HHS Freezes More Than $1 Billion in Medicaid Payments to California and Minnesota

On July 21, 2026, the Department of Health and Human Services deferred more than $1 billion in Medicaid payments to California and Minnesota, withholding roughly $867.5 million from California and about $199 million from Minnesota. HHS Secretary Robert F. Kennedy Jr. and CMS Administrator Mehmet Oz said the pause followed reviews that flagged claims in high-risk categories the states had not fully documented, and officials said funds would be released once states supplied supporting records. It was the second such deferral this year for both states, which earlier had $1.3 billion (California) and $350 million (Minnesota) paused.

Deferring Medicaid payments over fraud concerns is an atypically aggressive use of federal authority; CMS normally works with states to resolve billing issues rather than halting funds. To date the administration has publicly announced deferrals only for Democratic-led states, prompting Governors Gavin Newsom and Tim Walz and other Democrats to argue the moves are politically motivated and threaten care for low-income residents. Administration officials deny targeting blue states and say they are following data on suspected fraud.

The deferrals are framed as a pause rather than a permanent cut, but HHS did not provide a timeline for restoring the money, and state Medicaid directors said earlier deferrals remain unresolved.