Medicaid is an important federal program intended to help Americans in need. Increasingly, however, the program is funding fraudsters whose primary goal is self-enrichment. The Senate Homeland Security and Governmental Affairs Committee, which I chair, recently completed an examination of Medicaid fraud and spending. The results are alarming:
- Medicaid overpayments to providers stand at $37 billion per year, a 157 percent increase since 2013.
- California alone paid more than $1 billion in federal Medicaid funds for nearly a half-million people who could not establish they were eligible.
- Government watchdogs documented that numerous “dead” people and prisoners are getting Medicaid benefits, while insurers reap spectacular profits. Nationwide, investigators are conducting nearly 20,000 ongoing Medicaid fraud investigations.
- Medicaid is even being used as a funding source to help fuel the nation’s opioid epidemic. We identified nearly 1,100 people convicted or charged nationwide in fraud or related schemes targeting Medicaid to obtain dangerous prescription opioids.
What is being done to fight this unacceptable waste of taxpayer funds? Not nearly enough. The Centers for Medicare & Medicaid Services, which runs Medicaid with the states, has largely failed to police Medicaid fraud. Government watchdogs have warned CMS for 15 years about the program’s vulnerability to fraud and overpayments, but CMS has not taken basic steps to fix the problems. CMS still does not have an anti-fraud strategy; conducts only irregular, highly flawed audits of Medicaid providers; and has ignored anti-fraud recommendations made by the non-partisan federal auditors. CMS will not even recoup funds wrongly doled out by the states.
The growing fraud and abuse is especially important as Medicaid consumes an ever-increasing portion of the federal budget. As conceived during President Lyndon Johnson’s “Great Society,” Medicaid was to be a small program to help poor people cover medical bills. In its first full year, it enrolled just four million people, at a cost of $222 per enrollee.
Today, Medicaid has grown into what even The New York Times recently called “a behemoth.” Now the nation’s largest health insurer, Medicaid covers more than 70 million people—one in five Americans—at a total cost to taxpayers of $554 billion per year. Per enrollee, Medicaid costs nearly $8,000, a 3,491 percent increase since 1966. These numbers are even more dramatic when examined in context: if Medicaid had grown only at the rate of inflation and growth in population since 1990, its total costs would be about $165 billion.
This growth will only continue to accelerate. Federal Medicaid spending is expected to increase another 96 percent by 2025, in significant part because of the Affordable Care Act’s Medicaid expansion.
Medicaid’s soaring cost was predictable, as the benefits of free market competition have been gradually removed from our nation’s health care system. By transitioning to third-party payment, we have separated health care consumers from direct payment for health care products and services. Most consumers do not know what treatments really costs and do not care. With the broken U.S. healthcare financing system increasingly dominated by the government, the share of all health care spending paid by government has more than doubled since 1960. The result: Overall health spending now consumes about 17 percent of the nation’s gross domestic product.
On Wednesday, I will chair a hearing of my committee to examine these important and worrisome trends. This oversight is essential to ensure Americans have confidence that CMS is tackling Medicaid fraud and that federal Medicaid dollars are only flowing to those truly in need.
Senator Ron Johnson is a Republican from Wisconsin and is the chairman of the Senate Homeland Security and Governmental Affairs Committee.