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Federal judge Loren L. AliKhan ordered a temporary ban on part of the Trump administration's directive to freeze federal aid which was set to come into force on Jan. 28, 2025.
The funding freeze came as Medicaid reimbursement portals across all 50 states faced a sweeping blackout on Tuesday. The administration denied that Medicaid was part of the aid freeze and said the portal outages were done in error, the Associated Press reported . The White House stated that the portals would be back online shortly and that no payments were affected.
The aid freeze from the Trump administration triggered widespread uproar among charities, educators, and state governments due to its potential impact on essential services. The court ruling prevents the administration from freezing funding for "open awards" already granted until at least Feb. 3 to allow time for further legal arguments.
President Trump has ordered a temporary freeze on all federal loans and grants, except for Social Security and Medicare. This pause affects various programs, including infrastructure and foreign aid, while agencies review funding alignment with his administration's priorities. This came after the Trump administration's efforts to align federal spending with recent executive orders targeting programs related to diversity, equity, and inclusion (DEI) and other progressive policies, CNN reported.
Federal agencies "must temporarily pause all activities related to obligation or disbursement of all Federal financial assistance," White House Office of Management and Budget acting director Matthew Vaeth said in the memorandum, a copy of which was obtained by CNN, citing administration priorities listed in past executive orders. The administrative stay, initiated after a lawsuit from nonprofit organizations that rely on federal funding, will remain in effect until Monday afternoon. A subsequent court hearing is set for that morning to address the matter, reported the Associated Press.
The White House said the nationwide "outage" was caused by the locking out of Medicaid, Head Start, and health centers from federal funding systems. Despite the assurance of restoration, concerns about potential payment delays and impact on healthcare services remained. "My staff has confirmed reports that Medicaid portals are down in all 50 states following last night's federal funding freeze," Sen.
Ron Wyden, D-Ore., wrote in a post on X. NEW: 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. https://t.co/6cqzQpyOoz "This is a blatant attempt to rip away health insurance from millions of Americans overnight and will get people killed," he wrote.
"The government doesn't know the full scope of the programs that are going to be subject to the pause," AliKhan said. A wave of fear gripped organizations, both public and private, that rely on federal grants and loans for their operations following the order. The situation remained tense until the White House provided reassurance regarding the short-term nature of the freeze.
"This is not a blanket pause on federal assistance and grant programs from the Trump administration," Press Secretary Karoline Leavitt said in her first White House briefing. She said that the pause on federal grants and loans is primarily aimed at programs associated with Democratic priorities rather than implementing broad cuts across all funding. For several hours on Tuesday, state Medicaid agencies were unable to access federal funds for the health insurance program covering over 72 million low-income Americans.
However, access was restored in the afternoon, with reports of additional states regaining entry to the funding system..
