Officials Decry Retribution as Vance Defers $1.3B in Medicaid Payments to CA

“Political retribution, plain and simple,” was how US Sen. Alex Padilla described an announcement by Vice President JD Vance late Wednesday regarding the White House’s decision to withhold $1.3 billion in Medicaid reimbursement payments to California.

Vance and Mehmet Oz, administrator of the Centers for Medicare and Medicaid Services, claimed the state’s Medicaid records have generated “red flags” and demanded officials clarify $630 million in billing, $500 million that’s been spent on home health services, and $200 million in what Oz called “questionable expenditures,” which he claimed had been used to provide coverage for undocumented immigrants, who are not eligible for Medicaid.

The announcement came a month after Vance’s federal anti-fraud task force suspended the licenses of nearly 450 hospice care facilities and 23 home health agencies in the Los Angeles area, accusing them of fraud.

Vance also warned that all 50 states could soon see federal funding for their Medicaid Fraud Control Units frozen if they fail to “aggressively prosecute Medicaid fraud.”

“We can turn off other resources within their state Medicaid programs as well,” said the vice president.

California Gov. Gavin Newsom, who has frequently sparred with the Trump administration, said Vance and Oz were “attacking programs that keep seniors and people with disabilities OUT of nursing homes,” which are far more expensive to run than home healthcare agencies.

“MAGA hates in-home support programs — which help people stay out of costly institutional settings like nursing homes and get the care they deserve, typically from loved ones,” said Newsom.

Newsom also said the Trump administration had informed state officials that the deadline to review California’s Medicaid records “before deciding whether to defer funding” would be later in the month.

Democratic members of Congress warned that their constituents rely heavily on Medicaid, with seven out of 10 of the congressional districts with the highest Medicaid enrollment located in California.

Rep. Sydney Kamlager-Dove (D-Calif.) said that 56% of her constituents rely on “this lifesaving program,” and many have already been harmed by the Republican Party’s slashing of Medicaid funding in the One Big Beautiful Bill Act last year.

“Withholding reimbursements only further hurts patients, strains providers, and drives up costs,” said Kamlager-Dove. “We will fight this with everything we’ve got.”

“This administration needs to stop playing politics with people’s health and lives,” said Panetta. “When people commit fraud, they should be punished accordingly. However, this administration continues to punish California for political purposes, including penalizing innocent people by taking their healthcare away.”

State Attorney General Rob Bonta noted that California has “not hesitated to challenge unlawful actions by the Trump administration,” and suggested the state could file a legal challenge against the withholding of Medicaid funds.

The anti-fraud task force led by Vance has so far exclusively focused on rooting out alleged fraud in federal programs in blue states. The White House suspended $259 million in federal payments to Minnesota earlier this year after a scandal regarding the state’s social services system.

“The Trump administration is attacking California over claims that they can’t back up,” said Padilla. “Let’s be real, this isn’t about fraud — it’s about punishing a state that didn’t vote for” President Donald Trump.