Medicaid Spending Keeps Soaring So much for Democratic claims of onerous cuts. It’s up 10% so far this fiscal year.

WSJ editorial.

The California Grift Goes On

Eighty percent of improper Medicaid payments nationwide reflect failures of eligibility, not bad-actor providers

Letter to The WSJ. 

"The California fraud story is even worse than your editorial points out (“The Great California Medicaid Grift,” May 16). The story’s central theme is that state leaders don’t care about fraud.

According to my organization’s freedom of information requests, California’s Department of Health Care Services referred only 127 Medicaid providers for fraud investigation between January and March. Yet CBS News found 89 hospice providers at a single address, 75 of which have racked up a combined 400 violations since 2021. The federal government has also suspended 800 hospice providers in the state this year. Is California even looking for fraud?

The real fraud story is that 80% of improper Medicaid payments nationwide reflect failures of eligibility, not bad-actor providers. California contributes to this crisis by letting people self-attest to key aspects of their eligibility, which is to say, it tolerates lying. The Trump administration should get California to start caring about fraud—to say nothing of every other state.

Hayden Dublois

Foundation for Government Accountability" 

Costliest Autism-Therapy Firm—Which Was Barred From Medicaid—Is Closing

A rival provider, which recently settled civil allegations of fraudulent Medicaid billing, to take over operations at Piece by Piece Autism Centers

By Christopher Weaver of The WSJ. Excerpts:

"The nation’s costliest autism therapy provider will shut down by mid-May"

"the state of Indiana said it would bar the firm from billing Medicaid."

"The autism-therapy provider, Piece by Piece Autism Centers, received $340,000 in Medicaid payments per patient in 2023, the highest level in the country"

"Once Piece by Piece—which state officials have said abused the taxpayer-funded program for low-income people—closes, its centers will be operated by a rival autism-therapy provider"

"Piece by Piece extracted its high payments in part by boosting list prices to levels that allowed it to collect as much as $640 an hour from the state"

"From 2019 to 2023, Indiana directly paid Piece by Piece $58 million"

"State Medicaid programs’ direct payments for the therapy grew to $2.2 billion in 2023, from $660 million just four years earlier"

"At first, owner Meghann Mitchell, who purchased a $2.5 million Sanibel Island vacation home, a $600,000 riverfront Indiana getaway and other properties as Piece by Piece’s billings soared, was defiant. She wrote to employees that “Piece by Piece has done nothing wrong and intended to fight this decision,”"

"Mitchell also owns, through a limited liability company, real estate used by the centers—meaning she could remain a landlord for her former business."

"Indiana is undertaking a wider overhaul of how it covers autism therapy. For years, Indiana had paid autism-therapy providers 40% of whatever list prices they charged, leading to ultrahigh payments for some providers. The state set a flat rate in 2024."

"Indiana also plans to seek federal approval for a moratorium on new autism-therapy providers this month"

Related posts:

The Boom in Autism Therapy Is Medicaid’s Fastest-Growing Jackpot: Some companies have found lucrative opportunities to capitalize on a growing need, billing long hours and extracting payments as high as $800 an hour (2026)

Autism-Therapy Firm That Was Paid $340,000 per Patient Is Barred From Medicaid: Indiana officials move to terminate Piece by Piece Autism Centers, cite federal pressure for crackdown after a Journal investigation (2026) 

The Medicaid Autism Racket: Behavioral therapy payments are an easy target for fraud (2026)

Autism-Therapy Firm That Was Paid $340,000 per Patient Is Barred From Medicaid

Indiana officials move to terminate Piece by Piece Autism Centers, cite federal pressure for crackdown after a Journal investigation

By Christopher Weaver of The WSJ. Excerpts:

"Indiana is barring one of the nation’s most expensive autism-therapy providers from billing the state’s Medicaid program two weeks after the company’s practices were detailed in a Wall Street Journal article, state officials said.

The autism-therapy provider, Piece by Piece Autism Centers, received the highest per-patient payments in the country in 2023—about $340,000 on average—according to a Journal analysis of Medicaid billing records.

Piece by Piece did so in part by raising its list prices to levels that allowed it to collect as much as $640 an hour from the state for services that could be performed by a high-school graduate. From 2019 to 2023, Indiana directly paid Piece by Piece $58 million for autism-therapy services, the billing records show."

"In letters sent to Piece by Piece this week, the state [Indiana] said it was revoking the company’s provider agreements for all seven of its centers."

The state "would bar the centers from billing Medicaid"

One official said "“There were no guardrails under the prior administration, and they weren’t doing the job of oversight they should have been doing." 

