Gavin Newsom built his political career promising Californians the most generous government programs in the country — no questions asked, no paperwork required.
Now someone is finally asking questions.
And Newsom’s response tells you everything you need to know about why the money vanished in the first place.
Kennedy Pulls the Plug on $1 Billion in Unverified Medicaid Payments
Secretary of Health and Human Services Robert F Kennedy Jr said that concerns over fraud schemes led him to shut off $1 billion of federal Medicaid spending for California and Minnesota.
The Centers for Medicare and Medicaid Services is holding back roughly $867.5 million from California and $199 million from Minnesota.
The department stressed the money is being deferred, not cut, and that both states can recover it by documenting that the claims meet federal Medicaid requirements. “States that receive federal Medicaid funding must demonstrate that every dollar meets federal requirements,” Kennedy said. “When they cannot, we will not release federal funds until they do.”
That’s not an unreasonable ask. That’s basic accounting.
Kennedy put it plainly: “We have a duty to stop the payments, demand answers, and then follow the evidence wherever it leads.”
CMS Administrator Dr Mehmet Oz said the administration’s review uncovered repeated irregularities in both states, including claims submitted for deceased beneficiaries, providers previously flagged through fraud detection systems, and spending patterns federal officials said were significant outliers.
“If it smells like fraud, we’re not paying for it anymore,” Oz said.
The deferrals follow an April takedown in which the Justice Department charged eight defendants in a $50 million health care fraud scheme dubbed “Operation Never Say Die,” including operators of sham hospices that billed Medicare for beneficiaries who were not terminally ill. According to court documents, one Anaheim operator recorded a non-death discharge rate of roughly 85 percent, nearly five times the national average, while paying beneficiaries cash kickbacks delivered in envelopes.
An analysis from CBS News found that 700 of the approximately 1,800 hospices in Los Angeles County triggered red flags for fraud, using California’s own definitions.
Seven hundred fraudulent hospices. In one county. Using the state’s own standards.
CMS officials suspect the questionable spending in California is rooted in in-home services. Over the past two federal fiscal years, California’s spending in these programs went up 24%, while the rest of the country’s average was 12%, according to CMS administrator Mehmet Oz.
According to CMS, the frozen funds in California include $221 million in claims associated with individuals whose immigration status Oz described as “unsatisfactory immigration status.” Federal authorities also pointed to millions of dollars in claims linked to services allegedly provided to beneficiaries after their deaths.
Newsom Calls It Politics While His Medicaid Program Bleeds Billions
Newsom’s response was about what you’d expect from a man who spent years signing checks and calling it compassion.
“Why they’re doing it is pure politics,” the Democratic governor said.
Newsom responded to Kennedy’s announcement in a post to X, calling it a “recycled political stunt,” and insisting that California is being targeted for political reasons — not due to fraud.
The governor then claimed all this is an attack on his likely successor Xavier Becerra, the Democrat candidate for governor and a former Health and Human Services chief under former President Joe Biden.
So the man who ran HHS while all of this fraud allegedly exploded is now running for governor of California. And Newsom is accusing the people investigating the mess of playing politics. Got it.
Kennedy said that Biden-era HHS Secretary Xavier Becerra “looked the other way while fraud, waste, and abuse exploded.” “The scammers got paid,” Kennedy said.
“Instead of protecting your money, they opened the floodgates to theft,” he said, blaming both the Biden administration and Democrat state officials for weakening oversight and dismantling key program integrity safeguards.
Kennedy explained that Becerra weakened anti-fraud efforts protecting taxpayers by cutting program integrity staffing.
And now Newsom wants the money back without showing the receipts.
The Trump administration is freezing more than $1 billion in federal Medicaid funding to California and Minnesota over suspected fraud, with Kennedy warning that states won’t receive another taxpayer dollar until they prove the payments were legitimate. “If Governor Gavin Newsom or Governor Tim Walz wants this funding released, all they have to do is provide basic documentation showing that these services are legitimate and not fraudulent.”
The Bigger Problem Newsom Doesn’t Want to Talk About
Here’s what makes Newsom’s outrage ring hollow.
California expanded Medi-Cal to cover all illegal aliens, and that expansion ballooned the cost of Medi-Cal for all illegal aliens under the program to $9.5 billion. The state received more than the intended number of recipients, causing a $6.2 billion deficit to open up.
Newsom originally estimated that full Medi-Cal coverage for illegal aliens would cost $3.1 billion. But the first year of Medi-Cal coverage exploded to $9.5 billion.
That’s not a rounding error. That’s a program that nobody was watching.
Newsom signed legislation to close the budget gap in the state’s Medicaid services to ensure coverage for 15 million people through June. It’s part of California’s plan to fix the $6.2 billion gap in the state’s Medicaid budget after the state launched an expansion to give all low-income adults coverage regardless of their immigration status.
While federal law currently prohibits federal Medicaid funding from going to illegal aliens, with the exception of emergency services, California financed its expansion by implementing a budget maneuver to draw down increased federal funding, placing American taxpayers on the hook for the free coverage California is giving to illegal aliens.
In other words, California decided to give government-run healthcare to people who entered the country illegally, couldn’t figure out how to pay for it, and then went looking for federal money to cover the shortfall. And when the federal government paused payments and asked for documentation, Newsom called it a political attack.
Kennedy has said his department loses approximately $100 billion each year to fraud, describing several schemes that diverted taxpayer-funded healthcare dollars through fraudulent hospice operations and medical equipment companies.
That figure should stop every American cold. One hundred billion dollars a year. Stolen. And the Biden administration’s answer was to cut the people responsible for catching it.
Under Kennedy’s direction, HHS and its Office of Inspector General are also using exclusion authorities to remove bad actors from Medicare and Medicaid and, in many cases, permanently bar them from returning.
That’s what actual accountability looks like. Not press releases. Not lawsuits threatening to call a freeze “political.” Permanent bans for people who stole from sick Americans.
Newsom built his national profile on the idea that California was the model for the rest of the country — big programs, big promises, no limits. But the Medi-Cal disaster is what happens when government-run healthcare operates without any guardrails. Spending doubles. Fraud explodes. And when someone finally asks where the money went, the governor calls it a stunt.
Kennedy’s position is straightforward: show the documentation and the money flows again. Newsom’s refusal to treat that as a reasonable request tells you more about the state of California’s books than any audit ever could.
The voters who sent Donald Trump back to Washington in 2024 did so precisely because they were tired of watching their tax dollars disappear into programs nobody was policing. Robert F Kennedy Jr is doing exactly what he was put there to do. Gavin Newsom just doesn’t like being the one who has to answer for it.
Sources: New York Post, Fox News, The Blaze, Washington Examiner, Breitbart, California Globe, California Policy Center, House Budget Committee