medicaid

WASHINGTON — The Trump administration is deferring an additional $1.2 billion in Medicaid reimbursements to California, citing concerns about potential fraud in a state program that helps older adults and people with disabilities with everyday tasks.

Dr. Mehmet Oz, the administrator for the Centers for Medicare and Medicaid Services, said federal officials took action after they grew concerned about the rapid expansion of California’s personal care services program in recent years. State officials were notified of the decision Tuesday, he said.

“California has been growing that program 24% in the last three years. That is twice the rate of every other state average in the country,” Oz said. “Impossible for us to understand how that could be so we are taking major action in California.”

Oz did not provide any evidence of fraud but suggested the state was paying people too much taxpayer money to help with services that could be offered for free, like “paying somebody to carry groceries upstairs for your mom.”

“Many of you would carry groceries upstairs for your mom for free, but in California, they will pay you a lot of money for it,” he said.

The move is the latest in a series of efforts by the administration to withhold federal money from California. In May, the administration held back $1.3 billion in Medicaid reimbursements to the state over concerns about “fraudsters” in the state’s hospice and in-home care programs. The actions have been part of a broad effort by the administration to rein in fraud in federal healthcare benefits programs, particularly in Democrat-led states.

Gov. Gavin Newsom’s office did not immediately respond to a request for comment. But the office has been critical of the administration’s past efforts.

In May, Newsom’s office called the action to withhold funds for in-home care programs a “sick” and politically motivated attack on services that are meant to “keep seniors and people with disabilities OUT of nursing homes.”

Those services usually cover assistants who help people with daily tasks such as bathing, laundry or cooking. They also provide needed care such as injections under the direction of a medical professional. A 2020 report by the California state auditor found that nearly three-quarters of In-home Supportive Services caregivers assist a family member.

Newsom’s office, however, has argued that the program saves taxpayers money, saying IHSS care costs $30,000 a year, while nursing home care costs $137,000 a year.

California’s hospice industry has had problems in the past and authorities have tried to crack down on the issue. A Times investigation in 2020 found that providers were billing Medicare for hospice services and equipment for patients who were not actually dying while the industry boomed.

The Trump administration, led by Vice President JD Vance, has tried to focus attention on the issue of waste, fraud and abuse as a centerpiece policy platform to bring down healthcare costs.

On Tuesday, Trump and Vance announced a $25-million whistleblower program designed to pay out cash to people who tip off the federal government about fraudsters. The program will offer a 1% commission for tips that lead to a successful conviction. Trump said he would be the sole arbitrator of who gets to keep the money.

“I’ll determine whether or not the person is deserving, and I will be very generous believe me. We are not looking to save on that,” Trump said. “I promise you I will be fair.”

Trump said the money will be handed out “expeditiously and fairly.”

“I promise there is nothing in this for me,” he said.

The White House referred comment about the decision to the Centers for Medicare & Medicaid Services. The federal agency did not immediately respond to a request for comment.

New restrictions have stripped Medicaid coverage from certain legal immigrants, including refugees and victims of human trafficking, as part of broader federal changes to the health insurance program that are expected to force millions off their coverage.

The change effective Oct. 1 cut from Medicaid what is estimated to be hundreds of thousands of people who legally immigrated to the United States, many of whom work and pay taxes, in the latest Trump administration policy to target foreigners.

The move is part of sweeping changes to Medicaid under President Donald Trump’s 2025 tax cut and policy law, with many set to take effect early next year. The Medicaid changes are projected to result in 7.5 million fewer people with health insurance, according to the Congressional Budget Office’s 2025 estimate.

Advocates say that without Medicaid, people will not be able to afford private insurance and will either delay care or end up in emergency rooms, adding pressure to a strained health system. For immigrants, the cuts could be felt more acutely, compounding the effects of other administration efforts to restrict their access to public assistance as part of a broader immigration crackdown.

“This is about telling every immigrant in the United States that they are not welcome here and that they should leave,” said Ben D’Avanzo, a senior strategist at the National Immigration Law Center, which has pursued litigation against the Republican administration over its immigration agenda.

Refugees, asylum seekers, victims of human trafficking and domestic violence are among those who have lost coverage. Green-card holders were not impacted.

Lauren Bis, a White House spokesperson, said in a statement that “immigrants must be able to support themselves without taking from overburdened benefits programs paid for by hard-working American taxpayers.”

D’Avanzo said many people who have lost coverage will likely only realize when they need medical care. But for some, the change has been felt immediately.

