Wasted Money for Medicaid

By April 18, 2018 Commentary

Medicaid expenditures for the federal government and the states are growing rapidly, driven in part by the program’s expansion under the federal reform law.  The program provides gold-plated, basically free coverage, and research indicates it has done little to actually improve recipient’s health.  But a recent Government Accountability Office finds that it is very good at wasting taxpayer money.   (GAO Report)   The total cost of Medicaid was estimated to be $596 billion in 2017.  Improper payments alone were estimated at $37 billion by GAO, up from $29 billion in 2015.  GAO charitably attributes many of these improper payments to poor information and information systems.  It has continually recommended changes to CMS, and indirectly, the states, but so far those recommendations have not been implemented.  GAO found that there has been no overall fraud risk assessment or development of a risk-based anti-fraud program.  States continue to provide benefits to people who are not eligible.  Fraud by providers is widespread.  In addition to the fraud and waste recommendations, GAO has also made suggestions regarding ensuring adequate access for certain classes of beneficiaries and those also have been ignored.  And the states are just as bad, most also have pathetic controls on avoiding improper payments and improper enrollment, which is surprising since Medicaid is the single biggest budget problem, along with government employee pensions, for most states.  But politicians love to buy those votes.

A major problem with Medicaid is the dual government system of control and regulation.  There is zero justification for this.  Medicaid should be a state-only program and each state should decide how much resource it wants to dedicate to providing free health care to those who may, or may not, need it.  States, and even local governments, are in a far better position to make these decisions and to design programs they believe are effective and that reflect voters preferences.  The federal role should be eliminated–it only adds complexity and administrative cost and balloons an already out-of-control federal budget.  Beyond the governance problems, there is a fundamental unfairness in providing the basically free, unlimited coverage that Medicaid does when the taxpayers funding the program have far worse coverage and most struggle with health insurance and health care costs.  Recipients should be required to engage in responsible behaviors or lose coverage.  Those who are capable of working and chose not to, shouldn’t be eligible.  Recipients should have to receive coverage at community health centers or other low-cost providers.  All this would greatly lower the costs and would encourage better health behavior and better health.  The current system is a huge waste of money.

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