As President Trump and Republicans in Congress target inefficient spending, Medicaid has come under scrutiny. The program is plagued by waste, fraud and abuse. A recent report reveals that Medicaid has issued nearly $1.1 trillion in improper payments over the past decade, about twice as much as previous, incomplete estimates suggested.
Opponents of reforming the program insist that any measure to tame federal Medicaid spending would destabilize state budgets, forcing deep cuts to eligibility or benefits.
That’s just not true.
On the contrary, a little-noticed but crucial fact is that many states devote fewer resources to Medicaid than they did a decade ago, even as the program’s total costs have surged. States have become adept at shifting the costs of Medicaid to the federal government, crowding out other spending priorities and resulting in larger deficits, mounting debt, and higher interest rates and inflation.
Since its inception 60 years ago, Medicaid has been funded jointly by the federal government and the states. Historically, Washington covered about 60% of program costs and the states covered the other 40%. However, over the past decade, the fraction of Medicaid spending paid for by federal taxpayers has steadily increased.