Related post:

The Boom in Autism Therapy Is Medicaid’s Fastest-Growing Jackpot: Some companies have found lucrative opportunities to capitalize on a growing need, billing long hours and extracting payments as high as $800 an hour (2026) 

The Boom in Autism Therapy Is Medicaid’s Fastest-Growing Jackpot

Some companies have found lucrative opportunities to capitalize on a growing need, billing long hours and extracting payments as high as $800 an hour

By Christopher Weaver, Tom McGinty and Anna Wilde Mathews of The WSJ. Excerpts:

"In 2023, the state [Indiana] paid [Meghann] Mitchell’s company, Piece by Piece Autism Centers, $29 million to provide therapy to just 84 patients" 

"That amount [$340,000 a child] surpassed what Indiana Medicaid typically spends in a year treating a newly diagnosed lung-cancer patient or covering a year of nursing-home care."

"reimbursements as high as $640 an hour for routine therapy that can be administered by workers with little more than a high-school diploma."

"“I don’t think Indiana really had any oversight, or not much,” said Mitchell"

"The number of companies offering such therapy"

"almost doubled between 2019 and 2023. Direct payments from state Medicaid programs to autism therapy providers grew to $2.2 billion in 2023, from $660 million just four years"

"Federal taxpayers financed about 70% of Medicaid spending during that period. Entrepreneurs and investors, including some private-equity firms, have piled into the business."

"The office [inspector general inspector general] has so far found widespread flaws in Maine, Wisconsin, Indiana and Colorado" and "errors in every case, including billing for therapy while patients napped or watched videos"

"Many providers nationwide billed a high number of hours of therapy for nearly every patient"

some "billed an average of 30 or more hours of weekly therapy per child in 2023"

"Evidence-based, broadly accepted guidelines do not exist for autism care" 

one firm "paid bonuses for working more hours of “treatment delivery” services, starting at 30 hours per week"

"Medicaid [in Indiana] spending on autism surged—from $21 million in 2017 to $611 million in 2023"

"No one monitored providers’ billing practices during those years"

one company "company threw Christmas parties with an open bar at local country clubs and a downtown Indianapolis karaoke bar"

one firm "In October 2023 . . . boosted its therapy prices again, raising them to $1,600 an hour" 

The Medicaid Autism Racket

Behavioral therapy payments are an easy target for fraud.

WSJ editorial. Excerpts:

There was "a Minnesota man pleading guilty last week to bilking Medicaid by setting up a sham autism center."

"Medicaid autism treatment has become an open vault for fraud and abuse."

"Behavioral therapy is an especially ripe target for people looking to game Medicaid. Diagnostic standards can be elastic, and states provide little oversight of providers and pay claims without requiring verification of treatment or benefits. While insurers that administer Medicaid benefits have an incentive to police fraud, autism treatment has become a fee-for-service free-for-all."

"Abdinajib Hassan Yussuf set up a fly-by-night autism center [in Minnesota] claiming to provide one-on-one therapy for autistic children . . . and paid kickbacks to parents to enroll them in his center."

"99% of Colorado’s Medicaid payments in 2022 and 2023 for autism treatment were improper or likely improper, totalling $285.2 million."

"Many autism centers billed Medicaid at more than $50 an hour for autism “treatment” when children were playing games, napping or eating."

"the state failed to do a “postpayment review of payments” to verify compliance with state and federal requirements."

"treatment was often “provided by staff who did not have the appropriate credentials”"

"states have little incentive to police waste and fraud because they get paid more for enrolling more of their citizens in Medicaid." 

Diminishing Returns from the Government’s Drug Negotiation Program

By Alex Brill of AEI. 

"On Tuesday, the Centers for Medicare & Medicaid Services (CMS) announced the next 15 drugs that will be subject to government price negotiations. This is the third round of selections, bringing the total number of drugs subject to the new price-setting program to 40, with 10 drugs selected in the first year and 15 in the second. Starting next year, the number of new drugs selected annually will increase to 20.

According to CMS, Medicare expenditures for the 15 newly selected products total $27 billion from November 2024 through October 2025. This compares to $40.7 billion in sales for last year’s 15 selected drugs (from November 2023 through October 2024) and $60 billion for the 10 drugs selected in the first year (also measured from November 2023 through October 2024). It seems as if the low-hanging fruit has been picked and that each subsequent round of negotiations will likely result in diminishing cost savings.

