Trump officials hit California with ‘largest ever’ Medicaid funding freeze

from Ana B. IbarraCalMatters

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The Trump administration is suspending $1.1 billion in Medicaid funding from California’s home health care program over fraud concerns, a move that state health officials and health advocates say could harm hundreds of thousands of seniors and people with disabilities.

At the center of the dispute is California In-Home Support Services, or IHSS, which helps about 900,000 older Californians and people with disabilities with daily activities so they can stay in their homes instead of in institutional settings.

Dr. Mehmet Oz, administrator of the US Centers for Medicare and Medicaid Services, called it “the biggest delay we’ve ever done.” at a press conference on Wednesday. He said California is an emergency — its domestic health care costs are rising twice as fast as other states — and that the federal government will withhold Medicaid funds until the state can convincingly explain why.

The shutdown is part of the administration’s announced crackdown on Medicaid and Medicare fraud. Although Oz’s agency has raised concerns about “integrity” in California’s home health program, it has not provided supporting evidence, California health officials said.

State Medicaid Director Tyler Sadwit said in a press release that the program’s expansion is intentional. He attributed it to three factors: higher caseloads, higher hourly wages for home health workers and more hours logged as workers serve more people with greater needs.

Between 2023 and 2025, caseloads increased 17.5 percent and the average hourly wage for home health workers rose from $19 to $21, according to the Department of Health Services, which oversees the state’s Medicaid program, better known here as Medi-Cal.

Gov. Gavin Newsom, speaking at his budget presentation Thursday, argued that expansion should be celebrated, not punished. Home health care costs about $30,000 per person per year, Newsom said. Qualified nurses can cost four to five times as much.

State health officials said they have a strong oversight system in place to eliminate fraud in the home health care system, including “annual assessments, electronic schedules, verification tools and coordinated state and county review processes.”

In addition to the $1.1 billion home health deferment, the federal government is withholding another $200 million related to administrative claims the state said it expects and is working to resolve.

The federal funding freeze in California follows a similar action in Minnesota in February, when the federal administration halted $259 million in Medicaid payments. Minnesota sued to block it.

During Wednesday’s news conference, Vice President JD Vance — who heads the administration’s fraud task force — accused California, New York and Hawaii of not doing enough to combat Medicaid fraud. “That’s why we’re taking this action,” Vance said. “We want California to take this scam more seriously.”

California is at the center of the Trump administration’s anti-fraud efforts, with hospice care at the center of investigations. Vance and Oz also announced a six-month national moratorium on Wednesday — barring new hospice providers from enrolling in Medicare. California imposed a similar pause on new hospice licenses.

State health officials say patients at home will continue to have uninterrupted services. But advocates and unions representing caregivers are concerned about the uncertain timetable for federal funding — and what a prolonged freeze could mean for clients.

As part of the program, Medicaid pays caregivers to help people with everyday tasks such as bathing, cooking, grocery shopping and going to medical appointments.

“It’s clear that California’s most vulnerable citizens need this program,” said Doug Moore, executive director of the United Domestic Workers, which represents caregivers. “There are people who are elderly, there are children, there are people with disabilities. Don’t put innocent people in the middle of this.

Supported by the California Health Care Foundation (CHCF), which works to ensure that people have access to the care they need, when they need it, at a cost they can afford. Visit www.chcf.org to learn more.

This article was originally published on CalMatters and is republished under Creative Commons Attribution-NonCommercial-No Derivatives license.