For Shannon Rosa, the word that keeps coming up is angry rather than “worried.” Over the past year, Rosa, a full-time caregiver for her disabled son and senior editor at an autism advocacy resource, has witnessed the Trump administration’s relationship with Medicaid benefits change from tense to openly hostile. She wasn’t shocked when federal officials revealed last month that they were withholding $867 million in Medicaid funding from California, on top of an earlier $1.34 billion freeze. Beyond that, she sensed something darker and more weary.
Health and Human Services Secretary Robert F. Kennedy Jr. and Centers for Medicare and Medicaid Services Administrator Mehmet Oz announced the Medicaid funding freeze in California and Minnesota on July 21. The combined cost of the two states is currently over $2.7 billion. California is facing $2.2 billion in federal reimbursements that have been withheld. Over the course of three quarters of postponed payments, Minnesota is short about $550 million. Suspected fraud is cited as the reason, especially in relation to in-home care services, which enable families like Rosa’s to function.
The lack of specificity from federal officials makes this situation more difficult to understand. Spending on home-based care has increased, which they have noted as suspicious. However, increasing expenses in a program that more people are utilizing, during a time of wage growth, and in a time when states have actively shifted away from expensive institutional care—that is not the same as fraud. That’s precisely what research professor Andy Schneider of Georgetown University’s McCourt School of Public Policy said. Growth is not proof. Parts of the program may actually be abused. However, the administration hasn’t demonstrated much of it.
What legal experts find most peculiar about this situation is that. The typical fraud enforcement strategy, according to Carl Tobias, a law professor at the University of Richmond, entails conducting an investigation before taking any action. Instead, there is currently a freeze, and it is the responsibility of California and Minnesota to demonstrate the validity of their payments. States that have already spent money on care they anticipated receiving reimbursement will suffer immediately as a result of this significant inversion of standard procedure.
For many years, California’s management of disability care has relied heavily on in-home supportive services, as they are officially known. Instead of losing money by quitting work, they enable a family member to stay at home and provide care while receiving a meager wage thru Medicaid. Rosa is able to continue her career while taking care of her son thanks to the program. Families disintegrate without it in ways that are difficult to explain to those who have never required this kind of assistance, she claims. “People end up on the streets. They become unstable,” she remarked. That statement doesn’t contain any drama. It’s only math.
It is difficult to overlook this situation’s political undertones. All of the states with Medicaid funding freezes are controlled by Democrats. At the press conference, Kennedy himself admitted that suspicions are centered on California’s in-home care expenditures. The administration has relied on the fact that Minnesota’s deferrals target areas identified by the state’s legislative auditor, but detractors point out that identifying risk areas for review differs from verifying actual fraud. Tobias put it bluntly: it appears that financial levers are being used in a political struggle.
At the core of this is something that seems almost contradictory. Because home-based care is less expensive than institutional alternatives, the Centers for Medicare and Medicaid Services encouraged states to switch to it for years. That conclusion is consistently supported by research. Oz now seems to be challenging the very spending habits that were made possible by federal policy. This is an odd reversal that begs the question of what the administration truly hopes to achieve in the future with state Medicaid programs.
