WASHINGTON, July 22 -- Millions of Californians and Minnesotans covered by Medicaid woke Tuesday to news that the federal agency responsible for their coverage had frozen over a billion dollars in reimbursements to their states, with no timeline given for when the money would flow again. The Department of Health and Human Services, led by Secretary Robert F. Kennedy Jr., announced it had deferred more than $1 billion in Medicaid payments to California and Minnesota pending what it described as a review of high-risk claims in a crackdown on fraud.

The move immediately drew accusations from both states that the federal government was weaponizing Medicaid oversight against Democratic governors rather than conducting a genuine anti-fraud eff...