A supporter of the government’s price-setting power might have hoped that this year would yield more potential savings than last year because, for the first time, Medicare Part B drugs were eligible for selection (only Part D drugs could be selected in the first two rounds). However, despite the inclusion of six Part B drugs among the 15 selected products, aggregate sales for this year’s cohort are still lower than in the previous round.

The drugs selected this year are the top 15 from CMS’s list of 50 potential drugs for selection. Should the 20 drugs announced next year comprise drugs 16-35 on this list, sales will be considerably lower—just $10.2 billion, based on the most recent data. (Of course, the actual drugs selected in 2027 may differ from this, and their sales next year may be higher or lower than last year.)

Admittedly, a retrospective review of a drug’s past sales is an imperfect metric for estimating the potential prospective savings from the government’s price negotiations. A comprehensive analysis would project the future spending of each drug as a baseline from which to then estimate the savings from price setting. Such efforts should also consider the extent to which the government’s intervention is substituting for (and thus negating) the competitive, market-based savings that can be derived from generics and biosimilars.

Just because the savings from this ill-conceived program may be dwindling doesn’t mean the policy is less harmful over time. It still impedes incentives for drug innovation by creating a new uncertainty for drug developers. Moreover, the savings achieved through this policy likely pale in comparison to those achieved by a well-functioning generic and biosimilar market. Patent reforms that establish clearer limits on drug monopolies could reduce uncertainty and deliver more savings."

Medicaid Fraud in New York

By Chris Edwards of Cato. 

"Medicaid waste is huge. Officially, the federal-state health program loses 6 percent of benefits to errors and fraud a year, or $37 billion in 2025. But some analysts argue that the waste is much larger because the official figures exclude certain types of improper payments.

Medicaid theft seems straightforward to execute. No brilliant scheme is required, as the Minnesota scandals illustrate. You submit fake paperwork to the state Medicaid agency for services not provided, and the government drops money in your bank account. Scams often last for years before authorities finally investigate.

Recently, seven individuals in Brooklyn were found guilty of stealing $68 million from New York’s Medicaid program. The theft began in October 2017 and continued until July 2024. State administrators were paying a lot of money for a long time to three fake health care businesses before law enforcement finally caught up.

Zakia Khan and Ahsan Ijaz owned and operated two social adult day cares (SADCs)—Happy Family Social Adult Day Care and Family Social Adult Day Care—as well as Responsible Care Staffing, which was a consumer directed personal assistance program (CDPAP). These entities billed New York Medicaid, and the two ringleaders paid people to recruit fake patients with bribes to pretend to receive services from the scam health care companies.

Why did it take seven years to bust this racket? Did state administrators ever inspect the facilities, call customers to check if services were actually delivered, or interview the business owners, Khan and Ijaz? After all, they were getting about $10 million a year of taxpayer money.

New York Post reporters recently visited 13 SADCs in New York City and “found little evidence of any medical support being offered or administered.” Apparently, the program’s rules are loose, government administrators don’t seem to audit much, and facilities appear to offer free lunch and games to able-bodied individuals. More ping pong tables than wheelchairs.

The Post reports that the “number of SADC centers has jumped from 40 in 2013 to almost 400 today, popping up in storefronts, apartments, and basements across the five boroughs.” Meanwhile, in New York, even “Governor Hochul has called CDPAP a racket … citing TikTok ads which reportedly attempt to recruit individuals at $37 an hour to care for their own relatives who may not actually need care.” 

Laxity in rules and enforcement helps explain why New York State spends two and a half times more on Medicaid than Florida, even though the latter has a larger population.

state, and local spending on Medicaid in New York State soared from $55 billion in 2013 to $116 billion by 2025, with federal taxpayers currently picking up 60 percent of the costs. How can we cut Medicaid fraud? Congress should block-grant the program and slash the federal payment share."

Medicaid’s Structure Actually Invites Waste and Fraud

Medicaid’s size and complexity create endless opportunities for gaming the rules. Incentives are skewed and accountability is weak, and the taxpayer always foots the bill.

By Thomas Savidge AIER. Excerpt:

"The Bad News: Medicaid’s Design Makes It Susceptible to Error (Including Fraud)

Medicaid is a joint federal-state program that funds health insurance coverage for America’s poor. The federal government transfers funds to states, which then administer Medicaid programs, with some variations from state to state. 

This income threshold to be eligible for Medicaid increased under the expansion of The Affordable Care Act (also known as the ACA or Obamacare). Because ACA enrollees receive more federal dollars than traditional Medicaid, state policymakers are incentivized to prioritize serving more Medicaid expansion enrollees (the slightly less poor) over those in traditional Medicaid (the poorest Americans). 

