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California’s federal cash crunch just got uglier.
The Trump administration is withholding another $1.2 billion in Medicaid reimbursements, putting fresh heat on a state whose personal care spending has ballooned at a pace federal officials say they can’t explain.
Dr. Mehmet Oz, who heads the Centers for Medicare and Medicaid Services, announced the latest move after questioning the growth of California’s program for older adults and people with disabilities. The numbers have Washington demanding answers, and California has yet to receive funding.
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“California has been growing that program 24% in the last three years. That is twice the rate of every other state average in the country,” Oz said Tuesday from the White House.
“Impossible for us to understand how that could be so we are taking major action in California,” he added.
Oz also questioned whether California is asking taxpayers to bankroll services that families would ordinarily handle themselves.
“Many of you would carry groceries upstairs for your mom for free, but in California, they will pay you a lot of money for it,” he said.
The latest freeze lands on a state already facing a separate $1.3 billion withholding announced in May over suspected fraud in hospice and in-home care programs. That puts $2.5 billion in federal Medicaid reimbursements in dispute, a hefty bill for California as the administration scrutinizes how the state spends public money.
There is a major caveat. Oz has not presented specific evidence of fraud in the personal care program, so suspicions about that program have not been substantiated in his public remarks.
The administration is instead trying to get insiders to expose alleged wrongdoing. Oz was alongside Vice President JD Vance, who serves as fraud czar, as President Trump unveiled a new $25 million Justice Department whistleblower initiative Tuesday.
The program offers $30,000 bounties out of a dedicated federal pot for tips leading to fraud charges—though Trump sweetened the pot by offering tipsters an additional 1% commission on any recovered funds.
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Trump named himself the ultimate “arbitrator” of the program, promising he would personally decide who gets paid. “I’ll determine whether or not the person is deserving, and I will be very generous believe me. We are not looking to save on that,” Trump said. “I promise you I will be fair.”
California Gov. Gavin Newsom’s office, meanwhile, has pushed back against separate federal allegations involving illegal voter registration, arguing that the number of people charged does not support claims of widespread violations.
