Tag: welfare

Earlier this year, The Federalist highlighted a Wall Street Journal investigation that found taxpayers had spent billions paying for individuals who had enrolled in Medicaid in multiple states simultaneously. The kicker is not surprising but still shocking: As bad as the Journal exposé seemed, the reality is worse.

A new investigation increased both the number of enrollees with duplicate forms of taxpayer-funded coverage and the amount taxpayers are paying for such unnecessary double-dipping. It provides an example — one of many — to rebut leftist claims that the recently passed budget reconciliation bill will somehow destroy the safety net.

Explosion of Wasteful Spending

The Journal analysis of Medicaid data from 2019 to 2021 found taxpayers spent $4.3 billion over three years, providing duplicate coverage to an average of 660,000 people per year. The Trump administration recently examined what happened after four years of Biden administration policies, designed to promote enrollment in taxpayer-funded coverage at all costs.

The analysis by the Centers for Medicare and Medicaid Services (CMS) of 2024 enrollment data concluded that, last year, “an average of 1.2 million Americans each month were enrolled” in Medicaid in multiple states — nearly double the level of duplicate enrollment cited by the Journal in the opening years of the Biden presidency. Moreover, CMS also noted that another “1.6 million Americans each month were enrolled in both Medicaid” and taxpayer-subsidized coverage on the insurance Exchange plans.

According to CMS, the total cost of all this unnecessary spending on a total of 2.8 million duplicate enrollments is $14 billion per year — more than three times the $4.3 billion figure the Journal reported earlier this year. CMS didn’t specify if that $14 billion figure represented total Medicaid costs (i.e., including the share of Medicaid costs that states pay themselves), or only the potential costs to the federal government.

Regardless, it represents a large amount. For purposes of comparison, the Congressional Budget Office (CBO) estimated that, during the last fiscal year, the federal government would spend $607 billion on Medicaid. Simply eliminating the duplicate payments would reduce federal Medicaid spending by roughly 2.3 percent — without doing anything to harm beneficiaries, who would still have taxpayer-funded coverage, just not in multiple places at once.

Phony Coverage Losses?

The CMS data highlights two important points regarding Medicaid and taxpayer-funded insurance programs. First, the discussion about the number of individuals who will “lose” coverage seems overstated.

CBO has yet to release detailed coverage estimates regarding the final version of the bill, enacted into law. But the case described above demonstrates the absurdity of this type of exercise. The left might scream about 2.8 million people “losing” coverage — even though they “lost” coverage only on paper and are still insured elsewhere (and at taxpayer expense) in the system.

Many of the other supposed “losses” from the legislation fall into similar buckets: individuals who choose not to comply with the new work requirements, undocumented migrants denied taxpayer-funded coverage for public policy reasons, and so forth.

A good percentage of Americans would have few qualms about lawmakers making these types of reasonable policy judgments. And yet the left hopes to overwhelm such rational behavior with screaming headlines talking about Trump taking away health care from 15 million Americans.

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Democrats bemoaning the loss of Medicaid coverage are glossing over a critical fact: States could fund the program themselves if they wanted to. The truth is, Medicaid is not nearly as popular as the taxes needed to keep it afloat.

There is a lot to complain about Trump’s One Big Beautiful Bill (BBB), signed into law last week. For example, it will add trillions to the deficit while allocating billions to be used for deporting hard-working immigrants and even American citizens. Yet Democrats are denouncing it not for its lack of fiscal responsibility, but rather for one of its only positive provisions: its reforms to Medicaid.

Original versions of the bill included various reforms to Medicaid, like work requirements for some able-bodied adults and provisions limiting funds for undocumented immigrants and gender transition procedures. To this, Democrats responded with instant outrage: “Medicaid is a lifeline for millions of kids, seniors, veterans, and people with disabilities in our states and nationwide. Republicans’ proposed cuts would be disastrous.”

The final version of the bill eliminated some of the more thorny cost-saving provisions while keeping the work requirements in place. Yet Democrats are still dissatisfied with the bill, with California Gov. Newsom claiming that “the President and his MAGA enablers are ripping care from cancer patients, meals from children, and money from working families.”

You can tell this is nothing more than political posturing because there are no cuts to Medicaid to begin with. The OBBB only reduces the rate of growth of Medicaid spending, but the overall cost of the program to taxpayers will continue to increase. Cutting means getting rid of something, not reducing the rate at which you add stuff.

Maybe we should not be too hard on the semantics. After all, Americans have very little experience with Medicaid cuts. Throughout its 60-year history, the only time Medicaid spending was truly cut was in 2006, by a mere 0.25%. This should come as no surprise since Medicaid promotes excessive spending by design.

Medicaid is structured in such a way that for every $1 that states spend on Medicaid, the Federal government matches it by up to $9. This design allows state politicians to grant their constituents $10 in political goodies (Medicaid) while only incurring $1 of political cost (higher taxes). Where does the rest of that money come from? Federal taxes and debt.

Now that Washington is cutting back its match rate, this windfall of benefits without costs to states will slow down. States must choose between filling the funding gap themselves (by raising taxes) or reducing coverage. State officials (many of whom will be facing reelection in the next few years) would rather do neither and keep this party going.

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