The Trump administration has halted over $250 million in Medicaid reimbursements to Minnesota, accusing the state of widespread fraud. This move marks a sharp escalation in what officials now call Donald Trump's 'war on fraud,' targeting blue states with aggressive federal actions.
'Stop federal payments'
On Wednesday, Vice President JD Vance announced the suspension during a press conference in Washington.
He stated, '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.'
The move follows a federal investigation into a fraud scandal involving Minnesota's Somali community, linked to schemes estimated to have stolen up to $9 billion across social service programs.
Vance's words echoed a broader political message. He accused Minnesota of mismanaging federal funds and hinted that the state's Democratic leadership bears responsibility.
'If the state was worried about the impact on services and low-income residents, it needed to cooperate with the federal government,' he explained. The vice-president added, 'The main reason that we're doing this is that we want to make sure that the people of Minnesota have access to the services that they're entitled to.'
The first state targeted
Mehmet Oz, administrator of the Centers for Medicare & Medicaid, was visibly firm.
'It's unponderable that you would take advantage of these precious programs,' he said, emphasizing that Minnesota is the first to face such drastic measures. 'Other states will be next,' Oz warned, signalling a nationwide campaign against Medicaid fraud.
Oz also announced a six-month moratorium on federal funding for durable medical equipment, including prostheses and orthotics. This halt is due to concerns about benefit fraud, which has long plagued federal health programs.
'New enrollments for federal funds for such devices would be halted,' he explained, 'due to concerns about benefit fraud.'
'Shooting protesters and arresting children'
Minnesota's governor, Tim Walz, a Democrat, responded sharply.
'This has nothing to do with fraud,' he declared on X (formerly Twitter). 'The agents Trump allegedly sent to investigate fraud are shooting protesters and arresting children. His DOJ is gutting the US Attorney's Office and crippling their ability to prosecute fraud. And every week Trump pardons another fraudster.'
Walz's words reflect the political and social tensions surrounding the federal crackdown.
'This is a campaign of retribution. Trump is weaponizing the entirety of the federal government to punish blue states like Minnesota,' he stated on X.
This is a campaign of retribution. Trump is weaponizing the entirety of the federal government to punish blue states like Minnesota.
— Governor Tim Walz (@GovTimWalz) February 25, 2026
These cuts will be devastating for veterans, families with young kids, folks with disabilities, and working people across our state.
The scandal that sparked this action involves a federal investigation into social service fraud linked to Minnesota's Somali community. Federal prosecutors estimate that billions have been stolen through schemes involving identity theft and false claims.
Vance's comments also hinted at political motives.
'If we had some better cooperation, we could have commonsense immigration enforcement,' he said. 'We encourage everybody in Minnesota, whatever their political affiliation, to work on the state government a little bit.'
Trump himself has been vocal about Minnesota's problems. During his recent State of the Union address, he called the state a 'stunning example' of widespread fraud.
The stakes are high. Medicaid covers more than 70 million Americans, including children, pregnant women, and people with disabilities. In Minnesota, nearly one in four residents depends on Medicaid or MinnesotaCare for healthcare. Cutting off nearly a quarter-million dollars in federal aid could ripple through communities, affecting access to essential services.
