The first three months of 2026 have witnessed an unprecedented series of fiscal and rhetorical attacks on states by the White House and the political leadership at CMS, ostensibly about fraud against Medicaid. The focal point of these attacks has been Minnesota. On January 6, CMS notified the Governor of Minnesota that his state was out of compliance with federal Medicaid law and that until the state came into compliance CMS would be withholding half a billion dollars in federal Medicaid matching funds every quarter going forward. On February 25, Vice President Vance, at a White House press conference, announced the deferral of $259 million in federal Medicaid matching funds on expenditures for the last quarter of FY 2025. And on March 16, President Trump issued an Executive Order creating a Task Force to Eliminate Fraud chaired by Vice President Vance. The E.O. singled out Minnesota for what it alleged was “staggering fraud and waste,” adding that there was “strong reason to believe that similar problems exist in other States, including California, Illinois, New York, Maine, and Colorado.”
As these actions play out—currently, the compliance action is in a holding pattern, the deferral process is moving forward, and the Task Force has held its first meeting—it’s worth stepping back and asking what exactly is going on here?
Let’s be clear: fraud against Medicaid (or for that matter, Medicare or commercial insurers) is, regrettably, not a new issue. Over 20 years of DOJ and HHS/OIG reports on controlling fraud against Medicare and Medicaid document that reality. The federal and state agencies responsible for preventing, detecting, investigating, and prosecuting fraud against Medicaid have been in place for at least that many years. And as their annual reports indicate, they are delivering results. Could they be doing a better job? Of course. There’s always room for improvement.
The question is not whether there is fraud against Medicaid. The question is whether the White House or CMS leadership attacks on Democratic-led states have done anything to reduce it. There’s little evidence that they have. Last month, CMS approved a revised Corrective Action Plan submitted by Minnesota to tighten up its defenses against fraud which the state is in the process of implementing. (A timeline of activity relating to Minnesota is here). Other than that, CMS leadership has made partisan videos; the agency has sent letters to California, Florida, Maine, and New York asking about anti-fraud policies and practices (the letter to New York includes an egregious overstatement of fraud against its Medicaid program); and the agency has published a Request for Information (RFI) for input on how to strengthen its ability to combat fraud, waste, and abuse in Medicare and the Marketplaces as well as Medicaid and CHIP.
Perhaps something substantive will come out of all this fact-gathering. Perhaps not. But there’s no shortage of constructive actions that CMS should be taking. It could start by issuing guidance to states along the lines of last month’s Informational Bulletin on oversight of managed care, explaining what services and provider types it considers to be at high risk of fraud, what the best practices are for mitigating those risks, and what federal funding is available to support state adoption of those best practices. It could also update its program integrity toolkits for state Medicaid agencies; to take one example, its assessment of data analytics to detect fraud against Medicaid is 12 years old and does not include the term “Artificial Intelligence.”
Finally, it could conduct more focused program integrity reviews, which are efforts to identify weaknesses in individual state programs and the help states fix them, not to punish states financially. (It speaks volumes that CMS’ January 2026 focused review of Personal Care Services in Maine, a detailed 22-page analysis that requests a corrective action plan, receives no mention whatsoever in CMS’ February 6, 2026 letter to Governor Mills requesting “detailed information regarding program integrity…and provider oversight” in the state’s Medicaid program).
As far as one can tell from the public record, the agency is doing none of these things. So what’s going on here? As it happens, a mid-term election is coming up on November 3 that will determine the control of Congress during the last two years of the current administration. It’s hard to avoid the conclusion that the White House is trying to change the subject to avoid a pre-election conversation about the impact of the historic cuts in federal funding for Medicaid enacted last year on access to needed services for millions of Americans. The exclusive focus of the President’s March 16 E.O. on states led by Democratic Governors suggests an exercise that is other than nonpartisan.
But from this vantage point, the administration’s actions, ostensibly to “crush” fraud against Medicaid, are not just about the mid-terms. What’s going on now is also part of a long game, one that started in 1981 under President Reagan, continued during the Speakership of Newt Gingrich in 1995, and most recently resulted in the one-thumb-down defeat of President Trump’s effort to “repeal and replace” the ACA in 2017. The object of the game is to cap federal spending on Medicaid, either by converting the program into a block grant with fixed federal allotments to states, or by imposing a “per capita cap” on federal matching payments.
What does capping federal matching payments to states have to do with reducing fraud against Medicaid? In a word, nothing. Most fraud is committed by bad actor providers and business people. These bad actors don’t really care whether the Medicaid funds they steal come from the current health insurance program, from a program operating under a per capita cap, or from a block grant. Their focus is the money, not the federal-state financing mechanism. If they aren’t screened out of the program in the first place, or if they find their way into the program and their fraud schemes aren’t detected, they will extract as much as they can get away with.
What does capping federal matching payments to states have to do with providing health insurance coverage to help low-income Americans access needed medical and long-term care services? In a word, everything. As my colleague Edwin Park has explained, a cap will shift the costs of financing needed health and long-term care services for low-income Americans—including the risks of health care inflation, recessions, and natural disasters–from the federal government to the states. (A cap is a federal budgeteer’s dream: a dial that will enable the government to ratchet down the capped amounts available to states in order to generate offsets to pay for tax cuts, for other spending, or even deficit reduction.) A cap will undercut health care coverage for children (Medicaid covers 40 percent of the nation’s children) and pregnant women (Medicaid covers 40 percent of the nation’s births). It will disrupt the states’ abilities to pay not just for Medicaid services but also for other state priorities, including K-12 education. And that’s not the half of it.
Despite over four decades of efforts to dismantle it, Medicaid remains a health insurance program in which the federal government and the states share the cost. There has certainly been no shortage of proposals to cap the program. But the fact is that Medicaid works, and it is popular. A majority of the public are worried that cuts in federal spending on Medicaid would have a negative impact on their or their family’s access to needed services.
And that is where the “major crackdown” on Medicaid fraud announced by CMS on February 25 comes in. It’s a communications effort to reframe the program as one riddled with fraud. And it’s clever: no one (other than bad actors) likes fraud. Fraud is despicable, particular when directed at a program for the most vulnerable among us. If Medicaid is viewed as a safe harbor for fraudsters, public support for the program will fall off.
Consider this recent piece from the Paragon Institute, which argues that there are four types of Medicaid services that are “ripe with improper payments and fraud:” (1) home- and community-based services (HCBS); (2) non-emergency medical transportation (NEMT); (3) applied behavioral analysis for autism spectrum disorder (ABA); and (4) substance abuse disorder services and treatments (SUD). The authors discuss each of these services, referencing examples of improper payments, which are not fraud, and increases in Medicaid spending on these services, which are not necessarily evidence of fraud. They cite examples of actual fraud against Medicaid by NEMT providers and by SUD providers (oddly, not by HCBS or ABA providers), but they do not offer any suggestions for reducing fraud specific these service areas other than curbing payments to family members for caregiving services.
Here’s their first recommendation:
“The most effective long-term reform, requiring legislative action, would be to cap federal Medicaid funding so that spending above the cap is borne entirely by states. This would force states to internalize the cost of waste and fraud. While Congress has pursued such reforms in other welfare programs, it has failed to do this for Medicaid.”
Rubbish. States have a major fiscal stake in the program. They have already “internalized” the cost of fraud against the program. They have every incentive—financial, programmatic, and reputational–to minimize it and they are doing so. Capping federal payments will do nothing to change that; instead, it will simply shift financial risk from the federal government to states, disrupting their finances, their health care economies, and the health of their low-income citizens.