Beneath the surface of Medicaid’s state-federal partnership lies a tangled web of financial sleight-of-hand that quietly drains federal coffers, shifts enormous costs from states to the federal government, and raises premiums on working people.
To explain the issue, last month, Paragon Health Institute released a report titled “Addressing Medicaid Money Laundering.” The term “Medicaid money laundering” was coined by the Wall Street Journal in a 2008 editorial, but some criticize our use of the term and defend these “creative” financing arrangements. In doing so, critics use innocuous, often misleading terms and provide superficial descriptions that downplay the egregiousness of these schemes. To paraphrase famed radio announcer Paul Harvey, let’s give you the rest of the story.
Since Medicaid’s inception, the federal government has given states money for a portion of the program’s costs, while states administer the program and shoulder the remaining cost. States pay just 10% for able-bodied adults without children. But when it comes to the most vulnerable — children, the elderly, pregnant women, and people with disabilities — the state share can rise to as much as 50%, depending on the state. But states are sidestepping financial responsibility and laundering money from healthcare providers to maximize federal loot.
