The Trump administration announced Tuesday that it is freezing more than $1 billion in Medicaid payments to California and Minnesota in an effort to crack down on fraud.

Medicaid is the public health insurance for people with low incomes, including some disabled and elderly people, jointly funded by state and federal dollars.

The U.S. Department of Health and Human Services and the Centers for Medicare & Medicaid Services deferred more than $867 million to California and $199 million to Minnesota. The feds say they need more documentation from those states to support some Medicaid claims for services that are at high risk for fraud.

The freeze marks the latest round of withheld payments as the Trump administration continues its crackdown on suspected fraud in publicly-funded social service programs, mostly focusing on Democratic-led states. Earlier this year, the Trump administration launched a fraud task force to look into potential waste or abuse in publicly-funded benefits programs, explicitly naming states such as California, Colorado, Illinois, Maine, Minnesota and New York.

The Trump administration has already deferred Medicaid payments in Minnesota twice this year, totaling nearly $400 million. The deferral process, under which the federal government can withhold funding when questioning claims already billed to Medicaid, had never been used to deny funding for entire service areas until a $243 million deferral in February, the Minnesota Attorney General noted.

A letter delivered Tuesday from CMS to the Minnesota Department of Human Services stated that $195 million of the deferred $199 million comes from specific providers that CMS identified as high-risk for fraud or “aberrant billing practices” based on historical billing and analysis. The money comes from services delivered from January through March and has already been paid. States will have to provide documentation backing up the claims or be forced to reduce future billing to the federal government.

The Trump administration has also threatened to withhold $2 billion in annual Medicaid funding to Minnesota in a separate process. The funding fight in Minnesota centers on 14 Medicaid services deemed high-risk to fraud and are largely designed to give long-term care for elderly and disabled people. But state officials have said that funding freezes could deliver a serious blow to the state’s Medicaid program more generally, which cost $18 billion in 2024 and covers other low-income Minnesotans.

John Connolly, temporary commissioner and state Medicaid director for the Minnesota Department of Human Services, said in a statement that Tuesday’s deferral reflects the federal government’s “unprecedented and punitive ways as part of their war on Medicaid and its recipients.”

“CMS touts their new fraud-detection capabilities, yet has not provided data or explanation on how the deferral amount was calculated or what it was based on. I respectfully ask the federal government to partner with us and share any information about their methods to identify potentially fraudulent providers in Minnesota,” Connolly said.

The federal-state fight over Medicaid funding has affected thousands of Medicaid providers in Minnesota, who were abruptly cut off from funding as the state raced to reach a federal deadline to screen all providers in the “high-risk” services. Providers and their advocates said the process was rushed and left legitimate providers unable to get paid for delivering services to vulnerable Minnesotans.

HHS Secretary Robert F. Kennedy Jr. said the Trump administration’s goal is to strengthen the integrity of the Medicaid program and make sure federal funds are spent appropriately.

“States that receive federal Medicaid funding must demonstrate that every dollar meets federal requirements,” Kennedy said in a news release on the deferred funds. “When they cannot, we will not release federal funds until they do.”

California Gov. Gavin Newsom, a Democrat, called the withheld funds a “recycled political stunt” in a post on X, and said his state was being targeted for political reasons.

Minnesota Democratic Gov. Tim Walz rejected the Trump administration’s framing of the situation in a post on X: “This isn’t about fraud — it’s about cutting your healthcare so that Trump can afford the tax cuts he gave to billionaires.”

CMS said it identified unusually high growth in spending on certain in-home care programs in California, triggering the hold on that state’s funds. It has not provided proof of fraud.

Newsom countered in his X post, arguing that California is saving taxpayer money “by keeping seniors and people with disabilities out of far more expensive nursing homes.”

In Minnesota, a CMS review flagged expenditures that raised “potential eligibility or billing concerns.”

“CMS is done trying to chase down stolen and misused funds after they’ve already left the building,” Dr. Mehmet Oz, CMS administrator, said in a news release, adding that the deferred payments are part of a “proactive new approach to program integrity.”

The pauses in funding don’t affect who is eligible for Medicaid, and they’re not permanent cuts.

Alyssa Chen of the Minnesota Reformer contributed to this story. Stateline reporter Anna Claire Vollers can be reached at avollers@stateline.org.

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Wisconsin’s unemployment rate sits near a historic low, but for thousands of rural residents the link between a layoff and losing health insurance has never been stronger.