Dwindling supplies of lifesaving medication

In Tucson, Arizona, María Chacon has been caring for her son Jesus for almost five years since a car accident at 17 left him unable to breathe on his own. He requires a ventilator, a feeding tube and daily medication, and must be turned once every two hours to stop sores from forming. Chacon said he sometimes opens his eyes.

The family is originally from Mexico and entered the U.S. on a T visa, offered to victims of human trafficking, in 2018.

Chacon said Medicaid has helped cover almost $25,000 per month of care for her son, which includes a small stipend for her and her husband as compensation for being long-term caregivers. She said doctors have explained that even if they both worked 24 hours a day, they would not be able to cover the cost of his care.

“Since that day I haven’t been able to sleep. We haven’t been able to eat or anything. We’re wondering what we’re going to do?” Chacon said.

Jesus takes medication that Chacon estimates costs $7,000 a month. The supply runs out in mid-October. Without coverage, she does not know how her son is going to survive.

Chacon found out just days before the cuts that she was losing care. She called the state’s Medicaid offices to appeal. Although she is in the process of obtaining a green card, Medicaid coverage would only kick in five years after she is approved.

Steven Camarota, research director for the Center for Immigration Studies, a right-leaning think tank that seeks less immigration, said the administration “is trying to nibble around the edges” with the Oct. 1 cuts, finding piecemeal ways to curb immigration into the U.S.

Camarota believes the government should screen legal immigrants for income potential and education, reducing the number who might rely on public benefits once they cross the border.

“You need immigrants who are unlikely to need welfare,” he said, or those with high educational attainment.

The administration recently revived a federal rule that could deny green cards to immigrants who use public benefits that could include food stamps, Medicaid, housing vouchers and others.

Chacon believes the cuts to Medicaid coverage are part of the administration’s clampdown on immigrants. She said her son is in no condition to travel.

“I know that’s what he’s doing, but, as my son is, I couldn’t go to Mexico,” Chacon said.

Millions more will be dropped from Medicaid

Medicaid, jointly funded by states and the federal government, has become a political focal point during Trump’s second term. The president has pushed to root out what he describes as fraud in the program. In July, the administration deferred over $1 billion in Medicaid payments to California and Minnesota, claiming there was suspected fraud; critics argued the move targeted Democratic-led states.

As more people are cut from Medicaid, the federal government is predicted to reduce program spending by $911 billion, according to healthcare research nonprofit KFF.

In Arizona, officials said 29,000 legal immigrants were cut from Medicaid rolls on Oct. 1. In Florida, estimates are closer to 177,000. Overall, more than 281,000 immigrants from nine states and the District of Columbia are estimated to lose Medicaid coverage, according to KFF.

As more states implement various restrictions to coverage, 7.5 million people are expected to lose coverage by 2034, according to analysis by the Congressional Budget Office.

Without coverage, people will turn to emergency rooms for care. When people delay seeing a doctor, conditions can worsen and become even more expensive to treat.

“At the end of the day, it does raise the cost for the states because once you get these people in for something that could have been prevented, they could not go to the doctor because they were uninsured; they most likely will end up at a hospital in an emergency room,” said Carmen Feliciano, the vice president of policy and advocacy at UnidosUS, a Latino civil rights organization.

UnidosUS partners with community organizations to help provide medical care, but Feliciano said they already are overwhelmed and would not be able to support the number of people who are going to lose medical coverage in the coming months.

“We are not going to have the capacity to serve all the people who need it,” Feliciano said.

Schuettler and Hussein write for the Associated Press.

In March 2025, when California ran out of Medicaid funds to pay doctors and hospitals, the state borrowed $3.4 billion to keep the program afloat. It was, as a spokesperson for Gov. Gavin Newsom insisted, nothing new. Indeed, a handful of times over the years, the state had taken out internal, short-term loans to sustain its healthcare program for poor and disabled people.

The unprecedented move came a few months later, when Newsom and Democratic state lawmakers agreed to pay down the loan — which grew to $4.4 billion — over 10 years instead of later in the year. California’s healthcare safety net, it seemed, was buckling.

Rising healthcare costs systemwide were partly to blame. But so were several state-led expansions that made California’s Medicaid program, known as Medi-Cal, one of the nation’s most generous.

Now, with congressional Republicans’ One Big Beautiful Bill Act expected to reduce federal Medicaid spending by more than $900 billion over 10 years, California and dozens of other states must contemplate the limits of their generosity. The problem is particularly acute in the nation’s most populous state, which spends more on Medicaid than New York and Texas combined.

