Minnesota officials contest $550 million federal Medicaid funding freeze

Minnesota state officials are contesting a decision by the Trump administration to freeze $550 million in federal Medicaid funding scheduled for 2026. The freeze follows allegations of widespread healthcare fraud within the state that surfaced in late 2025.

John Connolly, the temporary commissioner of the Minnesota Department of Human Services and state Medicaid director, sent a five-page letter to CMS Administrator Dr. Mehmet Oz on October 2. In the letter, Connolly requested the resumption of funding, asserting that the state has met its reporting requirements by identifying 14 high-risk Medicaid service providers.

While the Walz administration acknowledges some level of fraud exists, officials argue the scope is difficult to quantify and that the federal government has not provided sufficient evidence to justify the scale of the funding freeze. Connolly characterized the administration's actions as feeling like ‘a war on Medicaid, not a war on fraud’ and expressed concern that the move is part of a ‘retribution campaign’ against the state.