JD Vance is threatening to withhold federal Medicaid reimbursement from states that do not investigate and weed out fraud.
The vice president, who is chairman of President Donald Trump’s anti-fraud task force, is set to issue the ultimatum on Wednesday, paired with a new audit of the state-level watchdogs tasked with preventing Medicaid fraud, administration officials tell The Wall Street Journal.
Thomas Bell, inspector general at the Department of Health and Human Services, laid out the administration’s threat in a letter to all states, which was obtained by the Journal.
“This means your failure to do your job has put all of your state’s Medicaid funds in jeopardy,” the letter reads.
Vance, who has been dubbed the “fraud czar,” has already halted payments to hospice services in California and to durable medical equipment suppliers in Florida following possible fraud findings.
A White House official told the Journal that freezing Medicaid funds is not the “preferred outcome” but that the “current system was unsustainable.”
A senior White House official told the Daily Beast in a statement on the matter, “States have a responsibility to be good stewards of taxpayer dollars and, as we’ve seen, this simply has not happened in many instances. If states are unable to handle the distribution of billions of taxpayer dollars, we will help them with that. If states are unwilling, we have other options.”
Freezing Medicaid funds is not unprecedented under Trump.
Just this year, the Trump administration withheld funds from Minnesota over allegations that the state’s federal services were being exploited by some in the state’s Somali population. The New York Post reports that four programs identified as being especially susceptible to fraud—autism care, at-home rehabilitation, non-emergency medical transports, and night supervision—had their funding paused.
Minnesota Gov. Tim Walz, who debated Vance in 2024 as Kamala Harris’ running mate, slammed the move as a “campaign of retribution” and said that the Trump administration would target blue states specifically. Vance justified the funding pause as a necessary action to protect taxpayer dollars.
Complaints that the administration will only target Democratic-controlled states were given credence when Trump himself said last month that Vance should specifically scrutinize blue states, similar to how he ordered the harshest migrant crackdowns in states run by Democrats.
Trump wrote on Truth Social that Vance’s focus will be “primarily in those Blue States where CROOKED DEMOCRAT POLITICIANS, like those in California, Illinois, Minnesota (Somalia beware!), Maine, New York, and many others, have had a ‘free for all’ in the unprecedented theft of Taxpayer Money.”
Vance held the inaugural meeting of his new anti-fraud task force on March 27. The meeting was held behind closed doors, but the Associated Press quoted the VP as saying, “This is not just the theft of the American people’s money. It is also the theft of critical services that the American people rely on.”
