Federal Judge Blocks White House Defunding of Federal Programs After Day of Chaos
In the afternoon of Tuesday, Jan. 28, a federal judge temporarily blocked a directive from the Donald Trump White House freezing a vast amount of federal spending; the announcement of the freeze had caused massive confusion and concern across Washington and across the country, as confusion over whether provider payments under Medicaid, among many other elements, might be affected. In fact, the Medicaid portals in all 50 states went down during the day on Tuesday, though the White House insisted that they would very soon be functional once again, and as of Tuesday evening, some Medicaid portals appeared to be functioning once again.
The Associated Press’s Chris Megerian and Lindsay Whitehurst wrote on Tuesday evening that “A federal judge on Tuesday temporarily blocked a push from President Donald Trump to pause federal funding while his administration conducts an across-the-board ideological review to uproot progressive initiatives. The order capped the most chaotic day for the U.S. government since Trump returned to office, with uncertainty over a crucial financial lifeline causing panic and confusion among states, schools and organizations that rely on trillions of dollars from Washington. U.S. District Judge Loren L. AliKhan blocked the funding freeze only minutes before it was scheduled to take effect. The administrative stay, prompted by a lawsuit brought by nonprofit groups that receive federal money, lasts until Monday afternoon. Another court hearing is scheduled that morning to consider the issue,” the AP reporters noted.
And they added that “The White House did not immediately comment on the order, which leaves unresolved a potential constitutional clash over control of taxpayer money. Democrats who have struggled to gain a foothold during Trump’s second term unleashed on the Republican president, describing his actions as capricious and illegal.”
Also on Tuesday evening, the Washington Post’s Tony Room, Jeff Stein, Jacob Bogage, and Emily Davies reported that “The order prevented the new restrictions from taking effect until at least Feb. 3, buying time for a coalition of public health advocates, nonprofits and businesses — represented by the left-leaning group Democracy Forward — to proceed with a case that may test Trump’s claims of expansive power over the nation’s fiscal trajectory. The decision arrived amid a wave of chaos and confusion in Washington, where few appeared to understand the scope and intention of a White House memo that had directed agencies to “temporarily pause” the disbursement of key federal funds. Even before it could officially take effect at 5 p.m., thousands of government services — many dedicated primarily to Americans’ health, safety and well-being — appeared to be at risk of interruption or shutdown, at least temporarily.”
What’s more, the Post writers reported, “For hours, states reported issues accessing funds under Medicaid, even though the White House later said it wasn’t supposed to be affected by the spending halt. Preschool centers struggled to obtain reimbursements from the federal program known as Head Start, putting some child-care services at financial risk. A web portal that housing providers use to draw down money for government-voucher and rental-assistance funds stopped working Tuesday, though the cause was not immediately clear. And federal health and education officials similarly said they had to halt work in response to the mixed messages from the White House. That stalled money for some after-school programs, charter schools and the Special Olympics, a spokesperson for the Education Department confirmed. The uncertainty forced the White House to try to clarify its approach by midday: In a second directive, the Office of Management and Budget said it sought only to bring spending in line with the president’s recent executive orders, including those that clamp down on foreign aid and funding for diversity, equity and inclusion, or DEI, which Trump has called ‘radical and wasteful.’”
The White House announcement created chaos for Medicaid-reimbursed healthcare providers. The Hill’s Joseph Choi reported that “State Medicaid programs across the country reported Tuesday they had lost access to federal payment portals one day after President Trump announced a freeze on federal grants and aid. By the late afternoon, states including Alabama, Maryland, North Carolina, Oklahoma and South Carolina all confirmed they had regained access to the portal, but some reported ongoing issues.”
Further, Choi wrote, “On Monday, acting Director of the Office of Management and Budget (OMB) Matthew Vaeth issued a memo stating agencies must halt ‘all activities related to obligation or disbursement of all federal financial assistance” to the “extent admissible by applicable law.’ State Medicaid programs reported Tuesday they have been blocked from accessing the portals that provide states with federal funding. Sen. Ron Wyden (D-Ore.) wrote on the social platform X, ‘My staff has confirmed reports that Medicaid portals are down in all 50 states following last night’s federal funding freeze. This is a blatant attempt to rip away health insurance from millions of Americans overnight and will get people killed.’ Rep. Maxwell Frost (D-Fla.) and Sen. Brian Schatz (D-Hawaii) similarly shared claims of states losing access, and multiple states confirmed outages to The Hill. White House press secretary Karoline Leavitt wrote on X on Tuesday afternoon that the White House was ‘aware of the Medicaid website portal outage’ but had ‘confirmed no payments have been affected — they are still being processed and sent,’” Choi wrote.
Meanwhile, CNN’s Jennifer Hansler, Andy Rose, Tami Luhby, and Devan Cole reported on Tuesday evening that White House Press Secretary Karoline Leavitt told the press in her first press briefing that “This is not a blanket pause on federal assistance and grant programs from the Trump administration.” The CNN reporters wrote that “Leavitt said the pause was directed more at Democratic priorities rather than making across-the-board cuts, and she said all agencies could make a case to the administration to keep their funding. ‘If they feel that programs are necessary and in line with the president’s agenda, then the Office of Management and Budget will review those policies,’ said Leavitt. Leavitt declined to directly answer questions Tuesday about whether Medicaid funding would be affected by the order. For several hours on Tuesday, state Medicaid agencies were unable to access federal funds for the health insurance program that covers more than 72 million low-income Americans. However, during the afternoon, states started regaining access to the funding system,” they wrote.
This is a developing story. Healthcare Innovation will update readers as new developments emerge.