Vice President JD Vance announced that the federal government would withhold $259 million in Medicaid funding for Minnesota due to concerns about fraud. The state and its welfare fraud scandals have become a target for the Trump administration, and Gov. Tim Walz says the funding move is politically motivated. Geoff Bennett discussed more with Matt Sepic, a reporter for Minnesota Public Radio.
Geoff Bennett:
Vice President J.D. Vance announced yesterday that the federal government would hold back $259 million in Medicaid funding for Minnesota over fraud concerns. The state and its welfare fraud scandals have become a target for the Trump administration, which deployed thousands of immigration agents to the Twin Cities in recent months.
The vice president spoke in neighboring Wisconsin today.
Vice President J.D. Vance:
The job of your government is not to open your borders and allow fraudsters to come in and take advantage of you. The job of your government is to shut the border and shut off the fraud, and that’s exactly what we’re doing in the Trump administration.
(Applause)
Geoff Bennett:
Democrats, including Minnesota Governor Tim Walz, says the defunding was politically motivated.
Gov. Tim Walz (D-MN):
The sense of retribution, no state has experienced this before. How does taking and punishing children and elderly have anything to do with fighting fraud, when that’s not where this issue was taking place?
Geoff Bennett:
To break this all down, we’re joined now by Matt Sepic, reporter from Minnesota Public Radio.
Matt, thanks for being with us.
And for folks who might be confused by some of this, first, we should explain, where exactly do these fraud allegations stem from?
Matt Sepic, Minnesota Public Radio:
Well, they go back several years.
And they really began with a scandal known here as the Feeding Our Future fraud. In that case, dozens of people, 79 at last count, have been charged. Most of them have already been convicted — and this began — it became public in 2022 — of stealing around $300 million from taxpayer-funded child nutrition programs.
That investigation has since morphed into Medicaid fraud. And that brings us to today. A former assistant U.S. attorney who investigated this case estimated back in December that as much as $9 billion may have been stolen from Minnesota’s Medicaid program since 2018.
Geoff Bennett:
So there is something to this.
This $259 million figure, though, put that in the context of how much money, Medicaid money, the state gets from the federal government.
Matt Sepic:
Well, Minnesota gets about $21 billion in Medicaid funds every year. That’s according to the latest figure that we have, which is from 2024.
So this is a not-insignificant chunk of money. And there remains some confusion over how this is all going to play out. Minnesota Medicaid Director John Connolly said today that the way this is structured means that the state will actually owe the federal government $260 million for the final three months of 2025 and will not see a future installment for the current quarter, the first three months of this year, until this halt on spending is lifted.
Geoff Bennett:
So who’s affected by these cuts, Matt?
Matt Sepic:
Primarily people who rely on 14 programs that had been flagged previously as being susceptible to fraud. These include autism services for children, a housing stabilization program that Governor Walz in fact shut down last year because there was so much fraud, as well as things like nonemergency medical transportation, so reimbursements for someone driving you to the doctor.
What it doesn’t appear to affect at this point are what we normally think of as core Medicaid services, such as physician’s visits, checkups, and that sort of thing.
Geoff Bennett:
So when President Trump, as he did at the State of the Union address earlier this week, said that members of the state’s Somali community have quote — this is — these are his words — pillaged an estimated $19 billion from the American taxpayer, what do we know about the accuracy of a claim like that?
Matt Sepic:
That number is wildly inflated.
The 14 programs that I mentioned that have been susceptible to fraud, according to Medicaid officials in the federal government, the state has spent, or the federal government has spent about $18 billion on those in total since 2018. About half of that — and this is an estimate — and it’s important to note that this is only an estimate.
This has not been proven yet, but a top federal fraud prosecutor who used to work at the Minnesota U.S. attorney’s office, Joe Thompson, estimated back in December that about half of that could be fraudulent. And that’s based on the exponential growth in taxpayer outlays for those 14 programs.
Geoff Bennett:
Has the state done anything to address this so it can’t happen again, this level of fraud?
Matt Sepic:
Well, it’s a hot topic at the legislative session over in St. Paul that just got under way. Lawmakers, Democrats, and Republicans are considering a number of proposals to combat fraud.
One of those is setting up a new inspector general’s office on the state level. They’re also talking about more site visits to ensure that Medicaid providers are providing what they say they are. State Attorney General Keith Ellison, a Democrat, is also asking state lawmakers to pay for fraud prosecutors in his office specifically to go after Medicaid fraud.
Geoff Bennett:
Matt Sepic of Minnesota Public Radio, thanks again for joining us this evening.
Matt Sepic:
You’re welcome.
