For Democrats across the country, there is only one thing wrong with Medicaid, the healthcare entitlement for low-income Americans — it doesn't cover enough people.
Nevermind that Medicaid is currently the single largest provider of health coverage in the nation. This insistence on growing the entitlement also distracts from the fact that Medicaid is among the most wasteful programs ever implemented.
By the federal government's own admission, improper payments accounted for more than one of every five dollars the program spent in 2021.
These payments mostly stem from eligibility errors, administrative mistakes, or fraud, according to research by the Foundation for Government Accountability.
Rather than expanding Medicaid, perhaps we should consider reforming the program so that it doesn't waste quite so much taxpayer money.
As the Centers for Medicare and Medicaid Services reported in November, nearly 22% of all Medicaid spending went towards improper payments last year. Even that number vastly understates the extent of the problem.
The Foundation for Government Accountability recently looked at state-level data and found that the improper payment rate in Ohio and Connecticut is around 44%. In Idaho, it's just under 40%. In Illinois, just over 37% of Medicaid payments are improper.
The vast majority of this improper spending — 80% — results from eligibility errors.
In other words, Medicaid currently spends billions of dollars each year covering patients who don't actually qualify for the program.
Yet Democrats still insist that loosening eligibility requirements even further should be among their top policy priorities.Thirty-nine states and the District of Columbia did so under the terms of Obamacare, extending coverage to childless adults making less than 138% of the federal poverty level — about $18,750 for an individual.
Gov. Gavin Newsom, D-Calif., is looking to expand his state's version of Medicaid, Medi-Cal, to cover all undocumented immigrants.
Medicaid has already been transformed from an assistance program for the truly needy into an entitlement that covers roughly one-fourth of the country. Today, the program covers more than 76 million Americans.
Then consider the crippling financial costs the program exacts on states.
By one estimate, nearly one-third of all money spent by states goes towards Medicaid. That figure is likely to grow in the years ahead.
As it does, states will have far less money left over for urgent priorities like education and transportation infrastructure.
The fact that one in five taxpayer dollars is spent "improperly" in Medicaid is justification enough for reform. Only in government would that kind of waste be tolerated.
One way to create a more cost-effective, less wasteful Medicaid would be to rethink its funding structure.
Right now, the federal government matches each dollar of state-level Medicaid spending.
The result is a dysfunctional situation in which states that spend more on Medicaid receive more federal funds.
For this reason, states have little incentive to crack down on wasteful spending.
Doing so might reduce the amount they get from Washington.
An arrangement in which the federal government funded Medicaid through fixed block grants could address this problem.
Under such a system, states would no longer be rewarded for spending more money on Medicaid. Instead, they'd have a strong incentive to eliminate waste, fraud, and abuse in order to maximize the impact of their federal funding.
A system of block grants would also give states more flexibility in how they spend their federal Medicaid dollars. That could allow them to address the particular health challenges of their Medicaid populations more creatively.
The needs of folks in Maine might be different than those in Florida. Block grants could give states the power to tailor their programs accordingly.
These are the kinds of reforms Medicaid desperately needs to become more sustainable, more targeted, more effective, and less wasteful.
But as long as Democrats focus unilaterally on making Medicaid bigger rather than better, the entitlement will continue to waste staggering amounts of taxpayer money.
Sally C. Pipes is president, CEO, and the Thomas W. Smith fellow in healthcare policy at the Pacific Research Institute. Her latest book is "False Premise, False Promise: The Disastrous Reality of Medicare for All," (Encounter Books 2020). Follow her on Twitter @sallypipes. Read Sally Pipes' Reports — More Here.
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