How Minnesota can fix the fraud: excerpt from American Experiment’s Health of the ACA Insurance Markets published in October:
The Government Accountability Office estimates that $2.3 trillion in improper payments have gone out of the federal checkbook since 2003.[1] In 2024, improper payments to Medicaid were $38 billion and in 2023, over $50 billion. The phrase “waste, fraud and abuse” has a euphemism for money that we all know should not be spent. After all, who could be against rooting out waste, fraud and abuse? It is important to be specific about exactly what is meant by recovering money in this way.
Every quarter, American Experiment polls Minnesotans about state governance and occasionally asks respondents to estimate how much state funding is wasted. Reliably, the poll finds that people believe about one-in-three dollars spent by the state are wasted.[2] The same poll also shows that 75 percent of Minnesotans support yearly eligibility checks, 58 percent support Medicaid recipients work or be looking for work, and 89 percent want a requirement for recipients to live within the state.[3]
People on Medicaid who make too much money, live in the wrong state, are on more than one program, or are dead need to be removed from Medicaid rolls. The One Big Beautiful Bill Act establishes a national enrollee database to facilitate checking enrollment and death records with other states, which is an excellent first step to redirecting improper recipients of Medicaid, reducing the federal and state budget burdens and strengthening the ACA marketplace plans, focusing on people with incomes that qualify for premium tax credits.
Removing ineligible enrollees from the Medicaid rolls reduces adverse selection in the private market by redirecting healthier and higher income individuals into the appropriate marketplace. By expanding the marketplace to the people who should be in it, premiums go down. Artificially inflating risk to the marketplace by allowing non-qualifying enrollees to stay on Medicaid is a large, hidden cost of an inflated Medicaid population. A balanced risk pool will be more accurate, fair, and predictable for competitive bids.
One-in-three enrollees who transitioned from Medicaid after the unwinding after the Covid-19 pandemic were eligible for ACA tax credits in the marketplace.[4] Spreading risk across a larger pool of members lowers premiums and stabilizes volatile projections.
Some improper payments are due to fraud. This is a serious crime, and policymakers should understand that rooting out fraud is essential to providing program integrity. If there is no serious penalty for committing such a crime, it will grow. This can happen on the provider’s side (such as billing for services never provided) or on the enrollee side (including receiving care as a result of lying on an eligibility review).
Willie Sutton famously claimed to rob banks because “that’s where the money is” and Medicaid crooks are drawn to fraud for the same reason. States attorneys general, inspectors, and law enforcement should partner with legislators to make laws that seek to find, prosecute, and prevent healthcare fraud. The neediest become the victims of the greediest.
Arrests certainly grab headlines. However, the lowest hanging fruit in terms of saving money is through the monotonous process of eligibility determination. Federal and state partners should work together to eliminate this gigantic misappropriation of money. This responsibility should not be limited to only the states who wish to do so.
States should tighten eligibility determination by appropriating resources and defining procedures to clean up the Medicaid rolls. These include:
- Increasing frequency of eligibility redetermination (the One Big Beautiful Bill Act mandates eligibility redetermination every six months for the expansion population)
- Verify social security number, address and crosscheck state and national databases
- Curb the use of presumptive eligibility for enrollment
- Require an interaction with enrollee before policies are renewed
The One Big Beautiful Bill Act requires states to perform eligibility checks for Medicaid recipients every six months.[5] The law also requires states to use reliable data sources to track where beneficiaries live and reduce duplicate enrollment in multiple states, as well as to remove deceased individuals from the Medicaid rolls through quarterly checks. The law also prohibits federal funding when an individual’s citizenship or immigration status has not been verified, which reserves Medicaid funds for eligible individuals.
We know that, after the great unwinding that followed the pandemic, up to twenty percent of all enrollees at any given time are ineligible. Many may not even be aware that they are on Medicaid. Reserving Medicaid funds for those individuals that need it most should be the priority—not wasting funds on ineligible payments.
[1] “Improper Payments: Information on Agencies’ Fiscal Year 2023 Estimates.” U.S. Government Accountability Office, March 26, 2024. https://www.gao.gov/assets/d24106927.pdf.
[2] Glahn, Bill. “Feeding Our Future Fallout: Voters Perceive More Government $ Are Wasted.” Center of the American Experiment, March 29, 2023. https://www.americanexperiment.org/feeding-our-future-fallout-voters-perceive-more-government-are-wasted/.
[3] Dean, Matt. “Poll Shows Support for Big Beautiful Bill’s Medicaid Eligibility Checks.” American Experiment, July 2, 2025. https://www.americanexperiment.org/poll-shows-support-for-big-beautiful-bills-medicaid-eligibility-checks/.
[4] Hempstead, Katherine. “Marketplace Pulse: The Bridge between Medicaid and the Marketplace.” RWJF Robert Wood Johnson Foundation, October 22, 2024. https://www.rwjf.org/en/insights/our-research/2022/03/marketplace-pulse-the-bridge-between-medicaid-and-the-marketplace-what-role-might-mcos-play-in-unwinding-the-pheht-mcos-play-in-unwinding-the-phe.html.
[5] Medrano, Chris, Brian Blase, and Ryan Long. “What Made It into Law: Health Provisions of the One Big Beautiful Bill.” Paragon Health Institute, July 10, 2025. https://paragoninstitute.org/medicaid/what-made-it-into-law-health-provisions-of-the-one-big-beautiful-bill/.
