The Real Medicaid Fraud? Pretending That Work Requirements Work

House Republicans demand Medicaid recipients prove they're working — even though data shows most already work. Meanwhile, big health insurers, conspicuously untouched by this bill, get a free pass.

As Congress moves closer to turning the latest Republican reconciliation bill into law, let’s take a moment to cut through the political talking points and focus on how millions of working Americans will be harmed if the bill is enacted in its current form.

The proposed legislation not only slashes Medicaid funding, but it also adds strict work requirements that will add billions of dollars in administrative costs borne by taxpayers. It’s being framed as a crackdown on “welfare dependency.” But new research from the Center for Economic and Policy Research (CEPR) tells a very different story — one that many lawmakers and special interests in Washington conveniently leave out of their talking points.

Medicaid Covers People Who Are Already Working — Lots of Them

According to CEPR’s latest analysis, more than 15.9 million working Americans get their health insurance through Medicaid. These are not people sitting on their couches. Over half of them — 8.7 million — work full-time jobs. The vast majority (92%) are private-sector employees, and more than half have kids at home.

Center for Economic and Policy Research’s factsheet on working Americans on Medicaid.

This is especially true for low-wage workers. Over 11 million of those enrolled in Medicaid are in the bottom 40% of the wage distribution, earning less than $22 an hour. These are the workers who are going to work day in and day out but still can’t afford basic health care coverage without public support, thanks to an insurance industry-controlled health care system that increasingly requires Americans to put more and more skin in the health care game.

What the Bill Doesn’t Do: Hold Big Insurance Accountable

What’s truly galling is that while lawmakers are eager to tighten the screws on Medicaid recipients — many of whom are poor, working parents — they’ve so far refused to rein in the real abusers of taxpayer dollars: big insurance conglomerates.

Lawmakers have to know that Medicare Advantage plans, run by the very same insurance giants that manage most states’ Medicaid programs (for hefty fees), are overpaid $84 billion a year by even the most conservative estimates. The nonpartisan Medicare Payment Advisory Commission has been waving red flags about this for years. So have other advocacy and watchdog groups. But Washington continues to look the other way.

Medicare Payment Advisory Commission’s news release regarding Medicare Advantage overpayments.

Insurers manipulate coding to make patients look sicker than they are (a tactic known as “upcoding”) and use narrow networks and prior authorization requirements that make it more and more difficult for patients to get the care they need. These practices enable insurers to grab billions of taxpayers’ money they are not entitled to — a game that shifts profits to Wall Street while keeping many legitimately sick people from accessing often life-saving medical care.

And yet, in this budget bill, not a single provision addresses these abuses.

So Far, Medicaid Work Requirements in States Haven’t Worked

In Arkansas, the first state to implement Medicaid work requirements in 2018, more than 18,000 people lost their coverage in just the first few months of the requirement’s implementation. Most were dropped not because they failed to meet the work threshold but because they couldn’t navigate the confusing reporting process.

So, under a similar plan to what is currently being considered in Congress, there was no measurable increase in employment, only an increase in the state’s residents who were uninsured. And it cost taxpayers more than $26 million in administrative costs. And know this: Much of the money required to handle all the additional administrative costs was largely routed to big health insurers – like UnitedHealth, Centene and Humana – that many states have hired to administer their Medicaid programs.

Georgia’s attempt to tie Medicaid coverage to work requirements has also been a costly policy disaster. Governor Brian Kemp’s “Pathways” program was sold to taxpayers as a conservative alternative to Medicaid expansion, but after spending nearly $87 million – three-quarters of it on consultants — Pathways has only enrolled about 6,500 people, a fraction of the quarter-million Georgians it was supposed to help. It’s been plagued by technical failures, staffing shortages and overly burdensome red tape that have kept thousands from completing applications.

Not surprisingly, Georgia has quietly abandoned monthly work verifications.

Why Politicians Inflict Pain on the Poor Instead of Big Insurance

Health insurers dole out tens of millions of dollars in campaign contributions every election cycle alone. So when lawmakers have to choose between cutting coverage for a grocery store cashier and cutting profits for a Fortune 500 insurance company, guess who they choose?

There have been bipartisan proposals in Congress that would cut the fat from Medicare Advantage plans, root out fraudulent coding and protect Americans’ tax dollars — without yanking care from working families. But none of those proposals made it into this bill.

So the next time you hear a politician say Medicaid is being abused by the “able-bodied,” remember this: They’re talking about people you know and who make life easier for all of us. They’re the people who check us out at the grocery store, who clean our homes and our offices and who care for our loved ones in nursing homes.

The Senate still has a chance to change course. If they’re serious about saving taxpayer dollars and standing up for American families, they’ll take a hard look at who’s really gaming the system and costing taxpayers billions of dollars — and it’s not the working-poor on Medicaid.