Trump’s ‘War on Fraud’ Targets Minnesota’s Medicaid

CMS Administrator Mehmet Oz and Vice President JD Vance
Reuters
By Yuval Rosenberg and Michael Rainey

Happy Thursday! As the Senate wraps up its work for the week, the Department of Homeland Security shutdown is about to reach the two-week mark with no sign of progress toward a resolution - or even a next step in negotiations between the White House and Democrats. "We sent them a proposal a week ago Monday," Senate Democratic Leader Chuck Schumer told reporters Wednesday. "We still haven't heard back. Crickets. So it's in their court."

Trump Admin Halts $260 Million in Medicaid Payments to Minnesota

The Trump administration is freezing nearly $260 million in funding for Minnesota's Medicaid system, citing concerns about fraud in the program.

The move comes soon after President Trump declared a "war on fraud" during his State of the Union address, an effort that is being led by Vice President JD Vance. During the speech, Trump suggested that the federal government could conceivably balance its budget by eliminating fraud - something that would be virtually impossible given the size of the budget deficit. ("He'll get it done," Trump said of Vance. "And if we're able to find enough of that fraud, we will actually have a balanced budget overnight.")

The announcement of the Medicaid freeze on Wednesday was the first action taken by Vance in the newly declared war. "What we're doing is we are stopping the federal payments that will go to the state government, until the state government takes its obligations seriously to stop the fraud that's being perpetrated against the American taxpayer," Vance told reporters.

Dr. Mehmet Oz, who runs the Centers for Medicare & Medicaid Services, said the freeze means that $259.5 million in healthcare spending in Minnesota will not be reimbursed as federal investigators review specific programs for potential fraud.

"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. Any delay in services is going to be, should be laid at the seat of Governor [Tim] Walz."

A political football: Oz's comments highlight the unavoidably political nature of the dispute, which comes against a background of multiple investigations into significant fraud in the state's social welfare programs. The first federal investigations began in 2021 during the Biden administration, leading to dozens of indictments and more than 60 convictions so far.

A video about specific instances or allegations of fraud in Minnesota by a conservative influencer named Nick Shirley that went viral late last year pushed the story into the national spotlight and onto the agenda of the Trump administration. Supercharging the issue, Walz was on the Democratic presidential ticket that lost to Trump in the 2024 election, and some of the instances of fraud involved Somali immigrants, a group that Trump has repeatedly singled out, calling them "garbage" and "low-IQ people," among other things.

Last month, Trump emphasized the political aspect of his aggressive crackdown in Minnesota, which initially focused on immigrants and has now been expanded. "FEAR NOT, GREAT PEOPLE OF MINNESOTA," he wrote on his social media platform in January, "THE DAY OF RECKONING & RETRIBUTION IS COMING."

Walz said Wednesday that the freeze on Medicaid funds is "totally illegal and unprecedented."

"This has nothing to do with fraud," Walz said on social media. "This is a campaign of retribution. Trump is weaponizing the entirety of the federal government to punish blue states like Minnesota."

In December, Walz said that an estimate of fraud in the state's Medicaid program of $9 billion - a number that Trump has rounded up to $19 billion in his State of the Union address - lacked evidence and was "sensationalized." Last summer, Walz indicated that total fraud in the state's social welfare programs could exceed $1 billion - massive, to be sure, but far short of some of the claims being tossed around currently.

A plan to tighten up: Whether the estimates of fraud are accurate or not, the Trump administration is demanding that Minnesota take steps to guard against cheating.

"We will give them the money, but we're going to hold it and only release it after they propose and act on a comprehensive corrective action plan to solve the problem," Oz said. "If Minnesota fails to clean up the systems, the state will rack up a billion dollars of deferred payments this year."

On Thursday, Walz unveiled an anti-fraud legislative package that aims to provide better oversight, enhanced enforcement and sharper criminal penalties.

"Any dollar of state money, especially those being used for programs to enhance people's lives, if that goes to the wrong place, is misspent, or in the case of this, criminals are stealing it, we need to do everything possible to prosecute that," Walz said.