Using county-level data from all 72 Wisconsin counties between 2014 and 2023, I tracked how shifts in local unemployment moved together with shifts in the uninsured rate. Before the pandemic, a one percentage point rise in county unemployment was tied to roughly a 0.21 percentage point rise in lack of insurance. After the pandemic, that same increase pushed lack of insurance up by 0.55 percentage points. The relationship more than doubled.

Almost all that vulnerability sits outside our cities.

In Wisconsin’s 46 nonmetropolitan counties, the unemployment-coverage link is strong and statistically significant. In the 26 metropolitan counties, which include the Milwaukee, Madison, Green Bay and Fox Valley metro areas, the same statistical model finds no significant relationship at all.

This is not a story about lazy or careless workers. It is a story about how policy design and geography combine to leave rural Wisconsinites without a net.

Wisconsin made a distinctive choice when the Affordable Care Act became law. The state expanded BadgerCare Plus to adults below 100% of the federal poverty line but declined the full expansion to 138% that most other states have now adopted. The Wisconsinites in that 100% to 138% income band, about $15,650 to $21,597 for a single adult in 2025, are sent to the federal marketplace instead of Medicaid.

Marketplace coverage in that range comes with subsidies, but also with deductibles, co-pays and out-of-pocket maximums that Medicaid would not impose. For a worker who just lost shifts, the marketplace can mean nominal insurance with effective noncoverage. My analysis found that the unemployment-coverage link is sharpest precisely for this low-income group, which is what the policy design predicts.

Rural labor markets compound that policy choice. They have fewer employers, smaller firms and less industry diversification. When a foundry, a paper mill or a dairy processing plant lays off workers, the next job in the same county is unlikely to offer group health benefits. Small firms, which provide a larger share of employment in rural areas than in cities, are far less likely than large ones to offer coverage, a gap documented in KFF’s employer survey.

The supports that help urban workers navigate a coverage transition are also thinner outside the metros. UW-Extension research found that only 63% of households in Wisconsin’s most rural counties had home broadband, compared with over 95% in metropolitan areas.

Healthcare.gov enrollment, marketplace navigator outreach and routine renewal notices all assume reliable internet. A working spouse in a rural area is also less likely to carry employer coverage to fall back on since rural jobs are concentrated in small firms and self employment that often do not offer health benefits.

The pandemic period offers one more piece of evidence. During the public health emergency, federal law required states to keep Medicaid enrollees continuously covered. Coverage held steady even as unemployment surged. The historical link between job loss and insurance loss weakened. Then the Medicaid unwinding began in 2023. Wisconsin disenrolled nearly 394,000 residents from BadgerCare Plus by mid-2024, most for procedural reasons like paperwork rather than actual ineligibility. The post-pandemic coefficient of 0.55 captures what happens when protective policy is withdrawn but the underlying vulnerability remains.

Three state-level actions would directly reduce the harm.

First, complete the BadgerCare Plus expansion to 138% of poverty so that workers in the transition zone are automatically covered when they lose their jobs. A Georgetown University analysis found that full expansion would cover more than 80,000 additional adults in that income band. Assembly Bill 1153, the BadgerCare Public Option introduced this year by Rep. Tara Johnson, D-town of Shelby; Rep. Robyn Vining, D-Wauwatosa, and others, addresses a related gap by letting any Wisconsinite buy into BadgerCare Plus regardless of income and deserves serious debate alongside full expansion.

Second, invest in rural enrollment navigators and renewal pathways that do not assume broadband. Coverage policy without enrollment infrastructure produces coverage on paper only.

Third, build administrative stability into BadgerCare Plus renewals so that procedural disenrollments do not strip coverage from people who remain eligible.

The federal Medicaid cuts enacted in 2025 will widen the rural-urban gap I documented. KFF estimates that the cuts will leave more than 50,000 additional Wisconsinites uninsured by 2034. Without state action, the workers already at the sharp end of the unemployment-coverage relationship will absorb a disproportionate share of that loss.

The link between losing work and losing health security is not a law of economics. It is the result of choices, and Wisconsin can make different ones.

Jiyue Wang lives in New Brunswick, New Jersey. He completed this research as part of his master’s degree in economics at the University of Wisconsin-Milwaukee. He will begin a Ph.D. in political science at Rutgers University in September 2026.

Guest opinion: Rural Wisconsin workers lose health insurance twice as fast as before the pandemic is a post from Wisconsin Watch, a non-profit investigative news site covering Wisconsin since 2009. Please consider making a contribution to support our journalism.