The Obama Medicaid Scam


President Obama is responsible for the greatest expansion of Medicaid in its history. What was once a healthcare safety net for lower-income children, pregnant women, adult caretakers, seniors, and the disabled is now providing coverage for able-bodied adult males, many of whom make far more money than the Federal Poverty Level (FPL).

Brian Blase and Aaron Yelowitz, writing in The Wall Street Journal, expose the truth about how much Medicaid eligibility has really expanded. They say in 2014, when the expansion started, the feds stopped doing audits of states’ Medicaid eligibility determinations. The Obama administration’s goal was to build public support for the new law by signing up as many people as possible, regardless of eligibility. Now, after a four-year hiatus, the Centers for Medicare and Medicaid Services (CMS) have begun auditing program eligibility again.

In a recently released report, audits found “high levels of observed eligibility errors,” meaning a significant number of people are enrolled in Medicaid who shouldn’t be.

Blase and Yelowitz analyzed the CMS report and suggest that the expansion appears to have more than tripled the amount of improper spending in the program. Twenty percent or more of Medicaid spending in 2019 – an amount likely to exceed $75 billion – is improper. Before ObamaCare, the Medicaid improper payment rate was only 6%.

Obama expanded eligibility to include those with incomes up to 138% of FPL, about $17,000 for a single person in 2019. Under the old Medicaid eligibility rules, states determined eligibility and some income limits were as low as 25% of FPL (Alabama). Although Obama tried to force all states to comply with his new rules, The Supreme Court determined this was unconstitutional and states were allowed to accept or reject the new rules. ObamaCare tried to incentivize states to expand by paying 100% of the increase in costs for the first three years, but only 90% thereafter.

Because of these incentives, states prefer to add patients as expansion enrollees, even if they qualified under the old rules. States receive reimbursement for old enrollees under the old rates, about 50% of costs. 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 benefit from newly enrolled patients, they have no incentive to be sure they are eligible. 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.

Blase and Yelowitz say this occurs more commonly in those states that expanded Medicaid under ObamaCare. The most severe are California, Kentucky, New Mexico, New York, and West Virginia. They estimate between 2.3 million and 3.3 million people with income above eligibility thresholds are enrolled in Medicaid in expansion states. In some areas, such as New York City or Los Angeles, the problem appears so large it suggests purposeful and fraudulent abuse on the part of local officials and the medical industry.

The irony of this crisis is that Medicaid has been shown in several studies to be worse than no insurance at all when it comes to controlling blood pressure, blood glucose levels in diabetes, and other common medical conditions. This is because Medicaid reduces access to healthcare since reimbursement rates to providers are so low. This is just another example of how the Obama administration promoted Medicaid expansion at the expense not only of taxpayers, but all those who receive their healthcare through this flawed system.

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