2 weeks Ago
Our national health care safety net, known as Medicaid, is fundamentally broken. It prioritizes the healthy over the sick and insurers over patients — with little accountability. Finally, Congress is taking notice.
Today, Pennsylvania spends about $44 billion in both federal and state funds on Medicaid — more than one-third of the commonwealth’s operating budget. On the federal level, Medicaid—at over $600 billion annually — sits fourth in spending, trailing Social Security, defense, and Medicare. More important than the scale of the spending is the scale of the waste.
Over the past decade, Americans wasted billions on improper Medicaid payments, with national estimates ranging between $543 billion and $1.1 trillion. The last thorough federal audit of Pennsylvania, conducted in 2019 by the Center for Medicare and Medicaid Services, found $2.
3 billion in improper payments, with $1.8 billion due to eligibility errors — about $800 in improper payments per recipient. But Medicaid’s problems extend beyond this outrageous waste of tax dollars.
The program rewards states for enrolling healthy adults at the expense of those who most need Medicaid benefits. Pennsylvania receives a 90% match for the roughly 800,000 healthy adults enrolled in Medicaid after the Affordable Care Act (i.e.
, Obamacare) expansion. Before the Obamacare expansion, these recipients weren’t eligible for Medicaid. Meanwhile, offers Pennsylvania receives a 56% match for the 2 million traditional enrollees (i.
e., seniors, kids, pregnant moms, and the disabled). The lower match disincentivizes treatment for those with greater needs.
Thus, this government-endorsed discrimination leaves 13,000 Pennsylvania seniors and disabled residents on waiting lists for community care. It gets worse. The Obamacare Medicaid expansion isn’t delivering on its promises to reduce unnecessary emergency room use and uncompensated hospital care.
A 2021 analysis found that emergency room usage increased following Medicaid’s expansion to healthy adults around 2014, creating longer waiting times and higher costs. Meanwhile, Pennsylvania hospital closures are on an alarming uptick, with most closures over the last 20 years occurring within the last six years, well after Pennsylvania expanded Medicaid in 2015. And, of course, costs to taxpayers keep climbing.
In fact, even with reforms to erase billions in wasteful spending, overall Medicaid spending will jump from about $600 billion today to over $800 billion by 2034. Congress isn’t cutting Medicaid; instead, lawmakers are merely slowing the growth of this out-of-control program. There is a better way.
We can (1) refocus on the sick and disabled, (2) encourage work for able-bodied recipients, and (3) ensure states pay their fair share for Medicaid. Better eligibility verification protects Medicaid for high-cost populations. Pennsylvania Long-Term Living under Medicaid will likely increase by 37% in five years .
Cracking down on waste could help meet this need without raising taxes. Currently, the state verifies Medicaid eligibility once a year; increasing verification to every six months is essential to reducing waste. After tightening eligibility requirements, Arkansas identified about 80,000 ineligible recipients — nearly one-third of whom already received Medicaid benefits from another state.
Second, 800,000 able-bodied Pennsylvanians receive Medicaid without work requirements. Roughly half of the expansion population does not work. Requiring employment is a must for reform.
Gainful employment is the pathway to procuring higher-quality private insurance and avoiding dependency on public services. If access to care increases one’s ability to participate in the labor force (as Medicaid advocates claim), work requirements only complement the program. Finally, misuse of state-provider taxes or assessments is exploding Medicaid costs.
Under this systems, states tax hospitals or nursing homes to draw down federal matching funds. Next, states make those providers whole with dollars to spare — all without requirements to serve more people or better services. Pennsylvania has a history of abusing federal taxpayers.
For years, Pennsylvania placed a special tax on Medicaid managed-care organizations. In 2014, federal inspectors deemed this tax “ impermissible .” An audit found Pennsylvania pocketed more than $1.
1 billion from this tax scheme — again, all without expanding services or serving more recipients. Fortunately, state lawmakers repealed the tax in 2016. Congress is right to scrutinize these funding schemes.
Taxpayers should commend lawmakers for taking the first step toward entitlement reform, especially for programs that bankrupt this country without making Americans healthier. Polling suggests that Congress has a mandate to act. Two-thirds of American voters agree that Congress must “take a hard look” at “weeding out waste, fraud, and abuse” in federal programs such as Medicaid, and 84% agree that Medicaid should require work for able-bodied recipients.
Pennsylvanians agree: 84% also support adding work requirements. Expanding a broken program means only more brokenness. However, restoring accountability, prioritizing human dignity and choice, and ending the fleecing of taxpayers can begin to stabilize the health and finances of our country and our commonwealth.
This is a contributed opinion column. Elizabeth Stelle is vice president of policy at the Commonwealth Foundation, Pennsylvania’s free-market think tank. The views expressed in this piece are those of its individual author, and should not be interpreted as reflecting the views of this publication.
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