Right now, the focus for Congressional Republican leaders seems to be on securing substantial savings by cutting down on Medicaid fraud, rather than simply looking at Medicaid profits.
This isn’t just a little detail for the White House. You have a president about to push through a tax bill, and a few Republicans may dig in their heels, anxious about losing their seats. Those seats could be endangered if the public perceives Republicans as funding tax breaks for the ultra-rich by slashing Medicaid benefits that support severely disabled individuals, children, seniors, and families.
No surprise, then, that both the White House and Republican leadership are keen to suggest that states have a major chunk of fraudulent, wasted Medicaid spending—spending that they claim can be eliminated without hurting profits or rural hospitals.
However, the reality doesn’t exactly back this narrative. Independent reviews reveal a minimal drop in inappropriate Medicaid payments, indicating that any major cuts—hundreds of millions in Medicaid funding promised to states—are likely to lead to significant losses in compensation and benefits.
One awkward truth in this debate is that the notion of “inappropriate payments” (which includes everything from fraud to inadequate documentation) contradicts the Republicans’ assertions that Medicaid cuts won’t harm profits.
According to both the Inspector General’s Office and the Government Accountability Office, around 80% of inappropriate Medicaid payments in recent years originate from states lacking proper documentation rather than from outright fraud or waste.
There’s also the matter of inappropriate payment rates decreasing, particularly after the pandemic, when states benefitted from more flexible documentation requirements. From 2022 to 2024, those rates fell to just 5.1% as states improved their compliance.
That figure is noteworthy. A 5% rate for inappropriate payments is comparable to fraud estimates for the private sector, which also hover around 3-5%.
It’s strange how some conservative backers, hesitant to challenge these relatively low figures, seem to advocate for more paperwork and bureaucracy. They suggest that major Republican governors in Texas, Florida, Georgia, and Indiana—who have reported low inappropriate payment rates—will utilize post-pandemic flexibility to exaggerate those payments.
Sure, Trump’s early days in office highlighted his intent to use fraud and waste as justifications for severe spending cuts, but it seemed like he was sidestepping a genuine strategy to tackle actual Medicaid fraud.
For one, the focus from the White House and Republican leaders tends to lean toward fraud by Medicaid recipients, who account for only about 2% of Medicaid fraud convictions. Evidence shows that the overwhelming majority of scams involve providers like medical device companies and pharmacies.
Additionally, the White House and the Efficiency Department have been critical of the surveillance sector, even though these officials are crucial for providing leads to federal prosecutors and bolstering Medicaid fraud investigations through the Medicaid fraud control units.
Curiously, instead of collaborating with watchdogs, Republicans opted to dismiss a respected Inspector at the Department of Health and Human Services.
Moreover, rather than invest in innovative technology designed to spot and prevent the types of fraud that could cost taxpayers significant sums, the White House has pulled back on expertise and hasn’t proposed extra technology investments at either the federal or state level.
Real actions to confront Medicaid fraud seem to have been largely ignored, mainly because such efforts don’t align with the White House’s strategy of cutting billions from Medicaid and shifting responsibilities to states.
Alongside considering Medicaid funding caps and rejecting provider taxes commonly used by states, Republican leaders appear set on narrowing Affordable Care Act coverage, which would further diminish Medicaid access for about 20 million Americans.
According to estimates from the Urban Research Institute, reclaiming these funds could strip health insurance from as many as 10 million working Americans, particularly those in the 55-64 age range who aren’t low-income enough for federal aid but can’t afford private insurance. Cuts could also impact optional Medicaid programs that assist older adults with home care or provide prescriptions for children with autism and Down syndrome.
Inappropriate Medicaid payments might be cut significantly, but costs will likely escalate. The low reimbursement rates already jeopardize the survival of rural hospitals. Moreover, current funding struggles have left long-term care services for older adults and disabled children facing painfully long wait lists.
Let’s be clear: Slashing Medicaid to fund tax cuts for the wealthy will inevitably lead to serious cuts in benefits, increasing emergency visits to hospitals and doctors, and swelling the ranks of uninsured individuals by millions.