The Centers for Medicare & Medicaid Services (CMS) estimates Medicaid’s improper payments within three categories:

1. Managed care: Measured errors in payments states make to private insurance companies that are contracted to deliver Medicaid benefits (known as managed care organizations).
2. Fee-for-service: Measured errors in payments states make directly to providers on behalf of fee-for-service beneficiaries, including payments made to ineligible providers.
3. Eligibility: Measured errors in state eligibility determinations for both types of Medicaid beneficiaries.

In fiscal year 2024, improper payments in Medicaid were estimated at $31.1 billion — equal to five percent of total Medicaid spending. This highlights a major weakness in the program, whose size and complexity lead to clerical errors and procedural mistakes. Additionally, when states fail to collect the necessary documentation (such as up-to-date income verification), improper payments (including fraud) are more likely to occur.

Saul Zimet recently wrote in The Daily Economy:

The government bureaucrats who kept sending hundreds of millions of dollars to the fraudsters year after year had every indication of what they were enabling, but their incentives were to enable rather than prevent the theft.

Unfortunately, Medicaid’s design encourages state policymakers to maximize transfers. In some instances, that may mean lax oversight of where the money goes and who is eligible to enroll in Medicaid. COVID-19 stimulus funding required states to relax eligibility requirements and accelerate approvals to receive Medicaid: the environment was ripe for accidental improper payments as well as waste and fraud.

Since Medicaid’s inception, state policymakers have taken advantage of accounting gimmicks (such as provider taxes) to maximize the amount federal taxpayers shell out into state programs. The motivation for state officials is clear: increase your spending and have federal taxpayers in other states pay for it. Transfers to state and local governments often come with strings attached — the terms and conditions of receiving the transfers — allowing federal policymakers more influence over state and local spending. Whether or not the use of a provider tax loophole represents a misuse of Medicaid’s framework is the subject of debate. Research from the Paragon Institute highlights areas that, at the very least, require substantial investigation and reform to prevent states from shifting costs to federal taxpayers.

The Worse News: Medicaid’s Errors May Be Worse Than Official Government Estimates

From 2015-2024, the GAO reported $543 billion in improper Medicaid payments. Unfortunately, that may be lower than the actual total. Research from economists Brian Blase and Rachel Greszler found that improper payments during that period are estimated to actually be $1.1 trillion, more than double the GAO’s estimates.

The discrepancy comes from Blase and Greszler’s inclusion of eligibility checks in the audits of improper Medicaid payments, which both the Obama and Biden administrations excluded. The halting of Medicaid enrollment audits is especially concerning because during this same period, many states expanded Medicaid under the ACA and Medicaid saw a record number of enrollees during the pandemic. Blase and Greszler comment, “Eligibility errors of this nature are particularly concerning as it can indicate that individuals are allowed to remain enrolled in the program during times in which they do not qualify, potentially diverting limited resources that could otherwise be invested in better serving vulnerable populations.”

Blase and Greszler’s research raises serious concerns about Minnesota. Is the fraud being investigated just the tip of the iceberg?"

A Tale of Two Medicaid States: Minnesota Fraud vs. Indiana Reform

More indictments in Tim Walz’s state, while Mike Braun’s reforms save hundreds of millions of dollars

WSJ editorial. Excerpts:

"fraud losses since 2018 could top $9 billion."

"two men in Philadelphia . . . registered as housing providers despite no connections in the state. Minnesota was the first state to let Medicaid funds be used for housing services for the disabled and recovering addicts. The defendants billed Medicaid for fake services."

"This is a pattern in the charges: Defendants set up sham companies, then submitted false claims."

"the home-care program “has been vulnerable to fraud,” as providers can bill the state for providing care up to 24 hours a day. Minnesota Medicaid spending on this in-home program surged to $170 million in 2024 from $4.6 million in 2021"

"The state’s Medicaid spending has increased by nearly two-thirds in six years."

"Medicaid spending nationwide has increased by some $380 billion since the beginning of the pandemic"

This "spurred Indiana Republicans this spring to impose reforms, including more rigorous eligibility checks and guardrails to prevent excessive billing."

"the state said it expects to save $466 million on Medicaid over the next two years compared to its spring projections. Medicaid enrollment has declined by some 11% thanks to eligibility checks."

"the 340B program, which lets hospitals and pharmacies they contract with buy drugs as steep discounts. They then charge insurers large markups when they administer the drugs to patients."  

Medicaid Insurers Promise Lots of Doctors. Good Luck Seeing One

Many doctors listed in insurer networks treat few or no Medicaid recipients, leaving patients with long waits; ‘Don’t get sick.’

