Testifying Before the House Budget Committee

Today I will be testifying before the House Budget Committee at 10am EDT during their hearing, “Reversing the Curse: Rooting Out Waste and Fraud and Restoring the Dignity of Work.” I appreciate the opportunity to testify before the Budget Committee to discuss key issues relevant to the One Big Beautiful Bill (OBBB) that are also covered by Paragon’s research, including Obamacare enrollment fraud, the provider tax money laundering scheme, and how federal Medicaid policy discriminates against the most vulnerable including children, pregnant women, the elderly, and the disabled.

You can read my entire written testimony here, and a video of the hearing can be accessed from the Budget Committee’s website and from their YouTube channel.

What follows are the remarks I plan to deliver during today’s hearing to help shape the policy discussion:

Thank you, Chairman Arrington, Ranking Member Boyle, and Members of the Committee.

My name is Brian Blase, and I am the president of Paragon Health Institute.

Our nation’s future depends on reforming federal health programs.

Over the past four years, Biden administration policies placed our nation on an unsustainable fiscal path.

In Medicaid and Obamacare, the Biden administration prioritized enrollment at any cost—diverting resources from the most vulnerable, enabling fraud, and shifting significant Medicaid costs from states to Washington. Today, the federal government covers 75% of Medicaid spending—far above the historic 60% share.

Incentives matter. Biden-era incentives led to massive federal spending with little health benefit.

CBO projects $1.9 trillion more spending on Medicaid and Obamacare over the next decade than it forecast at the start of the Biden administration.

I will address three major problems.

First, massive improper enrollment.

Paragon research shows 6.4 million people enrolled in fully subsidized Obamacare plans who do not qualify.

As a pandemic measure, President Biden signed legislation that expanded subsidies—making coverage fully subsidized for people with income between 100 and 150 percent of the poverty line.

The Biden administration curtailed eligibility verification and disregarded mounting evidence of improper enrollment.

Large fraud rings emerged that misled applicants about free perks, coached income misstatements, and profited from commissions—while insurers reaped windfalls. A recent Bloomberg News exposé quotes agents saying half of enrollees had no idea they were signing up.

One broker said, “You have to throw away a little bit of your morality.”

Improper exchange enrollment will cost the government nearly $30 billion this year. Automatic re-enrollment perpetuates improper enrollment. Nearly half of current exchange enrollees took no action during open enrollment and were auto-re-enrolled.

Fraud led to plans being switched or canceled without enrollees’ knowledge. Millions have other coverage or don’t know they’re enrolled.

On Medicaid, the Biden administration extended the COVID public health emergency, leaving nearly 20 million ineligible people on Medicaid. The administration then made it harder for states to remove ineligible enrollees.

Second, program incentives divert resources from the most vulnerable.

On average, states receive seven times more federal funding for every state dollar spent on able-bodied expansion adults than for children, pregnant women, the disabled, and seniors. Expansion states have strong incentives to classify enrollees under the expansion and focus resources on able-bodied adults.

Bad incentives have led improper federal Medicaid payments to total $1.1 trillion over the past decade.

Third, states are increasingly using legalized Medicaid money-laundering tactics to pay commercial rates and shift costs to the federal government.

Medicaid money laundering—where states tax hospitals, recycle funds back, and claim federal reimbursement—exploded during the Biden administration.

The Biden administration issued a rule that states could make Medicaid payments through insurers up to average commercial rates. Commercial hospital rates are nearly triple Medicare rates, so Medicaid now often pays more than Medicare. This threatens seniors’ access and leads providers to prioritize Medicaid over Medicare. These inflated Medicaid payments quadrupled under the Biden administration.

The One Big Beautiful Bill introduces needed reforms.

It reverses the Biden administration’s “enroll-at-any-cost” approach.

It reinstates eligibility checks.

It appropriates funding for Obamacare’s cost-sharing reduction program—which will lower premiums and deficits.

It prioritizes Medicaid as a social safety net with a community-engagement requirement to promote work, education, and volunteering.

It empowers individuals by expanding HSAs and ICHRAs, giving Americans, not bureaucracies, control.

It limits Medicaid money-laundering by freezing the provider taxes that states use to inflate federal payments. The past four presidents have identified Medicaid provider taxes as scams.

It caps new state-directed payments at or just above Medicare rates.

It ends schemes like California’s Medicaid tax scam that brought in $10 billion before the state expanded Medicaid to unauthorized immigrants.

Even with these reforms, Medicaid and Obamacare will still cost half a trillion dollars more over the next decade than CBO projected at the start of the Biden administration. But they are critical steps to preserve the programs for those who need them and protect taxpayer dollars.