AAF: Medicaid Reform 101

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For more information, please contact AAF Policy Director John Shelton at jshelton@advancingamericanfreedom.com

April 21, 2025 AAF: Medicaid Reform 101

TOPLINE: Let the drafting begin. Congress has unlocked the reconciliation process. Now, Congress can begin the actual drafting of the bill.

BACKGROUND: Medicaid is a federal program where the federal government partners with state governments to provide health insurance for lower-income Americans. Medicaid is the 3rd largest mandatory program and represents ~$1 out of every $5 spent on health care in America. In 2022, Medicaid accounted for 9% of federal spending. STATE OF PLAY: The House passed a resolution instructing the Energy & Commerce Committee to cut $880 billion of the projected $8.2 trillion in spending over the next 10 years (which includes healthcare programs like Medicaid as well as energy and telecommunications programs). Committee-approved spending would still dramatically increase, but at a slower rate.

Meanwhile, the Senate resolution calls for trimming just $1 billion from these projected increases—leaving Medicaid to soar from under $600 billion last year to just shy of $1 trillion in 2035. Remember: House Conservatives only supported the Senate amendment after receiving a commitment from leadership to reduce projected spending by $1.5 trillion over 10-years out of $89.3 trillion Here’s how Conservatives can reform Medicaid to better steward taxpayer dollars: 1. Curb Waste, Fraud, and Abuse:

• Invest in robust oversight and audit programs to identify and prevent waste, fraud and abuse in the Medicaid system. • Medicaid accounted for $31.1 billion in improper payments for FY24. 2. Apply Caps to All Eligibility Categories Based on the Overall Inflation Rate.

• Capping the overall spending growth saves $761 billion over 10 years and capping the spending per enrollee saves $907 billion over 10 years. 3. Implement Work Requirements on Food Stamps for Able-Bodied Adults:

• Millions of able-bodied adults are Medicaid-eligible and receive hundreds of dollars per month in SNAP benefits. While statute such as EMTALA makes a direct work requirement on Medicaid impractical, a SNAP work requirement could deliver $100 billion in welfare savings over 10 years. 4. Close the California Loophole and Other State Financing Gimmicks:

• California has essentially created a money laundering scheme where it taxes Medicaid insurers, pays them more than they taxed them, and then reports the payments to the federal government to claim matching federal dollars. • The result? Your tax dollars subsidize California’s liberal wish list ideas. • DIG DEEPER: PARAGON HEALTH INSTITUTE: California’s Insurance-Tax Shuffle: How Federal Money Ends Up Paying for Medicaid for Illegal Immigrants Bottom Line: Congress should reform Medicaid to be more responsible with taxpayer dollars. Failure to address runaway Medicaid spending will only exacerbate America’s financial crisis.