President Donald Trump’s administration’s order to pause all federal grants and loans starting yesterday triggered confusion in the US health system, with Democratic legislators saying states were having trouble accessing Medicaid funds, the massive programme that provides care for low-income Americans.
US Senator Ron Wyden, the top finance committee Democrat, said his office had confirmed that the portal doctors use to secure payments from Medicaid had been deactivated in all 50 states. Medicaid, which covers about 70 million people, is jointly funded by both the states and the federal government, and each state runs their own programme.
White House Press secretary Karoline Leavitt said she could not say whether the programme had been frozen, telling reporters at her first briefing since Trump took office on January 20, “I’ll get back to you.”
The order was not limited to the $618 billion Medicaid programme, also threatening to disrupt education, anti-poverty programme, housing assistance, disaster relief and a host of other initiatives that depend on trillions of federal dollars.
The freeze followed the Republican president’s suspension of foreign aid last week, a move that began cutting off the supply of lifesaving medicines yesterday to countries around the world that depend on US development assistance.
The Office of Management and Budget, which oversees the federal budget, said in a memo that grants and loans would be put on hold while the administration ensures they are aligned with the Republican president’s priorities, including executive orders he signed ending diversity, equity and inclusion efforts.
The memo said the freeze included any money intended ‘for foreign aid’ and for ‘non-governmental organisations’, among other categories.
The White House said the pause would not impact Social Security or Medicare payments to the elderly or ‘assistance provided directly to individuals’, such as some food aid and welfare programmes for the poor.
In a second memo, OMB officials said funds for Medicaid, Head Start, farmers, small businesses and rental assistance would continue without interruption.
But the order was creating chaos and confusion among an array of non-profits as well as state and local officials, even before it was to take effect.
In Connecticut, the reimbursement system for Head Start – a government programme that provides early education and other benefits to low-income families – was shut down, preventing pre-schools from paying staff, Democratic US Senator Chris Murphy said on X.
Leavitt also would not specifically say whether Head Start or disaster aid would be frozen at the briefing.
Four groups representing nonprofits, public health professionals and small businesses filed a lawsuit challenging the directive, saying it “will have a devastating impact on hundreds of thousands of grant recipients.” Democratic state attorneys general were also preparing to sue the Trump administration.
The OMB order is the latest directive in the Trump administration’s campaign to dramatically reshape the federal government, the nation’s largest employer.
In a blizzard of executive actions, Trump has shuttered all diversity programmes, imposed a hiring freeze, sent national security officials home and sought to strip away job protections from thousands of civil servants.
As part of last week’s 90-day foreign aid suspension, the administration moved to stop the distribution of drugs for HIV, malaria and tuberculosis, as well as medical supplies for newborn babies, in countries supported by the United States Agency for International Development. The US is the largest single donor of aid globally, disbursing $72bn in 2023.
Agencies have until February 10 to submit detailed information on any programmes subject to the suspension.
The federal government provides money to a broad swath of nonprofits, which reacted with dismay and confusion.
“From pausing research on cures for childhood cancer to halting food assistance, safety from domestic violence, and closing suicide hotlines, the impact of even a short pause in funding could be devastating and cost lives,” Diane Yentel, president and CEO of the National Council of Nonprofits, one of the four groups that sued yesterday, said in a statement.
Trump’s order could also cause turmoil in state and local governments that depend on federal aid for everything from highway construction to school lunches and foster care.
The memo did not appear to exempt disaster aid to areas like Los Angeles and western North Carolina that have been devastated by natural disasters. Trump pledged government support when he visited both places last week.
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