes Decisive Action Against Medicaid Fraud
Vice President JD Vance and CMS Administrator Dr. Mehmet Oz announced on February 25, 2026, the temporary halt of $259,505,491 in federal Medicaid funding to Minnesota. CMS identified issues in Q4 FY2025 spending, including rapid growth in high-risk areas like home care services. This preemptive deferral protects taxpayer dollars from unsupported or fraudulent claims, marking a shift from past post-audit recoupments. The action aligns with President Trump’s priority on fiscal responsibility and curbing waste.
Immigration Violations Fuel Funding Pause
Of the deferred amount, $15.4 million stems from claims involving individuals lacking satisfactory immigration status. This ties directly to Trump administration efforts enforcing legal immigration boundaries in public benefits. Minnesota’s history includes Minneapolis daycare fraud linked to Somali communities, underscoring long-standing concerns. Federal overseers view these lapses as leadership failures under Governor Tim Walz and AG Keith Ellison, prioritizing American citizens’ resources over unchecked spending.
Minnesota’s Mixed Record on Fraud Control
Minnesota’s Medicaid Fraud Control Unit, headed by AG Keith Ellison, secured over 300 convictions by 2026 despite a small staff of 32. It outperformed peers in provider fraud from 2020-2022 per HHS OIG audits. Referrals tripled since October 2025, prompting bipartisan H.F. 2354 (MAP Act) to add 18 staff and $1.23 million annually. Yet CMS flagged noncompliance, rejecting the state’s initial corrective plan submitted January 30, 2026, after a December 5, 2025, demand.
Stakeholder Reactions Highlight Political Divide
Dr. Oz labeled fraudsters “self-serving scoundrels” and launched crowdsourcing for tips, stressing collective vigilance. Vance framed the pause as ensuring Minnesota stewards tax dollars properly. Ellison threatens lawsuits calling it “illegal,” while Walz decries it as blue-state retribution devastating vulnerable groups. Bipartisan state lawmakers support MFCU expansion, revealing consensus on fraud’s threat despite partisan rhetoric. CMS holds leverage with 75% funding share and 900% state ROI potential.
Impacts and Broader Implications
Short-term, the deferral strains Medicaid for 1.2 million enrollees, hitting low-income families, veterans, and home care recipients hardest. Long-term, unresolved issues could lead to $1 billion more withheld, setting precedent for federal holds on noncompliant states. Nationwide, it spurs anti-fraud measures amid 2025’s $5.7 billion Medicare fraud suspensions. This protects conservative values of limited government and individual accountability, alerting taxpayers to past fiscal mismanagement’s toll.
Sources:
MN AG: Medicaid Fraud Control Unit Expansion and Response
CMS Press Release: Trump Administration Crackdown on Health Care Fraud
KSAT: Vance Announces Pause of Medicaid Funding to Minnesota
KFF: Understanding Medicaid Home Care Amid CMS Fraud Focus
MN House: Session Daily on MAP Act
