Republicans must slow Medicaid spending

Fraud and abuse have made Medicaid the fastest-growing federal spending program by far. It is long past time for Republicans to slow it, and they took a good first step in the House budget resolution passed last week.

A decade ago, the federal government spent $301 billion a year on Medicaid, $600 billion on Medicare, $845 billion on Social Security, and $3.5 trillion overall. By 2024, it spent $618 billion on Medicaid, $1.09 trillion on Medicare, $1.454 trillion on Social Security, and $6.8 trillion overall. That means that while Medicare, Social Security, and overall spending grew by just 81%, 72%, and 94% respectively, Medicaid spending ballooned by 105%.

Medicaid spending is expected to rise from $618 billion this year to $1.02 trillion in 2035. This astronomical increase is due to bad government in Washington and greedy decisions in blue state capitals that have turned a safety net for the most vulnerable into a healthcare inflation machine that drives costs and deficits for everyone.

Before Obamacare expanded it in 2010, Medicare primarily benefited people who were truly needy, including pregnant women, children, elderly people, and disabled people. Medicaid is a joint program between the federal government and states, with Washington picking up about half the cost.

But to induce states to sign up for the Affordable Care Act’s Medicaid expansion, the law raised federal reimbursement rates, but only for the new populations being served, predominantly able-bodied men and women. Between 2013 and 2022, more than 20 million such adults were added to Medicaid, compared to just 2.5 million children, 1.2 million seniors, and 400,000 disabled people. The explosion in Medicaid spending is almost entirely among able-bodied adults being added to the rolls.

This has driven up health insurance premiums for everyone. Medicaid pays healthcare providers far less than private insurance for every patient and procedure. Healthcare providers pass on their costs to private health insurers, meaning that for every able-bodied adult added to Medicaid, your private health insurance premiums go up.

Medicaid’s spending splurge has been made worse by two Biden administration regulatory decisions. One allowed states to use Medicaid dollars for nonhealth spending, such as on food, housing, and transportation. The other allowed states to impose special taxes on Medicaid providers, which providers pay for through higher fees to the state. States then bill the federal government for this increased spending, essentially turning supposed tax hikes on Medicaid providers into cash payments for Medicaid providers from federal taxpayers. Such quasi-fraudulent gimmicks mean blue states such as California and New York get more than twice the Medicaid dollars per resident than red states such as Florida and Texas get.

Then there is the outright fraud committed by Medicaid providers, which costs taxpayers at least $40 billion a year.

NO ONE ELECTED THE WHITE HOUSE CORRESPONDENTS ASSOCIATION

“You don’t want able-bodied workers on a program that is intended, for example, for single mothers with two small children who is just trying to make it,” House Speaker Mike Johnson (R-LA) said. “That is what Medicaid is for. Not for 29-year-old males sitting on their couches playing video games.

The federal government has spent over $4.6 trillion on Medicaid in the past decade. That is set to rise to $8.6 trillion in the next decade. By equalizing Medicaid match rates paid for different populations, ending state Medicaid spending on nonhealthcare items, and closing the Medicaid provider tax loophole, Republicans could slow Medicaid’s spending growth by at least the $880 billion the House Energy and Commerce Committee has been charged with finding.