Vice President JD Vance said they are suspending part of California's Medicaid funding following reports of widespread fraudulent activity.
The Trump administration is deferring £1 billion ($1.3 billion) in Medicaid reimbursements to California over concerns that fraudsters are driving up costs shouldered by taxpayers, Vance announced on Wednesday.
He claimed that these bad actors 'put drugs' in unsuspecting patients by encouraging false and unnecessary prescriptions.
'There are California taxpayers and American taxpayers who are being defrauded because California isn't taking its program seriously,' Vance told White House reporters. 'Also you have people who have been prescribed medications that they don't even need.'
More on the Medicaid Funding Freeze
'They've had drugs put into their bodies that they don't need because fraudsters have actually encouraged false prescriptions and false administration of medications,' he explained. 'I want to be clear here. We're talking about withholding the Medicaid fraud enforcement payments that go to the state bureaucrats. We're not talking about withholding people's benefits.'
Vance said the decision should serve as a warning to the US's 50 states, all of which will be notified that their Medicaid Fraud Control Units could lose funding 'if they do not aggressively prosecute Medicaid fraud' in their respective states.
Dr. Mehmet Oz, Centres for Medicare and Medicaid Services administrator, said the California Medicaid freeze was the largest deferral they've ever made.
Vance Hits the Ground Running as Trump's 'Fraud Czar'
President Trump appointed Vance as the administration's 'fraud czar' last month. The Vice President has since emphasised that blue states like California do not take Medicaid fraud seriously compared to red states.
Oz confirmed the anti-fraud operations include a six-month suspension on new Medicare enrollment for hospices and home health agencies. 'We're making it for a good reason,' he explained. 'We'd like the state to at least come to the table and explain to us how these outlier payments have been generated.'
Trump's Critics Call Out 'Politically Motivated' Freeze
We hate fraud. But that’s NOT what this is.
— Governor Newsom Press Office (@GovPressOffice) May 13, 2026
Vance and Oz are attacking programs that keep seniors and people with disabilities OUT of nursing homes. Pretty sick.
Why has IHSS grown in California? It’s simple: Because California is keeping more people OUT of far more expensive… https://t.co/bzmHwR8IMi
California Governor Gavin Newsom's office questioned the decision, stating, 'We hate fraud. But that's NOT what this is.'
They said state's In-Home Supportive Services works as a cost-saving measure that kept seniors out of nursing homes at $30,000 (£22,200) yearly versus $137,000 (£101,000).
'Vance and Oz are attacking programs that keep seniors and people with disabilities OUT of nursing homes. Pretty sick,' they asserted.
Once again, California appears to be targeted solely for political reasons.
— Rob Bonta (@AGRobBonta) May 13, 2026
The Trump Administration is planning to defer over $1 billion in Medicaid funding for vital programs that help seniors and people with disabilities remain safely in their homes.
My team is carefully…
Attorney General Rob Bonta criticised the deferral as political targeting of vital programs for seniors and disabled individuals.
'My team is carefully reviewing all available information. We have not hesitated to challenge unlawful actions by the Trump administration,' he wrote on X.
Medi-Cal, California's Medicaid program, serves over 15 million residents. It's projected costs of operation is estimated at £164 billion ($222 billion) this year. The state auditor previously found that a third of In-Home Supportive Services caregivers assist family members.
Vance positioned the actions as a wake-up call to protect programs from fleecing, offering new technologies if states cooperate. 'We don't want to turn off any money. What we want to do is ensure that people are taking fraud seriously,' he explained.