By Christopher Weaver, Anna Wilde Mathews and Tom McGinty of The WSJ. Excerpts:

"Private Medicaid insurers dominate the government healthcare program that covers more than 70 million low-income and disabled Americans. But when Medicaid-plan enrollees need care, they often can’t get appointments with the doctors listed in those insurers’ networks."

"the networks of doctors that insurers listed for their Medicaid members are less robust than they appear. Some doctors are erroneously shown in states or cities where they don’t actually work. Others won’t book appointments for Medicaid patients, who typically are far less lucrative than those with employer coverage. Some medical practices limit slots allotted for Medicaid visits, or simply won’t take new Medicaid patients."

"Centene claimed to have 28 child psychiatrists available to Medicaid patients within 50 miles of McClure’s home, including in nearby St. Louis, in 2023, according to a list the insurer submitted to Illinois officials. Eleven didn’t have a single appointment that year with a Centene Medicaid patient"

"To assess private insurers’ Medicaid networks, the Journal compared the insurers’ lists of providers with records of Medicaid care provided across 22 states in 2023. The analysis found that more than a third of the doctors listed in the networks didn’t treat the insurers’ Medicaid patients that year."

"Medicaid’s annual costs of about $900 billion are borne by state and federal taxpayers."

"More than 70% of Medicaid patients get their coverage through private insurers that contract with states to oversee the benefits."

"The Journal’s analysis showed that, in some states, the networks appeared to contain erroneous listings, such as psychologists, who don’t hold medical-school degrees, being listed as psychiatric doctors. 

In Texas, among the medical professionals that UnitedHealth’s Medicaid plan identified as doctors between 2021 and 2023 were 59 nurse practitioners and 31 physician and anesthesiology assistants"

"Insurers generally pay doctors far more to see a person with employer insurance, and hospitals often argue they need to be paid far higher rates for those with private insurance to make up for the money they lose on Medicaid patients."  

Medicaid subsidizes LTC for middle-class and affluent individuals who do not need government assistance

See New Paper: Better Long-Term Care for Billions Less by Michael F. Cannon of Cato.

"Steve Moses has been studying and advocating for better long-term care (LTC) for decades. In the latest Cato Policy Analysis, “Better Long-Term Care for Billions Less,” Moses explains how Medicaid dominates the market for LTC services and supports, reduces LTC quality, and subsidizes wealthier individuals at the expense of the poor.

Counterintuitively, Medicaid subsidizes LTC for middle-class and affluent individuals, who do not need government assistance. Middle-class people easily qualify for Medicaid under the basic financial eligibility rules. Some individuals with significant assets artificially impoverish themselves to become eligible for and receive Medicaid LTC subsidies.

Eliminating Medicaid LTC subsidies for individuals who could meet or could have planned to meet their own LTC needs would improve LTC quality and reduce the burdens Medicaid imposes on taxpayers. Middle-class and affluent seniors could draw on their assets and private LTC insurance, saving Medicaid as much as $100 billion per year without impairing its ability to serve those who truly need assistance.

The situation is fairly insane.

Why should amassing wealth that will pass to heirs take precedence over funding quality LTC for the living? Why should Medicaid force taxpayers to pay for LTC for those who would get it anyway, where subsidies serve no other purpose than to protect the inheritances of those individuals’ heirs?

Moses offers eight specific reforms that would rededicate Medicaid to its original purpose of providing assistance to those who cannot help themselves. And he doesn’t flinch from the stark reality: “To fix LTC, Medicaid LTC caseloads must decline dramatically.”"

Medicaid: Dishonest Budgeting, Excessive Spending

By Michael F. Cannon.

"Congressional Democrats are refusing to support a resumption of the few federal operations that the current “government shutdown” has paused. Among Democrats’ demands is that Congress rescind the meager Medicaid spending restraints in the recent Republican budget, and thus increase federal Medicaid grants to states.

Economists Martin B. Hackmann, Juan S. Rojas, and Nicolas R. Ziebarth offer a useful perspective. In a recent working paper, they find that Congress is already spending more on Medicaid than it told voters it would:

This paper studies the misallocation of Medicaid funds and its implications for patients and providers in the context of the nursing home industry. Combining comprehensive audit reports with survey data on nursing homes, we first document that many states use creative financing schemes. The schemes inflated nominal spending by about 30% while diverting at least $17 billion in Medicaid funds between 2000 and 2002. This diversion of funds increased the effective federal cost share (FMAP) by 16 percentage points, significantly more than previously documented.

