Vice President JD Vance announced Wednesday that the Trump administration is temporarily halting certain Medicaid funding to Minnesota, deferring $259 million in payments and giving Gov. Tim Walz 60 days to prove his state can be trusted with federal tax dollars.

The move, which Vance described at a press event alongside Centers for Medicare & Medicaid Services administrator Mehmet Oz, marks the most aggressive federal action yet against a fraud problem that has festered in Minnesota for years, stretching back to the COVID-19 pandemic and ballooning to staggering proportions.

Vance did not mince words about why the payments are being frozen:

"We are stopping the federal payments that will go to the state government until the state government takes its obligations seriously to stop the fraud that's being perpetrated against the American taxpayer."

A Quarter Billion Dollars, Held

Oz laid out the mechanics. The $259 million deferral is based on an audit of the last three months of 2025, and the funds will not move until Minnesota delivers results, not promises.

"We have notified the state and said 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."

Oz called it "the largest action against fraud that we've ever taken" at CMS. And the consequences for inaction are steep: if Minnesota fails to clean up its systems, the state will rack up $1 billion in deferred payments this year.

The administration sent a letter to Walz's office. He has 60 days to respond. Fox News Digital reached out to Walz's office Wednesday afternoon for comment. No reply had come.

Silence from the governor's mansion is becoming a pattern on this subject.

The Scope of the Problem

Minnesota's fraud crisis first came under the national spotlight in December 2025, though investigators have traced the schemes back to the pandemic era. Estimates of the total damage vary. Investigators have estimated the Minnesota scheme could top $9 billion. President Trump, in his State of the Union address Tuesday evening, put the number even higher.

"When it comes to the corruption that is plundering — it really, it's plundering America — there's been no more stunning example than Minnesota, where members of the Somali community have pillaged an estimated $19 billion from the American taxpayer."

Trump added that "in actuality, the number is much higher than that," and noted that California, Massachusetts, Maine, and other states face similar problems. Whatever the precise figure, the scale is extraordinary. Billions in taxpayer money are routed through social and welfare programs and siphoned off before reaching the people they were meant to serve.

Vance zeroed in on one particularly galling detail: officials have verified that a Minnesota program intended to provide after-school care to autistic children was exploited by fraudsters. The money earmarked for vulnerable kids ended up in the pockets of criminals.

"There are kids in Minnesota who deserve these services, who need these services, and they're not going to those kids. They're going to fraudsters in Minneapolis. That is unacceptable."

That's the part of this story that should make every American angry, regardless of party. Fraud isn't a victimless budget line. It steals from the most vulnerable people the programs claim to protect.

Immigrant Communities and Accountability

Oz noted that these schemes are not exclusive to Minnesota, but that they "disproportionately involve immigrant communities." He described these communities as "insulated" and able to "organize efforts," adding that "sometimes they don't understand what's going on."

This is a point that deserves honest treatment rather than the reflexive deflection it typically receives. When fraud concentrates in specific communities, acknowledging that fact is not bigotry. It is a prerequisite for actually stopping it. The alternative, pretending the pattern doesn't exist to avoid uncomfortable conversations, is precisely how Minnesota ended up hemorrhaging billions in the first place.

The left's instinct will be to frame any enforcement action as targeting immigrants. But the real victims of these schemes include the immigrant communities themselves, people who play by the rules and watch their neighbors exploit systems that were designed to help them. Refusing to act doesn't protect those communities. It abandons them to the fraudsters operating in their midst.

What Walz Has to Do

The ask from the administration is not complicated. Vance spelled it out plainly:

"All we need the governor and the administration of Minnesota to do is something quite simple, which is to show that before you give Medicaid funds to somebody, you're taking seriously whether they provided the services that they say that they're providing."

Verify that services were actually rendered before cutting checks. That's it. That's the bar. The fact that this needs to be demanded by the federal government, rather than already functioning as standard practice, tells you everything about how Minnesota has managed its obligations.

Oz said he believes Walz will take the letter seriously. Maybe he will. But Tim Walz governed Minnesota through the period when this fraud metastasized. He presided over the systems that allowed billions to vanish. The 60-day clock is ticking on a mess that accumulated on his watch.

A Larger War

Minnesota is the front line, but it isn't the whole battlefield. Trump made clear Tuesday night that the administration views this as a national problem, naming California, Massachusetts, and Maine among the states with even worse fraud exposure. The Minnesota action is a signal to every state capital: the era of loose oversight and unaccountable spending is closing.

For years, the federal government shoveled money to states with minimal verification, particularly during the pandemic, when emergency spending blew past every normal safeguard. The predictable result was a bonanza for fraud. Programs designed as safety nets became ATMs for organized schemes, and the people who were supposed to be catching it either couldn't or didn't care to look.

What's happening now is the corrective. It is not a cut to Medicaid. The administration has been explicit: the money will be released once Minnesota demonstrates it can be a responsible steward. This is accountability, the kind that should have existed all along.

Somewhere in Minneapolis, there are children with autism whose after-school programs were robbed to enrich criminals. The federal government just told Minnesota to fix it or lose a billion dollars trying not to.