Vice President JD Vance on Wednesday warned that the Trump administration will cut off certain federal anti-fraud funding to states that fail to aggressively investigate Medicaid abuse, escalating the White House’s pressure campaign on governors it says are allowing billions in taxpayer dollars to be siphoned off through fraudulent claims.
Speaking from the White House, Vance announced that the administration is already withholding $1.3 billion in Medicaid reimbursements from California, citing what officials described as widespread abuse in the state’s hospice system. The move comes as the administration’s anti-fraud task force broadens its scrutiny of state-run Medicaid programs, particularly in large Democratic-led states such as California, New York, and Hawaii.
“We’re announcing that the federal government is deferring $1.3 billion in Medicaid reimbursements from the state of California,” Vance said. “The simple reason is because the state of California has not taken fraud very seriously.”
The administration said it is sending letters to all 50 states requiring them to demonstrate that their Medicaid Fraud Control Units are actively investigating and prosecuting abuse. Vance said states that fail to show meaningful enforcement could lose federal funding intended to support those anti-fraud offices, with broader Medicaid penalties possible if problems persist.
The vice president argued the effort is meant to protect both taxpayers and legitimate beneficiaries, framing fraud as a threat to the long-term solvency of entitlement programs rather than an attempt to cut benefits outright.
Vance said the administration’s focus is not on eliminating Medicaid assistance, but on stopping what he described as widespread abuse by fraudulent providers and bad actors exploiting lax oversight in some states.
He pointed to Ohio as evidence that the problem is national, even in Republican-led states. Vance referenced an ongoing fraud case there involving home health care providers, arguing that abuse exists across the country but has too often gone unaddressed by government officials.
The Ohio case drew national attention earlier this month after an investigation by The Daily Wire’s Luke Rosiak <a href="https://www.dailywire.com/news/medicaid-millionaires-how-the-feds-pay-immigrants-billions-to-hang-out-with-their-families?author=Luke+Rosiak&amp;category=News&amp;elementPosition=4&amp;row=0&amp;rowType=Vertical+List&amp;title=DW+Investigation+Reveals+One+Of+The+Biggest+Government+Waste+Scandals+Hiding+In+Plain+Sight">uncovered</a> large-scale Medicaid fraud involving home health agencies and questionable reimbursements, helping thrust the issue into the broader debate over federal oversight.
“This happens everywhere. We’re a big country. Hundreds of billions of dollars goes out the door every single month from the federal government, and inevitably, you’re going to have people who try to take advantage of it,” Vance said. “What bothers me is not that you have a few fraudsters out there, it’s that the government hasn’t taken seriously pushing it back.”
In the clip, Vance further accused fraudulent providers of exploiting vulnerable patients while draining public funds, saying some healthcare operators were prescribing unnecessary medications simply to bill federal programs. He tied the anti-fraud push to the administration’s broader “America First” message, arguing taxpayer-funded health programs “ought to belong to Americans first” and warning that unchecked abuse could “bankrupt those programs.”
He pointed to New York as a prime example, saying the state recorded only nine Medicaid fraud indictments last year despite administering a program worth roughly $100 billion annually.
That comparison drew a contrast with Indiana, which Vance said logged more than four times as many fraud indictments despite having a significantly smaller population. 
“Does anybody here seriously think that the good people of Indiana are 12 times more likely to commit fraud than the people of New York? No, of course not,” Vance said. “The leadership in New York are just not taking the fraud issue seriously.”
Administration officials said the California action centers on alleged abuse among hospice and home health providers around Los Angeles. Centers for Medicare and Medicaid Services Administrator Dr. Mehmet Oz, who joined Vance at the press conference, said 800 providers had been suspended from federal reimbursements after investigators flagged them as potentially fraudulent. According to Oz, fewer than 20 appealed the decision.
The crackdown is being cheered by Republican state financial officers, many of whom have coordinated with the administration’s broader anti-fraud initiative. 
North Carolina State Auditor Dave Boliek said the effort reflects a basic duty to taxpayers. 
“It’s not my job to protect government,” Boliek said. “It’s my job to protect the taxpayer, and they need an advocate.”
State Financial Officers Foundation CEO O.J. Oleka said the White House action would strengthen efforts already underway in conservative-led states. 
“Real accountability with real teeth is indispensable for winning the war on fraud,” Oleka said, adding that the group’s 41 affiliated state financial officers have already uncovered billions in improper spending.
Though Vance repeatedly cast the campaign as nonpartisan, the administration’s highest-profile actions so far have targeted Democratic-led states. He insisted the issue transcends party lines, noting that his home state of Ohio has also seen significant fraud cases and that some blue states, including Maryland, have cooperated with federal investigators.
“We are not going to have a generous country if Americans think that they’re paying their taxes not to needy people, but to fraudsters,” Vance said. “That’s fundamentally what we’re trying to fix — rebuilding America’s trust.”

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Vance Threatens To Cut Funds To States That Ignore Medicaid Fraud After Daily Wire Investigation