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Medicaid payment systems restored in Pa. as Trump administration rescinds federal funding freeze memo

“Don’t let anybody tell you this was some technical glitch,” Pennsylvania Gov. Josh Shapiro said. “They were very purposeful in trying to wreak havoc on our communities."

President Donald Trump signs the Laken Riley Act during an event in the East Room of the White House, Wednesday, Jan. 29, 2025, in Washington. (AP Photo/Alex Brandon)
President Donald Trump signs the Laken Riley Act during an event in the East Room of the White House, Wednesday, Jan. 29, 2025, in Washington. (AP Photo/Alex Brandon)Read moreAlex Brandon / AP

Federal computer systems that were down in Pennsylvania on Tuesday were restored, and President Donald Trump’s administration on Wednesday rescinded its controversial memo ordering the pause of trillions of dollars in federal disbursements that caused chaos throughout the state and across the country as officials scrambled to decipher which government programs were at risk and groups mounted legal challenges to block it.

Gov. Josh Shapiro said at a news conference Wednesday that access to payment systems for Medicaid, workforce development database CareerLink, and preschool provider Head Start were all restored late Tuesday night, after he said they were previously inaccessible earlier in the day in Pennsylvania and other states after the memo was released.

He also reiterated his criticism that Trump’s administration intended to cause confusion across the country by issuing the memo with little explanation.

“Don’t let anybody tell you this was some technical glitch,” Shapiro, a Democrat, said. “They were very purposeful in trying to wreak havoc on our communities and stop these federal dollars from flowing to our states.”

It was not immediately clear how long the federal computer systems were down on Tuesday, and the White House claimed that no Medicaid payments were affected by the outage.

The turmoil began late Monday, when the Office of Management and Budget initially ordered that all federal funds — including those already granted by Congress — be paused starting at 5 p.m. Tuesday for review to ensure they aligned with Trump’s recent executive orders restricting diversity, equity, and inclusion initiatives and environmental efforts. A federal judge quickly blocked the directive from going into effect Tuesday evening, and the Trump administration on Wednesday rescinded the order altogether.

Federal funding makes up approximately 40% of Pennsylvania’s annual spending, totaling nearly $49 billion in the current fiscal year. These funds are often used by state governments or pass through to local governments to pay for essential services, such as highway repairs, food programs, public education, and more. Nonprofit organizations, colleges, and universities also rely on federal funding for everything from cancer research to providing community welfare services.

Attorneys general from 22 states filed a separate lawsuit questioning the constitutionality of the directive on Tuesday evening, including New Jersey Attorney General Matt Platkin, a Democrat.

Pennsylvania Attorney General Dave Sunday, a Republican, did not join the lawsuit, and put out a statement Wednesday afternoon saying that he spent the last day assessing the impact a federal freeze would have on Pennsylvania and “voicing concerns to the appropriate officials.”

“I am grateful that the President quickly recognized the importance of this funding to the people and organizations of the Commonwealth,” Sunday said.

While the memo was rescinded Wednesday, the confusion it caused did not stop there.

White House press secretary Karoline Leavitt said on X that the core purpose of it still stood: Federal funding is still frozen for funding related to Trump’s recent executive orders “and will be rigorously implemented.”

Meanwhile, freshman Sen. Dave McCormick (R., Pa.) wrote on the platform that he “is grateful to all the Pennsylvanians who reached out about the Administration’s spending pause over the last 24 hours.”

“The pause has been rescinded. Your input made a difference — thank you,” McCormick wrote.

Shapiro said on X in response to the memo’s rescission that the daylong chaos it created for leaders across the country was “reckless and unnecessary.”

“Pro tip: Next time, the Administration should do its homework instead of shutting down critical payment systems,” Shapiro added.