Trump Administration Withholds $1.3 Billion in Medicaid Funding from California Over Alleged Fraud

The Trump administration has announced plans to withhold $1.3 billion in Medicaid reimbursements from California, alleging that the state has not taken alleged fraud in its hospice and home health agencies seriously.

Vice President JD Vance made the announcement during a press conference on Wednesday, stating,

"These fraudulent health care providers are getting rich by giving people medications they don’t even need. We want California to get serious about this fraud."

Vance argued that states across the country were bearing the financial burden of California’s alleged inaction, though California Governor Gavin Newsom strongly disputed the administration’s claims.

Newsom’s Response:

In a statement posted on X, Newsom wrote,

"We hate fraud. But that’s NOT what this is. Vance and Oz are attacking programs that keep seniors and people with disabilities OUT of nursing homes. Pretty sick."

Newsom further defended California’s In-Home Supportive Services (IHSS) program, which provides home-based care to over 730,000 low-income, disabled residents. He argued that the program had ultimately saved the federal government money by preventing more expensive nursing home placements.

Newsom’s Claim:

"Why has IHSS grown in California? It’s simple: Because California is keeping more people OUT of far more expensive nursing homes!"

The Trump administration has labeled California as the epicenter of health care fraud, aiming to reduce Medicaid funding nationwide. Vance’s announcement follows a prior federal action that suspended the licenses of 447 hospice facilities and 23 home health agencies in the Los Angeles area due to suspected fraud.

Vance also warned that his anti-fraud unit would take aggressive steps to hold states accountable. He stated that letters would soon be sent to all 50 states, requiring them to demonstrate efforts to prosecute Medicaid fraud.

"And if they don’t, we are going to turn off the money,"