Republicans in Congress are rightly looking to Medicaid’s out-of-control spending growth for possible savings to help preserve the 2017 tax cuts in what President Donald Trump hopes will be “one big, beautiful” reconciliation bill.
If done right, those savings could also help save Medicaid as we know it. That means saving Medicaid for its intended recipients and saving Medicaid from being squandered on payments that are either implicitly or explicitly prohibited by law.
Medicaid was established to provide health insurance to low-income children, pregnant women, seniors, and the disabled. Today, more than 21 million out of a total of 71.3 million Medicaid enrollees aren’t among the program’s intended recipients, but are instead able-bodied, working-age adults without dependents.
What’s worse, the federal government pays for 90% of the cost of these so-called Medicaid expansion enrollees, but only about 57%, on average, for Medicaid’s intended population.
In other words, the federal government sends states $9 for every $1 that they spend on Medicaid for able-bodied working-age adults without dependents, and only $1.33 for what states spend on Medicaid for pregnant women and disabled children.
Not surprisingly, when it comes to enrolling people and helping them access healthcare providers and better services, states prioritize healthy adults who were never supposed to receive Medicaid over the vulnerable population the program was created to help.
Policymakers should stop discriminating against low-income children, pregnant women, seniors, and individuals with disabilities by lowering Medicaid’s outsize payments for expansion enrollees.
In addition to creating unequal payments, the Affordable Care Act’s Medicaid expansion caused the improper payment rate in Medicaid to quadruple such that about $1 out of every $4 in Medicaid spending over the past decade was an improper payment.
Paragon Health Institute President Brian Blase and I estimated that the federal government issued $1.1 trillion in improper Medicaid payments over the past 10 years. That figure could rise to $2 trillion over the next decade based on current spending trajectories.
In part, those improper payments stem from states enrolling people in Medicaid and billing the federal government for the services they receive without checking if they are eligible for Medicaid. Improper payments also come from states misclassifying traditional Medicaid enrollees as expansion enrollees in order to receive higher federal payments. And Medicaid’s provision that allows hospitals to “presumptively” enroll people in Medicaid based on only a few nonverified questions about their income and household size has resulted in an estimated 70% error rate in presumptive enrollment.
Policymakers could save hundreds of billions of dollars simply by reducing wrong Medicaid payments. That includes requiring more eligibility checks and enforcing legislation that directs the secretary of health and human services to push the cost of excessive improper payments back onto states by limiting how much the federal government will pay toward improper payments.
Lastly, policymakers can save Medicaid by ending, or at least limiting, money-laundering schemes that allow states to use so-called provider taxes to rake in additional federal taxpayer dollars. This laundering scheme turns restricted federal Medicaid dollars into unrestricted state funding streams.
As EPIC President and CEO Paul Winfree and Brian Blase exposed, California used federal dollars it gained from provider taxes to extend Medicaid coverage to illegal immigrants and to eliminate Medicaid’s asset test so that wealthy people can receive taxpayer-financed long-term care. Winfree and Blase estimate that California’s manipulation of provider taxes will generate $19 billion in extra Medicaid funds between April 2023 and December 2026.
THE REST OF THE STORY ON MEDICAID MONEY LAUNDERING
Ending the provider tax, something former President Joe Biden called for, would save taxpayers $630 billion in Medicaid spending over the next decade, with much of these savings coming from backdoor spending that is illegal under Medicaid law.
Collectively, these three proposals could save over $2 trillion in Medicaid spending over the next 10 years, and none of them would come at the expense of the program’s intended population. Rather, reducing discriminatory payments for expansion enrollees, cracking down on improper payments, and ending Medicaid’s money-laundering provider tax scheme would all protect and improve Medicaid for the low-income children, pregnant women, people with disabilities, and elderly beneficiaries it was created to serve.
Rachel Greszler is a visiting fellow in workforce at the Economic Policy Innovation Center.
This article was originally published at www.washingtonexaminer.com
