The Trump administration introduced on July 21, 2026, that it’s withholding US$867 million in federal healthcare funding for California and $200 million for Minnesota – a complete of greater than $1 billion.
Federal officers stated the 2 states had failed to supply ample proof that numerous disputed medical claims have been reliable. These embrace payments for in-home care and different providers coated by the 2 states’ Medicaid packages for low-income residents.
Medicaid directors say the funds may be recovered if the states provide the requested documentation. However the motion is very uncommon: Sometimes, Medicaid officers accomplice with states to conduct an audit once they suspect fraud, a cautious course of that usually takes years.
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It’s the second time in 2026 that the Trump administration has withheld or deferred federal Medicaid funds for a number of states, together with California and Minnesota, due to alleged fraud and abuse. The Democratic governors of these states have known as the choice a politically motivated assault on their constituents.
I’m a historian of social coverage who led the primary complete historic overview of Medi-Cal, California’s statewide Medicaid system. I’ve discovered that U.S. leaders have lengthy used the language of fraud and abuse to blur the road between correcting very actual failures inside Medicaid and – as I consider the Trump administration is at the moment doing – discrediting and defunding this system itself.
Slashing the protection web
The Medicaid restrictions are a part of the Trump administration’s total efforts to slash federal funding for the protection web.
The giant tax-and-spending invoice that Trump signed into legislation in July 2025 because the cornerstone of his second-term agenda pared eligibility for Medicaid by introducing work necessities for some adults. It’s chopping near $1 trillion in federal spending on this system over the following decade.
Researchers estimate that nearly 12 million folks, on high of the estimated 28 million with out medical insurance in 2025, may turn into uninsured by 2034 resulting from these modifications. By mid-2026, greater than 3 million folks had already misplaced their insurance coverage protection resulting from Republican modifications to the Reasonably priced Care Act.
‘Padlocking’ the ‘cookie jar’
In February 2026, Vice President JD Vance, Well being Secretary Robert F. Kennedy Jr. and Dr. Mehmet Oz, the administrator of the Facilities for Medicare & Medicaid Companies, or CMS, introduced a brand new anti-fraud initiative known as Complete Rules to Uncover Suspicious Healthcare.
Additionally identified by its quite unsubtle acronym, CRUSH, this initiative is taking unprecedented steps to withhold and defer funds in response to suspected fraud. “CMS is completed making an attempt to catch fraudsters with their fingers within the cookie jar,” Oz stated in saying CRUSH’s formation. “As an alternative, we’re padlocking the jar and letting them starve.”
To make sure, Medicaid fraud, waste and abuse – similar to suppliers billing Medicaid for providers which might be pointless or by no means rendered – are very actual issues that value taxpayers billions of {dollars} yearly. They do divert funds from the low-income and disabled Individuals enrolled in this system.
However the Trump administration’s newest strikes are a part of a much wider historical past of weaponizing Medicaid fraud and abuse – each actual and imagined. I see them as a politicized try and show that Medicaid itself is wasteful, that state governments can’t be trusted to manage federal cash, and that public advantages inevitably invite dishonesty.
Offering little oversight at first
Medicaid was established, together with Medicare for older adults, in 1965 as a part of President Lyndon B. Johnson’s “Nice Society” reforms. Regardless of offering thousands and thousands of Individuals with medical insurance protection for the primary time, these packages had few centralized mechanisms for the form of federal oversight that would stop and catch fraud and abuse.
And the sheer scale and complexity of the Medicaid system – joint federal-state funding, various eligibility necessities, thousands and thousands of enrollees and hundreds of suppliers – created alternatives for questionable billing practices amongst suppliers.
The Seventies noticed numerous extremely publicized Medicaid scandals involving nursing properties, laboratories, pharmacies and so-called “Medicaid mills” – healthcare suppliers that sought to invoice the federal government for big numbers of Medicaid sufferers for shoddy and sometimes fraudulent care.
A collection of high-profile congressional investigations spurred demand for stronger Medicaid oversight and enforcement. That led to the Medicare-Medicaid Anti-Fraud and Abuse Amendments of 1977, which established the nationwide Medicaid Fraud Management Models program.
The state-run Medicaid Fraud Management Models obtained beneficiant federal matching funds to research and prosecute fraud.
Probably the most severe Medicaid fraud was usually dedicated by healthcare suppliers and contractors, not sufferers. Medicaid Fraud Management Models have been principally chargeable for investigating suppliers, whereas additionally prosecuting the abuse and neglect of sufferers whose care was billed to Medicaid.
On the similar time, nonetheless, Medicaid was turning into entangled in a broader political debate over social spending, whether or not many Individuals have been turning into too depending on authorities advantages, and the alleged use of advantages by individuals who mustn’t have obtained them. Within the Nineteen Eighties and Nineteen Nineties, broadly circulated tales about Medicaid uncovered fraud and malfeasance by suppliers.
However disproportionately, in addition they highlighted the comparatively few cases of fraud by folks enrolled in this system, similar to circumstances the place they submitted false receipts for coated medically associated journey or offered medicine they obtained by means of Medicaid without spending a dime or at low value.
Utilizing Medicare fraud to justify spending cuts
The excellence between Medicaid and money help packages, such because the Support to Households with Dependent Youngsters “welfare” program, steadily disappeared in political rhetoric. False or exaggerated tales that portrayed African American single moms dwelling extravagantly whereas fraudulently claiming welfare advantages grew to become potent symbols of supposed authorities failure.
Whereas campaigning as a presidential candidate, Ronald Reagan seized on this trope of the welfare queen” in his assaults on social spending.
By the mid-Nineteen Nineties, opposition to welfare packages had turn into more and more bipartisan. Politicians in each events usually used tales of Medicaid fraud on the a part of suppliers and recipients to justify tighter eligibility guidelines and spending cuts.
Federal oversight expanded additional with the Deficit Discount Act of 2005, which created the Medicaid Integrity Program and strengthened federal oversight of state packages. The Reasonably priced Care Act, the landmark healthcare laws Congress handed in 2010, added new measures to display screen suppliers and confirm billing.
Considerations about Medicaid’s “integrity” grew to become extremely politicized within the debates surrounding the ACA. Critics of Medicaid enlargement argued that growing the quantity of people that may get medical insurance by means of this system would improve fraud and improper enrollment. Supporters of increasing Medicaid to assist extra Individuals achieve medical insurance maintained that anti-fraud rhetoric usually disguised ideological opposition to this system’s enlargement.
Blurring distinctions then and now
For the six a long time that this program has helped thousands and thousands of low-income Individuals get healthcare, politicians have blurred the excellence between defending Medicaid from abuse and utilizing abuse to discredit Medicaid itself.
In my opinion, the Trump administration’s campaigns towards California and Minnesota proceed that sample. It’s utilizing actual weaknesses inside Medicaid to advance a lot broader political arguments: that Democratic states can’t be trusted, that public advantages naturally invite abuse, and that withholding funds is itself a type of reform.
The outcome will little doubt be that fewer low-income Individuals will have the ability to get the healthcare they want.
By Ben Zdencanovic, Assistant Professor of U.S. Historical past, College of Cambridge. This text is republished from The Dialog below a Artistic Commons license. Learn the unique article.