One way to interpret these findings is that the federal government is spending too much on Medicaid. Congress enacted laws saying that the federal government will finance, for example, 50 percent of Medicaid spending in states like New York and California. Hackmann, Rojas, and Ziebarth find that state misbehavior and insufficient federal oversight have pushed that share to perhaps 66 percent, even though Congress told voters it was 50 percent. 

The recent Republican budget didn’t even cut Medicaid. It merely (maybe) restrained the growth of federal Medicaid spending. Congress should not increase Medicaid spending. For reasons of transparency, fiscal responsibility, sustainability, democratic accountability, and better health care, Congress should cut Medicaid spending immediately and dramatically."

MIT's Hendren's Basic Error in Cost/Benefit Analysis Regarding Medicaid

Don't Forget Deadweight Loss, aka, Excess Burden

By David R Henderson. Excerpt:

"He ignores the deadweight loss from taxation, also known as the excess burden of taxation.

Economists who study taxation understand that virtually every existing tax imposes a deadweight loss. This is a loss to society beyond the taxes collected. It arises because every tax distorts behavior. A tax on imports reduces imports, thus reducing gains from trade for the frustrated exporter and the frustrated importer (with most of the deadweight loss typically being borne by the importer.) A tax on income reduces the incentive to work and invest. A corporate income tax strongly reduces the incentive to invest.

Economists have estimated ranges of deadweight loss (DWL) per dollar of revenue raised and they find that those are often substantial.

Here’s what Harvey S. Rosen and Ted Gayer write in the 9^th edition of their excellent textbook Public Finance:

Because excess burden increases with the square of the tax rate, the marginal excess burden from raising one more dollar of revenue exceeds the average excess burden. That is, the incremental excess burden of raising one more dollar of revenue exceeds the ratio of total excess burden to total [government] revenues. This fact has important implications for cost-benefit analysis. Suppose, for example, that the average excess burden per dollar of tax revenue is 12 cents, but the marginal excess burden per additional dollar of tax revenue is 27 cents [Jorgenson and Yun, 2001, p. 302]. The social cost of each dollar raised for a given public project is the dollar plus the incremental excess burden of 27 cents. Thus, a public project must produce marginal benefits of more than $1.27 per dollar of explicit cost if it is to improve welfare.

The term “explicit cost” in the last sentence is ambiguous, though fairly clear in this context. But it would have been even clearer to substitute “government spending” for “explicit cost.”

With that in mind, let’s go back to Hendren’s 50 cents to $1.20 estimate of the benefits. Even if the right number is at the high end, $1.20, most incremental taxes impose more than 20 cents of DWL per dollar of government revenue. So the Oregon Medicaid spending flunks a cost/benefit test."

Explaining the Rise of Phantom ACA Patients

The problem isn’t real people with coverage they don’t use—it’s fraudulent sign-ups who never should have been subsidized.

Letter to The WSJ. 

"Profs. Amy Finkelstein and Matthew Notowidigdo miss the point: Poor public policy led to large numbers of phantom ObamaCare enrollees, not legitimate enrollees who use no healthcare services (“The Necessity of ObamaCare,” Letters, Aug. 20). The problem isn’t real people with coverage they don’t use—it’s fraudulent sign-ups who never should have been subsidized.

President Biden’s Covid credits, which made many plans fully taxpayer-subsidized, created perverse incentives. Bad actors rushed to maximize commissions by enrolling people regardless of eligibility. That led to fraudulent enrollment, with some unaware they were signed up and others covered elsewhere.

Using conservative assumptions, Paragon estimates that 6.4 million people who weren’t eligible were enrolled in a fully subsidized plan in 2025. Centers for Medicare and Medicaid Services data show the consequence: a spike in enrollees with no healthcare claims.

Thirty-five percent of exchange enrollees in 2024 had no medical claims, nearly double the pre-Covid share. More striking, 40% of those in fully subsidized plans with minimal cost-sharing didn’t use their plans to see a doctor or fill a prescription. This isn’t government subsidizing people with coverage who used no care. It’s government subsidizing millions of enrollees who don’t exist in the market. Insurers likely collected more than $40 billion in subsidies for nearly 12 million enrollees without a single claim in 2024—triple the pre-Biden levels.

Health insurance finances nearly all medical spending, including routine visits and prescriptions. In 2023, 85% of privately insured adults used their coverage to pay for care. The large and growing numbers of exchange enrollees using no healthcare is another reason to suspect mass phantom enrollment.

The scale of improper and phantom enrollment shows that Mr. Biden’s Covid credits inflated enrollment statistics, drained tens of billions from taxpayers, entrenched a costly regulatory structure and enriched insurers and enrollment middlemen. Congress should let them expire after 2025.

