JD Vance Halts $1.3 Billion Medicare Funding To California Amid Fraud Crackdown As Gavin Newsom Hits Back: ‘Pretty Sick’

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Vice President JD Vance has announced a series of measures to combat fraud in federal health programs, including a significant deferral of $1.3 billion in Medicaid funding to California.

Vance, acting as the fraud czar, highlighted California’s perceived lax approach to fraud as the reason behind the move. The administration is freezing some new Medicare enrollments for six months and urging all 50 states to investigate Medicaid fraud or face potential funding cuts.

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The Vice President said Medicaid fraud in California is harming both taxpayers and patients, alleging that fraudsters have pushed unnecessary prescriptions and medications onto people who did not need them.

“And if we continue to find problems, we can turn off other resources within their state Medicaid programs as well,” warned Vance.

CMS Flags California Spending

Dr. Mehmet Oz, head of the Centers for Medicare and Medicaid Services (CMS), stated that the administration requires California to clarify $630 million in billing, $500 million in home health services, and $200 million in “questionable expenditures” linked to coverage for undocumented immigrants.

Dr. Oz also announced that CMS will pause new Medicare enrollments for hospices and home health agencies for six months as part of anti-fraud efforts. During the moratorium, CMS will strengthen investigations, use advanced data analytics, and speed up the removal of providers suspected of fraud from the Medicare program.

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Newsom Defends Program

California Governor Gavin Newsom‘s office defended the state’s In-Home Supportive Services (IHSS) program against criticism from Vance and Oz, arguing the initiative helps seniors and people with disabilities avoid costly nursing homes. Newsom said IHSS costs about $30,000 per year per person, compared to $137,000 annually for nursing home care, saving taxpayers roughly $107,000 per person.

“We hate fraud. But that’s NOT what this is,” wrote the governor’s office. “Vance and Oz are attacking programs that keep seniors and people with disabilities OUT of nursing homes. Pretty sick,” it wrote.

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Trump Admin Escalates California Fight

In February, Vance and Oz announced a similar move in Minnesota. The administration paused $259.5 million in reimbursements, including $244 million tied to potentially fraudulent or unsupported claims and $15 million linked to individuals lacking satisfactory immigration status. Officials said 14 high-risk programs, such as autism services and non-emergency transportation, are being reviewed.

Meanwhile, the medicare pause is the latest in a series of actions by the Trump administration involving California. In March, the administration sued the state over its emissions goals. Furthermore, in September, the administration launched Medicaid spending probes targeting California’s $12.4 billion immigrant healthcare program.

Earlier this year, California, along with three other Democratic-led states, filed a federal lawsuit to block the Trump administration’s $600 million healthcare funding cuts, claiming that the funding cuts were illegal and driven by political disputes unrelated to public health, including disagreements over federal immigration enforcement.

Image via Shutterstock

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