Trump's fraud effort targeting blue states is really masking a more sinister goal: experts

The Trump administration is taking aim at what it calls rampant fraud in state Medicaid programs. But by focusing almost exclusively on Democratic-led states, it has handed ammunition to critics who say it mainly wants to embarrass its political enemies, not save taxpayer dollars.

In announcing earlier this month that Vice President JD Vance would lead the administration’s anti-fraud effort, President Donald Trump said on Truth Social that Vance would focus on fraud “‘EVERYWHERE,’ but primarily in those Blue States where CROOKED DEMOCRAT POLITICIANS, like those in California, Illinois, Minnesota (Somalia beware!), Maine, New York, and many others, have had a ‘free for all’ in the unprecedented theft of Taxpayer Money.”

Four of the five states the Trump administration is targeting, at least initially, are led by Democrats: California, Maine, Minnesota and New York. (The one Republican-led state is Florida.) But fraud involving government benefits isn’t any more prevalent in Democratic-led states than in Republican-led ones, according to federal data.

In Minnesota, which has been a particular focus of the president’s ire, Attorney General Keith Ellison said the administration’s goal is to “make a political point about it and try to assign blame, as opposed to fixing the real problem in front of us.”

“I wish we could get a partner. We used to have one, and it didn’t matter what the party affiliation of the federal government was,” added Ellison, a Democrat. “We all understood we had to protect the public dollar on behalf of low-income and economically struggling people.”

Indisputably, fraud is a long-standing problem: Across all its programs, the federal government loses hundreds of billions of dollars each year to fraud, according to the Government Accountability Office. Medicaid Fraud Control Units, which operate in all 50 states, recovered $2 billion in fraudulent payments and obtained 856 fraud convictions in fiscal year 2025.

The $1.3 billion the fraud units recovered in criminal cases was the highest in a decade, though much of that came from a single Virginia case. And the total is just a fraction of the roughly $920 billion that states and the federal government spent on Medicaid in fiscal 2024.

Ann Maxwell, deputy inspector general in the Office of the Inspector General at the U.S. Department of Health and Human Services, said the location and scope of fraudulent activity varies from year to year.

“There are always new people spending all their time and energy thinking about how they can defraud federal programs,” Maxwell said. “And so then it pops up in a different state or in a different provider group, and that comes to our attention, and we work to bring that down.”

Brad Pigott, a former U.S. attorney for the southern district of Mississippi who tried health care fraud cases during his tenure, said there is no link between geography and fraudulent activity.

“All of the work of fighting federal program fraud throughout the decades has proven that whether a provider or beneficiary is willing to perpetrate fraud has nothing to do with where they live, or with the demographics of where they live,” Pigott told Stateline. “Much less does that have anything to do with which political party governs their state.”

Taking aim at Minnesota

In January, the administration announced the creation of a new division for national fraud enforcement in the Department of Justice. In making the move, it cited a sprawling scandal in Minnesota involving the possible theft of billions of federal dollars.

Since 2018, according to a federal prosecutor, fraudsters likely stole half or more of the roughly $18 billion that supported 14 Medicaid-funded child care, child nutrition, housing and autism programs in the state. The Trump administration has emphasized the fact that 82 of the 92 defendants in the Minnesota schemes are Somali Americans. Trump has called Somalis in Minnesota “garbage,” and used their presence as a pretext for the administration’s forceful immigration crackdown in Minneapolis, even though the overwhelming majority of Somalis are American citizens.

In February, the administration said it would hold back $259.5 million in federal Medicaid payments to Minnesota “to prevent payment of questionable claims while further investigation is completed.”

“We do what any honest and patient-focused agency would do. We have notified the state that we will give them the money, but we’re going to hold it and only release it after they propose and act on a comprehensive corrective action plan to solve the problem,” Dr. Mehmet Oz, the administrator of the federal Center for Medicare & Medicaid Services, said at the White House in February.