“We know we can’t afford to serve everybody we want to serve in the model that we have today,” said Mark Ghaly, the former top Newsom health official who now co-chairs the Future of Medi-Cal Commission, a 29-person panel with the goal of modernizing and sustaining California’s Medicaid program for those who need it. “What can we do differently? What can we do smarter?”

The 2025 law that Newsom, a Democrat, has dubbed President Trump’s “Big Ugly Bill” is expected to leave millions more Americans without health insurance, mostly because of new work requirements. It also curbs the use of healthcare provider taxes and other strategies states have deployed to maximize federal funds. Some state lawmakers and consumer advocates have argued the federal cuts, along with rising costs, present an opportunity for the next governor to overhaul a program plagued by long appointment wait times, low reimbursement rates for healthcare providers, and volatile financing.

“If we continue to just give millions and millions into the same system and expect something different — I’m sick and tired of that,” said Caroline Menjivar, a Democratic state senator representing a Los Angeles-area district where roughly half of constituents rely on Medi-Cal.

Democratic lawmakers, who have often clashed with Newsom on Medi-Cal rollbacks, succeeded in getting him to delay a number of painful cuts until 2027 in hope that a new governor might reverse them.

So far, neither of the gubernatorial candidates running in the November election to replace Newsom has offered substantive proposals for a program that covers 1 in 3 Californians — roughly 13.6 million people.

Republican Steve Hilton, a former Fox News commentator, wants to pare back Medi-Cal eligibility and has promised to end coverage for immigrants without legal status, citing that benefit as an example of “wildly unsustainable” state spending. Democrat Xavier Becerra, who has spent decades trying to expand government-funded healthcare, has promised to protect Californians from the massive federal cuts and find and cut billions in administrative waste.

Expanding coverage

President Johnson signed the law that established Medicaid and Medicare in 1965 to cover certain low-income groups, such as families with children, older people and those with disabilities. Over the last six decades, states have substantially widened that pool, most notably under the Affordable Care Act’s Medicaid expansion to childless adults.

Starting in 2024, California offered healthcare coverage to all low-income residents, regardless of age or immigration status, although lawmakers scaled that back this year. At the same time, the state opted to cover a slew of non-mandated benefits such as physical therapy, hospice care and housing assistance.

“California has always struggled with wanting to have as broad a program as possible but then having to figure out a way to pay,” said Jennifer Kent, who oversaw Medi-Cal under Gov. Jerry Brown, a Democrat. “There is no population that we have met that we don’t want to offer coverage to, and we’ve never met a benefit that we don’t like.”

Since 2010, California’s Medi-Cal enrollment has nearly doubled while spending has ballooned from $50 billion a year to $222 billion. It now makes up more than 40% of overall state spending, according to the nonpartisan Legislative Analyst’s Office.

Conservatives argue the program is bloated and rife with fraud. They say the federal changes will force states to refocus resources on the neediest.

“The role of the safety net programs was just that — to be a safety net,” Hilton said in an interview. “I don’t think it’s a particularly positive boast to say 40% of Californians should be on a program that was designed for people living in poverty.”

Becerra declined an interview request.

Nelly, a 59-year-old from Los Angeles County, was one of millions who have benefited from the state’s Medi-Cal expansion, but she was initially reluctant to sign up.

For years after she left her corporate job to care for her ailing mother, Nelly said, she didn’t consider applying. She remained uninsured until three years ago, when she woke up and couldn’t see out of her left eye.

She enrolled in Medi-Cal in the emergency room. It now covers her appointments with specialists and transportation to and from. While her condition may exempt her from the new Medicaid work requirements, Nelly said, she’s still worried about losing coverage after experiencing numerous paperwork hiccups simply trying to renew.

Nelly, who asked that her full name not be used because she hasn’t told her family about her condition, said she understands not everyone on the program may need it. But, she added, “it should be there for someone like me.”

Tough choices ahead

When Republican state lawmakers got wind of Newsom’s plan to stretch the debt repayment over a decade, they accused Democrats of trying to “paper over” the state’s structural deficit.

“This leaves future governors and legislatures to clean up the mess,” stated a July 2025 memo from GOP senators. The Legislative Analyst’s Office later called the maneuver “unusual.” That could leave Becerra, the favorite to succeed Newsom in the overwhelmingly liberal state, as the face of staggering changes to a program he spent his career defending.

