Trump administration says it’s deferring $1B in Medicaid payments to California and Minnesota

UNDATED-AP- The Trump administration says it’s deferring over $1 billion in Medicaid payments to Minnesota and California because of suspected fraud and noncompliance. Health Secretary Robert F. Kennedy Jr. said Tuesday (July 21, 2026) the move aims to prevent fraud before it occurs, rather than recovering money after prosecution. The move is part of the administration’s strategy to crack down on fraud amid rising healthcare costs. But this approach has come with errors and lack of evidence in some cases. Kennedy says states can regain the funding by proving the legitimacy of payments. Minnesota’s state Medicaid director said federal officials hadn’t explained the basis of the deferral amount to the state. He accused the federal government of leading a “war on Medicaid.”