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Improper Medicaid payments top $75B: More than entire food stamp program

Improper Medicaid payments top $75B: More than entire food stamp program

$75 billion.

That is not the cost of Medicaid. That is merely the cost of improper payments from the Medicaid program, accounting for roughly 20 percent of the total program tab, according Brian Blaze and Aaron Yelowitz writing in the Wall Street Journal. Prior to the Obamacare expansion of Medicaid incentivizing states to flood their rolls with Medicaid recipients, the improper payments accounted for roughly six percent. Now, just the official fraud and waste of Medicaid amount to more than the entire cost of the food stamp program!

In many ways, the entire Medicaid program is one big fraud perpetrated on the American taxpayer, designed to serve as a cash cow for the insurance cartel and major hospital and health care administrator networks. When Republicans cowered from repealing Obamacare or at least reforming Medicaid in 2017, it wasn’t in response to a million-man march of poor people. It was in response to the health care mafia, which is the biggest lobbyist at both the state and federal levels.

Many people forget that most of Medicare and Medicaid are not purely “public.” These programs are managed by “private” companies that line their pockets with unconstitutional government interventions and then use their status in the market to demand more subsidies lest they threaten higher prices. In many respects, our system of venture socialism is worse than single-payer, because it combines socialism with some of the motives of capitalism, while government shields the private entities from market forces. It guarantees them an endless flow of public funds, consumer mandates, and regulatory favors (no antitrust laws, but onerous coverage burdens to keep out new competitors) to remove any need to innovate and compete.

As of 2016, roughly 73 percent of all Medicaid enrollees were being managed by the insurance cartel and health care providers, aka managed care organizations (MCOs). That trend has exploded since Obamacare and is likely even higher today. States like Kentucky, California, and West Virginia, which have particular problems with Medicaid eligibility fraud, have over 80 percent of their enrollment population run by MCOs.

Now you can appreciate why the industry loved Obamacare so much and went ballistic when it was feared that Republicans would repeal it. 84 percent of all coverage increases under Obamacare were from Medicaid. When millions of people were thrown onto Medicaid, it flooded the health care industry with free money.

As Blaze and Yelowitz explain in their WSJ piece:

Higher overall Medicaid payments came with benefits for state-level interest groups that profited from maximizing enrollment. Insurers have reaped substantial profits from the Medicaid expansion—owing in part to large government payments for people who are enrolled but don’t go to the doctor or use much medical care.

Since states view the Medicaid expansion as a cash cow, they have generally failed to conduct proper eligibility reviews. One federal audit by the Health and Human Services Department’s inspector general found that more than half of sampled enrollees in California’s Medicaid program were either improperly enrolled or potentially improperly enrolled. Whether out of greed or incompetence, many states neglect to obtain proper documentation and fail to verify income eligibility and citizenship.

This is why since the passage of Obamacare we’ve seen the endless construction in urban hospitals and the prolific mergers and acquisitions across the entire spectrum of insurance and health care administration. Isn’t there a better way to take care of people who are truly poor without creating artificial monopolies, degrading health care, and inducing $75 billion in annual fraud?

It’s very simple. Cut out the middleman. In 2017, I proposed a simple idea to restructure Medicaid in the mold of food stamps, whereby qualified low-income families would be given regulated health care accounts. Rather than having $600 billion annually pumped into the cartel monopoly, the money would go directly into these accounts to purchase any mix of insurance, out-of-pocket, concierge medicine, or health-sharing ministries of their choice.

The best way to give a handout is to actually give a handout, without enriching cronies in the “private” sector. The true reason why we have such political difficulty reforming these destructive programs is not due to a groundswell of lobbying from the poor but because of those who become wealthy by administering this program (or riding the wave of market distortions it leaves in its wake).

By empowering every individual, including those with lower means, to take charge of his own health care, we will finally prevent the insurance cartel and the lobbyists from impeding medical progress in this country.

Cutting out the middleman will save money on the public side, deflate the cost distortions on the private side, keep the government independent from the demands of the insurance cartel, and offer everyone, including the poor, the ability to go anywhere for service and just pay the bill directly – all with increased choice, competition, care, and innovation and without the interference and administrative nightmare.

Finally, it will also get rid of the nightmare of waste and fraud. So much of the fraud is built around incentives for states and/or hospitals, nursing homes, and insurance companies to milk the unlimited taxpayer trough by contracting with government rather than directly with the individual patients and competing for the business of 325 million Americans the same way supermarkets compete for individual shoppers, including those on food stamps.

There are numerous ideas to fix health care in America, but most of the problems are solved or pre-empted by removing the third and fourth parties from the equation and empowering consumers and doctors to innovate and make the right choices, while preserving a safety net that will be much more effective than what we have today.

If we only had a party capable of articulating such a vision …

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Daniel Horowitz

Daniel Horowitz

Blaze Podcast Host

Daniel Horowitz is the host of “Conservative Review with Daniel Horowitz” and a senior editor for Blaze News.
@RMConservative →