The governor noted that Minnesota's rate of Medicaid fraud is below the national average. In January, CMS data showed that Minnesota's improper payment rate for Medicaid was about 2.1%, less than half the national rate of 6.1%.

Trump Administration's New Obamacare Rules Could Increase Some Family Deductibles to $31,000: Report

The Trump administration has proposed new rules for Affordable Care Act plans that would allow people to buy plans with much lower monthly premiums - and much higher deductibles that could make it much more expensive, or altogether unaffordable, for them to actually get medical care.

As Reed Abelson reports in The New York Times, the new rules proposed earlier this month by the Centers for Medicare & Medicaid Services would allow catastrophic health insurance plans to raise the annual deductible to $15,000 for individuals and $31,000 for families. "The individual deductible would be eight times the average for someone with job-based insurance," Abelson says.

Experts reportedly doubt whether such an option would appeal to enrollees or help reduce costs. "Nobody wants that product," Amitabh Chandra, a Harvard health economist, told the Times. "It's going to be a really cheap product that nobody wants."

Abelson notes that the Trump administration proposed other Obamacare changes as well. "Some would make it harder for people to enroll, while others would redefine which benefits must be covered by a plan - adult dental care would no longer be considered an essential benefit," she writes. "The proposal could also erode other consumer protections. Overall, the rules could result in up to two million people dropping coverage in 2027, according to the administration's own estimates."

More than 1 million people have already dropped Affordable Care Act coverage this year after Congress allowed enhanced subsidies expire at the end of 2025, leading out-of-pocket premium costs to surge for millions of Americans.

Read more at The New York Times.

Congress Approved $15.5 Billion in Earmarks for 2026

The government funding bills Congress passed for fiscal year 2026 reportedly included nearly $15.5 billion in earmarks for 8,271 projects in lawmakers' districts, with about $273 million more in the stalled bill at the heart of the current Department of Homeland Security shutdown fight.

That "congressionally directed spending" accounts for just 1% of the more than $1.6 trillion in discretionary spending Congress has approved through September but often attracts disproportionate attention, The Washington Post's Riley Beggin and Federica Cocco note today. "The money," they add, "will bolster bridges, highways, sewer systems and airport tarmacs; renovate community centers, homeless shelters, housing projects and libraries; fund new hospital equipment, public transit and workforce training programs and more."

Army Corps of Engineers infrastructure projects, such as a $213 million effort to replace the Chickamauga Lock on the Tennessee River and $190 million allocated for work at the Howard A. Hanson Dam in Washington state, rank as the most expensive on this year's list. The Tennessee project lifted Republican Rep. Chuck Fleischmann, who heads the House Energy and Water Appropriations subcommittee, to the top of the list of House members requesting the most in earmarks. Fleischmann's total topped $251 million.

On the Senate side, Democratic Sen. Patty Murray, the vice chair of the Senate Appropriations Committee, topped the list, with nearly $485 million in earmarks for 96 projects. Republican Sens. Mitch McConnell of Kentucky, John Kennedy of Louisiana and Susan Collins of Maine, who chairs the Appropriations Committee, all secured more than $430 million in earmarks.

In all, 30 senators requested more than $200 million apiece in earmarks, while 31 House members requested at least $50 million. You can find lists of the lawmakers requesting the most in earmarks at CQ Roll Call.

The Post points out that smaller states did better on a per capita basis: "California received the highest sum, at $1.07 billion, but the picture shifts when accounting for population: Alaska got $442 for every resident, Maine $335 and South Dakota $223, while large states like California and Texas got just $27 and $21 per person, respectively. Puerto Rico - with 3.2 million people and no voting member of Congress - got $3 per person."

More individual earmarks next year: House Appropriations Committee Chairman Tom Cole on Wednesday announced the beginning of the fiscal year 2027 appropriations process, including the ability for House members to make earmark requests. "Due to high interest and demand, the limit for Community Project Funding requests is now increased to 20 projects per Member," Cole wrote.

Earmark funding remains capped at 1% of federal discretionary budget authority.

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