The Trump administration’s escalating crackdown on California just hit another level, with Vice President JD Vance announcing Wednesday that the federal government is withholding $1.3 billion in Medicaid funding amid what officials describe as massive fraud tied to the state’s hospice and home healthcare industry.
The move marks one of the largest federal anti-fraud actions in years and signals that the administration intends to keep tightening pressure on states accused of failing to police abuse within taxpayer-funded healthcare programs.
Speaking as head of the administration’s anti-fraud task force, Vance accused California leaders of allowing a system of fraudulent billing and abuse to flourish unchecked.
“Giving people medications they don’t even need, it’s a defrauding of the American taxpayer,” Vance said. “But it’s also a violation of the trust that should exist between every American and the people who prescribe the medications.”
“That’s one thing that we want to target, and this is why we’re taking this action because we want California to get serious about this fraud.”
The announcement follows a series of aggressive federal actions already underway in California. Just weeks ago, the administration suspended licenses for 447 hospice facilities and 23 home healthcare agencies suspected of fraudulent billing practices.
Federal officials say the broader investigation now involves a nationwide review of hospice and home health providers, with California emerging as ground zero for what investigators believe may be one of the largest healthcare fraud networks uncovered in recent memory.
“As Americans across the country have seen the rampant level of fraud going on in California, the Trump administration will not tolerate it,” a senior administration official told The California Post.
The administration has repeatedly framed the issue not simply as financial waste but as a broader collapse of oversight inside programs designed to help vulnerable patients.
“We want to protect Medicare,” Vance said. “But we can’t do that if the states administering those programs are allowing those programs to be fleeced by fraudsters.”
Importantly, Vance attempted to present the effort as bipartisan and nationwide rather than simply a political attack on blue states. He specifically referenced states including New York, Maryland, Ohio, and Minnesota while arguing the administration intends to pursue fraud aggressively wherever it exists.
Still, California has clearly become the administration’s primary example.
Over the past year, multiple investigations have exposed suspicious hospice operations throughout the state, including allegations involving networks of doctors connected to tens of millions in questionable billing activity. Those investigations reportedly contributed to federal authorities revoking one physician’s Medicare billing privileges and suspending dozens of agency licenses.
The administration has already taken similar steps elsewhere. Earlier this year, Vance announced the withholding of more than $250 million in Medicaid funding from Minnesota over fraud concerns and demanded Democratic Gov. Tim Walz submit a corrective action plan within 60 days. Months later, federal officials deferred an additional $91 million in Minnesota Medicaid funding, citing ongoing vulnerabilities.
“This happens way too much in the United States of America,” Vance said Wednesday. “And it happens because until recently we did not have a government or an administration that actually took anti-fraud prevention seriously.”
The crackdown also arrives at a politically sensitive moment for California Democrats already facing criticism over homelessness, healthcare costs, crime, and accusations of government mismanagement. Federal officials are clearly betting that healthcare fraud — particularly involving taxpayer-funded programs for seniors and vulnerable patients — is an issue likely to resonate well beyond partisan politics.
“You may think this is purely a red-state or blue-state issue,” Vance said. “That’s actually not true.”
Still, he closed with a line that made the administration’s broader message unmistakably clear.
“We hope this wake-up call will be heard loudly across the beautiful state of California,” Vance said, “whose people we’re trying to protect — sometimes from their own leaders.”