Brian Blase

Paragon Health Institute" 

Expanding Medicaid Hasn’t Improved U.S. Healthcare

The coverage isn’t great, most enrollees don’t need it anyway, and they can easily re-enroll if they do.

By John C. Goodman. Excerpts:

"While it’s true that many people will lose insurance, that doesn’t mean a significant loss of healthcare."

"most of those who will lose coverage are almost certain to be healthy and not in need of medical care."

"Nearly five million of these are able-bodied people without dependents"

"if people who lose coverage later get seriously sick, they can easily re-enroll and get Medicaid to pay their bills retroactively. There’s a three-month look-back period for coverage." 

"The CBO estimates that 7.3 million people on the ObamaCare exchanges will soon be without coverage for two reasons: a Biden-era expansion of enhanced tax credits will expire at the end of the year, and the One Big Beautiful Bill’s increased administrative barriers to enrollment. Those who end up without insurance because of this will almost all be healthy, because they are the most likely to give up in the face of more paperwork. One of the reasons health insurers are announcing an 18% increase in premiums in next year’s exchanges is because they expect healthy people to leave, making the remaining pool sicker and more costly."

"If someone who drops out of ObamaCare gets sick, it isn’t difficult to get back on."

"he can qualify for immediate enrollment if there is a “qualifying event” such as getting married, having a baby or moving to a new ZIP Code."

"all that spending has resulted in very little benefit—including for enrollees."

"Those who had enrolled had less financial stress and were less likely to be depressed, but there was no significant improvement in their physical health."

The Fiscal Consequences of Banning Compensation for Organ Donors

By Caleb Petitt of The Independent Institute.

"Could lifting restrictions on organ sales help ease the burden of America’s current fiscal crisis? Surprisingly, allowing kidney donors to get paid for their donation, even through the form of tax benefits, could have a significant impact on federal spending. The federal government pays a significant share of the costs involved in providing dialysis, and nearly half of all patients on dialysis use Medicare.

In 2019, nearly 395,000 Medicare beneficiaries were dialysis recipients who had their treatment covered by fee-for-service (FFS) plans. The average cost per patient for Medicare/Medicaid FFS patients with end-stage renal disease was $98,985 annually. That means that American taxpayers spent about $39 billion on dialysis alone in 2019, making up 4.9 percent of Medicare’s expenditures and roughly 0.9 percent of total federal expenditures in 2019. Dialysis has not been cheap for the American taxpayer.

The only way to get someone off of dialysis is for them to get a kidney transplant. Chronic Kidney Disease (CKD) patients with a successfully transplanted kidney can stop dialysis and begin living a normal life.

Kidneys, however, are in very short supply. There were nearly 90,000 people on the organ transplant waiting list for a kidney as of September 2024, but just over 27,000 kidney transplants were performed in 2023. The average wait time for a kidney transplant is between three to five years. That means nine to 15 hours a week of being reliant on a machine for three to five years for each person on the waitlist, and the average cost to the federal government of $296,955 to $494,925 per patient. Our current system of getting kidneys for people who need them is incredibly costly for patients and taxpayers.

Increasing living kidney donors would help CKD patients and taxpayers. If a patient finds a willing living donor, they can get a transplant within 6 months, assuming the donor’s evaluation shows they can safely donate. Living kidney donations are also more effective at helping the patient, since doctors can run more tests and screen for more potential problems with a living donor compared to a deceased donor.

But finding living donors is very difficult. Of the 27,500 kidney transplants that were performed last year, fewer than 6,500 were from living donors. Of living kidney donors, about 96 percent of the donations are directed to a specified friend or family member. Since family and close friends of someone who needs a kidney are often already willing to see if they are a viable donor, the way to increase living kidney donations is to increase donations from strangers.

Many economists have proposed a free market for organs to increase their availability, but such proposals are frequently dismissed as being radical, unrealistic, or unethical. Fortunately, such a dramatic step is not the only way to improve our current system.

In 2024, the bipartisan End Kidney Deaths Act was introduced to Congress, and the bill was reintroduced this year. If passed, it would grant a fully refundable $50,000 tax credit to undirected living kidney donors (meaning that the recipient is not specified) in 5 annual $10,000 increments, which could go a long way in encouraging living kidney donations. As long as the average wait time for a kidney fell by just six months, the program would pay for itself.

