As the federal budget moves through Congress, Democrats and their loyal media allies have done nothing but scream about Medicaid “Cuts” in funding and the harm that will do to health care. House Speaker Mike Johnson, R-La., has downplayed the possibility of significant cuts to Medicaid and stated, “what we’re talking about is rooting out fraud, waste and abuse–-eliminating these fraudulent payments can achieve a lot of savings.” Shouldn’t the state media instead focus on the possible savings from cutting Medicaid Fraud?
First, let’s make sure we get the facts straight. Medicaid was established to help the needy—poor children, pregnant women, the elderly and disabled. Yet Federal Medicaid outlays have increased 51% since 2019 (207% since 2008) as Democrats have turned the program into an entitlement for able-bodied, working-aged adults with lower incomes. Based on the CBO baseline projections Medicaid outlays are on track to increase by $2.4 trillion through 2035. The Federal Budget that Republicans are working on wants to shave $900 billion from the baseline so that the increase will only be $1.5 trillion over 10 years. So, the claim by the press that Republicans want to cut Medicaid is false—they are only trying to slow down the spending increase from fraud.
Now to examples of Fraud and abuse. Approximately 15 years ago then Vice-president Joe Biden described a SCAM where states impose taxes on hospitals—then the states use those taxes to spend more on Medicaid to collect more federal Medicaid dollars. For every dollar the states spend on Medicaid, the feds chip in $1-$3. However, for the Obama Care expansion population, the feds chip in $9 which gives the states the incentive to be lax on eligibility requirements so they can spend more on the healthy able-bodied than on the vulnerable. Bottom line: the hospitals and the states both make a profit on the “hospital tax scam”, and the only loser is the federal government who is now going bankrupt.
Why do Democrat-run states receive disproportionately more federal Medicaid dollars? In 2023 New York received $3,046 federal Medicaid dollars per resident, California $2,167—but Florida only $991 and Texas $1,239. Drilling down further on California: 37% of their residents are covered by Medicaid, and now undocumented immigrants receive Medicaid too. California is budgeted to receive $119 billion this year in federal Medicaid dollars (which is more than Florida’s entire state budget), and which is up from $78 billion five years ago. If DOGE would audit California, they could probably get half of that $900 billion of target savings by merely reducing California’s Medicaid funding back to 2021 levels.
This begs the question: If Louisiana does face federal Medicaid funding reductions, is it the result of fraud in Louisiana?
Steve Gardes is a Certified Public Accountant (CPA) and Certified Valuation Analyst (CVA) with over 40 years of public accounting experience.