“If Minnesota fails to clean up the systems, the state will rack up a billion dollars of deferred payments this year.”

Minnesota has sued to get the money.

“We don’t need the federal government to tell us that fraud is a bad thing,” Ellison said. “We prosecute it. We have been prosecuting it. We will continue to prosecute it. I’m seeking more resources with the state legislature to prosecute it.”

Meanwhile, the administration has expanded its focus to other Democratic-led states.

In an early March letter to New York Democratic Gov. Kathy Hochul and an accompanying social media video, Oz wrongly claimed that the state’s Medicaid program paid for personal care services — help with basic activities such as meal preparation, bathing and grooming — for 5 million people, or nearly three-fourths of the 6.9 million New Yorkers enrolled in the program.

“That level of utilization is unheard of,” Oz said in the video. In the post, he demanded that New York “come clean about its Medicaid program.”

But last week, CMS spokesperson Chris Krepich acknowledged to The Associated Press that the agency had erred in examining New York’s billing codes: The actual number of New Yorkers receiving personal care services is 450,000.

Krepich said the agency still has concerns about how much New York is spending per beneficiary, and that its Medicaid program is paying for too many personal care aides. Health experts say that’s largely because such services are expensive in New York, and the state has made a decision to provide more in-home care.

“It’s really clear New York has chosen, within federal rules and as a policy choice, to provide long-term care through home care and Medicaid. That’s our right as a state,” said Michael Kinnucan, health policy director at the Fiscal Policy Institute, a progressive think tank in New York.

“They could have gone and said, ‘Look, we don’t think all these states should be providing home care. We think it’s too expensive. We want to cut it.’ They didn’t do that because it would have been extremely unpopular,” Kinnucan said. “Now I think what they’re doing is trying to achieve that policy objective essentially through executive action, by making unfounded allegations of widespread fraud.”

But Bill Hammond, senior fellow for health policy at the Empire Center, a conservative-leaning think tank in New York, agreed with CMS that New York’s per-enrollee spending is unreasonably high.

“There are many reasons to be suspicious about the way New York uses its Medicaid money, and it’s needed some kind of oversight for a long time,” Hammond said. “So that’s not to defend every last piece of how the federal government’s handling this, but I’m still holding out hope that this will be a useful and constructive process.”

Where there is money, there is fraud

Medicaid is so large and involves so much money, it is inevitable that there will be bad actors and there will be fraudulent activity, said Summer McKeivier, a Los Angeles lawyer who represents clients accused of committing health care fraud. But McKeivier said the existence of fraud doesn’t necessarily mean the program is broken or that there is widespread criminal activity.

“The issue there is that the federal government and state government, in my opinion, are what I would consider the biggest loan sharks that we have in the world. Basically, they always want their money back,” McKeivier said. She said Medicaid is so complicated, it’s easy for providers to misinterpret the rules, overbill or mistake whether certain services are covered or not.

“The real problem, the overarching problem with both programs (Medicaid and Medicare), is that they are highly complicated and constantly evolving and changing.”

McKeivier said the Trump administration’s fraud effort puts the cart before the horse, since misspending is not fraud until it is proven to be so in court.

But Brian Blase, president of the Paragon Health Institute, a conservative policy group that advises congressional Republicans, said any hint of fraud should trigger an investigation.

“The programs are massive, and because they’re massive, and it’s people spending other people’s money, they’re loaded with waste, fraud and abuse,” Blase said. ”What we’re seeing now is just the tip of the iceberg.”

Andy Schneider, a research professor at the Georgetown University McCourt School of Public Policy, said curbing overall Medicaid spending — not just waste, fraud and abuse — is the administration’s real goal.

“You can see how fraud is an attractive political message for them,” Schneider said.

“There’s a longer game here, though, beyond the midterms and regardless of the outcome of the midterms, and it has to do with capping federal payments to states for Medicaid.”