Medicare and Medicaid made up 20 percent of federal expenditures last year, and it is nearly impossible to cut funding for those programs. If the federal government is trying to improve its fiscal health, and it desperately needs to, it needs to look for ways to make those programs run more efficiently. Allowing for financial compensation for living organ donations, especially kidneys, would improve the lives of people on dialysis and improve America’s fiscal health."

The Phantom Patients of ObamaCare

Nearly 12 million enrollees don’t bother to use their subsidized insurance. Health insurers get the benefit.

WSJ editorial. Excerpts:

"Democrats in 2021 sweetened subsidies for buying insurance on the ObamaCare exchanges. Enrollment has since doubled while taxpayer costs rose by 150%. Spending on ObamaCare subsidies has increased faster than Medicaid or Medicare since 2020, if you can believe it."

"More than a third of all enrollees generated no medical claims last year, according to Paragon’s analysis. That includes 40% of those in plans that are fully subsidized."

"tens of billions of dollars in subsidies for these 11.7 million enrollees “went to insurers and middlemen without funding a single medical service.” After individuals enroll in plans, the government pays monthly premium subsidies directly to the insurers."

"insurance brokers have been fudging incomes of people in order to enroll them in government-subsidized plans for which they aren’t eligible"

"about 6.4 million people this year were improperly enrolled in exchange plans." 

"1.6 million Americans each month last year were enrolled in both Medicaid and subsidized ObamaCare plans."

"ObamaCare requires them [insurers] to spend at least 80% of premium dollars on medical care."

the "circumvented this by increasing payments to providers, pharmacies and middle-men they own." 

Meet the Medicaid Double-Dippers

The feds find that 2.8 million people are on two government health-insurance plans

WSJ editorial. Excerpts:

"the government has now found that up to 2.8 million Americans are enrolled in two separate health plans underwritten by taxpayers. 

"1.2 million Americans last year were enrolled in Medicaid or the Children’s Health Insurance Program in two or more states."

"another 1.6 million enrolled in both Medicaid and an ObamaCare plan with taxpayer subsidies in 2024."

"The Biden Administration banned states from checking Medicaid eligibility more than once a year, though many people need the program only as a temporary safety net."

"the duplicate enrollment problem is costing as much as $14 billion a year."

Debunking the 100,000 Medicaid Deaths Myth

Partisan pundits are misreading statistical estimates and misrepresenting the science to suggest that Trump's Medicaid cuts will kill 100,000 people. That claim doesn’t survive scrutiny.

By Aaron Brown. Excerpts:

"Wyse and Meyer only show one side of the ledger—the reduction in mortality among people who gain Medicare eligibility. On the other side are the statistical lives lost from the people the money is taken from, or the programs cut."

"Counting statistical lives saved or lost is a debased currency, because it counts each actual life multiple times. And citing only the good side of the ledger makes it impossible to evaluate.

When New York Times readers are told that "the expansion of Medicaid has saved more than 27,000 lives since 2010," they are misled into imagining 27,000 people who would be dead if it weren't for the Medicaid expansion—27,000 actual lives saved."

"The 95 percent "confidence interval" reported by Myer and Wyse ranged from 4,500 to 50,000 statistical lives saved." 

"the authors lost track of over 400,000 people in their sample, 14 percent of the total, and had to guess whether they lived or died. The uncertainty from that guess is not reflected in the width of the 95 percent interval. They assumed that no one moved to another state or moved out of the income range for expanded Medicaid eligibility. They had to estimate from historical trends what the mortality rate would have been without Medicaid expansion." 

"Turning attention to the negative side of the ledger, after the Medicaid expansion, total expenditures increased by more than $1 trillion. That spending also costs statistical lives, because the same money could have been allocated to other potentially lifesaving programs, such as vaccinations, suicide prevention, mental health services, drug treatment facilities, screening for cardiovascular risk factors, and replacing old cars with newer, less polluting and safer models."

"Medicaid expansion may not have been a cost-effective way to reduce mortality, as a large share of health care spending is not targeted toward saving lives. Think of all your medical bills, including the ones insurance paid, and ask how many were for matters of life or death. Most likely, you purchased health care for symptom relief, a speedier recovery, an improved quality of life, and preventative care.

The lifesaving medical measures with the biggest impact, such as vaccinations and antibiotics, are relatively cheap. The Medicaid expansion may have relieved financial stress and made the program's beneficiaries more physically comfortable, which are better criteria for evaluating its impact."

"If Medicaid expansion had saved 100,000 lives over 10 years, it would have been easily obvious without careful statistical work. That would mean a cost of over $10 million per statistical life saved, when there are far cheaper ways to save statistical lives, and extracting $10 million from taxpayers or other programs could easily cost more than one statistical life."