More than 2 million Californians under age 65 could lose health coverage over the next four years as a result of the state and federal policy changes, according to recent estimates by the UC Berkeley Labor Center and the UCLA Center for Health Policy Research. At least 730,000 residents have already disenrolled since June 2025.

State agencies are scrambling to implement new federal work requirement rules for adult Medicaid enrollees under 65, hoping to automate as much verification as possible to blunt coverage losses. And in 2028, states will be required to charge some enrollees fees for many services, making it harder for them to maintain coverage.

Disability rights activists say new asset limits will prevent Californians from getting needed home care, which they say is more cost-effective and humane than nursing homes. Counties, deemed by state law to be healthcare providers of last resort, say they need immediate funding for the millions of uninsured patients they anticipate in the new year.

Hospital administrators have urged policymakers to help them keep their facilities stable, and the state’s most recent budget included some $390 million to assist public and distressed hospitals.

Martin Luther King Jr. Community Hospital in Los Angeles treats five times the patients it was designed to serve, and 80% of patients are uninsured or on Medi-Cal. Demand is so high in the chronically underserved area, MLK Community Healthcare CEO Elaine Batchlor said, that the hospital has erected tents in the parking lot. Most emergency room patients are now treated there.

“We already have an extremely overcrowded, overburdened emergency department,” MLK Community Healthcare CEO Elaine Batchlor said. “Insured care will turn into uncompensated care, and the financial burden for that will fall on providers.”

Becerra has said he opposes the state’s recent freeze on enrollment for adult immigrants without legal status, as well as new monthly premiums set to take effect next year, saying such moves will only saddle taxpayers with higher bills for ER care.

If elected, Becerra will probably need to wade into the politically toxic debate over whether to raise more revenue, cut benefits further, or do both.

Aside from promising to find and eliminate billions in administrative waste from the industry, the nation’s former top health official has not explained how he would cobble together the tens of billions of dollars the state is likely to need just to maintain status quo.

The next governor must tread carefully, Kent warned. “When people come and say, ‘Well, you should just do this because it’s the right thing,’ ” she said, “all of those right things have fiscal consequences.”

Mai-Duc writes for KFF Health News, a national newsroom that produces in-depth journalism about health issues and is one of the core operating programs at KFF — an independent source of health policy research, polling and journalism.

President Trump is promising more payments to voters just ahead of the Nov. 3 midterm elections — this time, to more than 20 million seniors, who each would get $90 to help pay for Medicare premiums.

The announcement, made late Friday night by Trump on social media, comes after he said last month about 1 million people would get rebate checks of $500 for Affordable Care Act premiums. It also comes after his One Big Beautiful Bill Act last year slashed funding for Medicare, disqualifying thousands from eligibility and raising fees for the rest, and for the ACA, raising premiums for millions by eliminating tax credits.

Trump has also promised on the campaign trail to send every American adult $5,000 if Republicans retain control of the House and Senate in the midterm elections.

His latest promise — which, like the others, would require approval from Congress — would probably cost more than $1 trillion, adding to the ballooning deficit and worsening inflation.

Polls show Americans increasingly blame Trump for the high cost of gasoline and groceries, with just 17% approving of his handling of inflation. Rising healthcare costs are also a key component of the affordability struggles many face across the country.

The president has sought to shrug off concerns about affordability, claiming the economy is booming.

The White House said the $90 payments for seniors would come from the Medicare Improvement Fund, established by Congress in 2008 as flexible funding to improve program operations and payments to healthcare providers.

As proposed, Medicare Part B enrollees would receive a one-time payment in October, either through direct deposit or by check, the White House said. Total monthly costs for the program — which covers costs like doctor’s visits, ambulance services and lab tests — start around $200 and vary with income.

To be eligible, seniors must be living in the U.S. and not be already receiving premium assistance from Medicaid or paying adjusted monthly premiums based on income, according to the Centers for Medicare and Medicaid Services. Seniors enrolled in Medicare Advantage, a private plan alternative to traditional Medicare coverage, would not be eligible for the payment. More than half of eligible Medicare beneficiaries have Medicare Advantage, according to healthcare research nonprofit KFF.

Previous administrations have not used the Medicare Improvement Fund in this way, although Congress has periodically taken out money from the fund to pay for other priorities, said Larry Levitt, KFF’s executive vice president for health policy. For example, $20.74 billion was used for the creation of the Affordable Care Act in 2010.

“The Medicare Improvement Fund language is quite broad and gives substantial discretion to the administration,” Levitt said.

Goldin writes for the Associated Press.