Mental health provider says federal Medicaid halt will lead to 'more crisis'

State leaders are responding to a move by the federal government to withhold about a quarter billion dollars in Medicaid funding.

The Trump administration says the state has 60 days to share a plan to address fraud or the freeze could be extended.

But Governor Tim Walz and members of his administration say they’ve been taking such steps. State Medicaid Director John Connolly said the state will have to pay the federal government a quarter billion dollars for services already provided, which is a hit to the state budget. Connolly says the Trump Administration has threatened to withhold more money.

The funding pause affects 14 categories of services funded through Medicaid. Late in 2025, the state began reviewing providers of those services. It has suspended or delayed some payments.

The programs include, in part, treatments for substance use disorder and mental health conditions. Marcus Schmit, executive director of the Minnesota chapter of the National Alliance on Mental Illness, spoke with host Nina Moini about what the funding threat could mean for mental health care in the state.