Here are three ways to fix it.
Medicaid was intended to be a safety net for the truly needy. But over time, both federal and state policymakers have lost sight of Medicaid’s core purpose and turned the program into a catch-all, open-ended welfare program for non-disabled adults.
Obamacare made this problem even worse, giving states the option to expand Medicaid to even more able-bodied adults. Nearly 13 million have been added since that expansion went live in 2014. Today, able-bodied adults in the program now outnumber individuals with disabilities — the people Medicaid was largely designed to serve — by a staggering 17.5 million.
Medicaid has clearly lost its focus, as I detail in a new report for the Foundation for Government Accountability. The most stunning finding: At least 21,904 individuals have died on Medicaid waiting lists in states since they expanded their programs.
The waiting lists are comprised of individuals with intellectual disabilities, traumatic brain injuries, spinal cord injuries, and even the elderly. These individuals are waiting for additional Medicaid services — home- and community-based care, specifically — beyond what states are required to cover through Medicaid. Because these additional services are optional, states can limit enrollment in these waiver programs. Once that limit is reached, additional applicants are forced onto the waiting list.
To put a finer point on it: Expansion states have chosen to spend tens of billions of their dollars on non-disabled adults instead of helping those on the waiting list. They’ve chosen to further strain the safety net by adding nearly 13 million more adults to welfare instead of helping people with traumatic brain injuries and other serious disabilities get the care they need. And we now know that at least 21,904 of these needy individuals have died before ever getting those services.
Medicaid is clearly broken. So, what can be done to protect limited resources and fix our broken Medicaid system?
First, states that have expanded Medicaid need to stop the bleeding by freezing future enrollment in their expansions. Existing enrollees would remain on the program until their incomes rise and they exit the program, just as they would anyway. But as they exit, resources would immediately be freed up for the truly needy.
Congress should also act by stopping new states from expanding Medicaid to able-bodied adults or by eliminating the enhanced funding that encourages states to prioritize able-bodied adults over the truly needy.
Second, states should pursue work requirements for all able-bodied adults in Medicaid. Prior presidential administrations never allowed states to adopt commonsense work requirements, despite their proven success in food stamps and cash welfare. Those days are over.
The Trump administration has allowed and is encouraging states to use the Medicaid waiver process to institute work requirements for able-bodied adults. The administration has so far approved Medicaid work requirements in Kentucky, Indiana, and Arkansas. CMS administrator Seema Verma recently said that eight states have Medicaid work requirement waivers pending and up to nine other states have expressed interest in the reform.
This is great news, because Medicaid work requirements can help move millions of able-bodied adults from welfare to work. States should continue pursuing them, and Congress should make the process easier by cementing Medicaid work requirements into federal law.
In order to crack down on fraud and protect resources, states should check eligibility more frequently and utilize data they already have, such as wage reports and death records.
Finally, states should attack welfare fraud with better data and more frequent eligibility checks. Waste, fraud, and abuse rob taxpayers and the truly needy of billions of dollars every year. According to the U.S. Department of Health and Human Services, most improper payments in the Medicaid program stem from eligibility errors — individuals enrolled in Medicaid even though they may no longer qualify or perhaps never did.
Just last month, for example, the U.S. inspector general announced that federal taxpayers spent more than $628 million on roughly 366,000 ineligible enrollees in California’s Medicaid expansion. The IG said another 79,055 were “potentially ineligible,” costing federal taxpayers an additional $402 million.
For those of you keeping score at home, that’s more than $1 billion — all money that could’ve instead gone to the truly needy. Meanwhile, since the state expanded Medicaid, 384 individuals on California waiting lists have died.
In order to crack down on fraud and protect resources, states should check eligibility more frequently and utilize data they already have, such as wage reports and death records. The Trump administration and Congress should also give states the express authority to check eligibility as often as they would like.
The Medicaid system clearly needs a serious overhaul. Policymakers must make Medicaid reform a top priority, and thankfully they have good options to get it done.