The HHS Office of Inspector General today reported that Medicaid paid insurance companies $207,501,380 to care for dead people.
Medicaid pays the medical costs for people with low income and those with disabilities. In Minnesota, insurance companies are paid for their Medicaid patients by a mix of federal and state payments as a capitated fee to cover their costs. From a financial standpoint, the only kind of enrollee insurance companies should like more than a healthy one is a dead one, especially if the government checks keep coming on their behalf. That’s exactly what is happening.
From July 2021 through June 30, 2022 an audit showed dead people continuing to have payments made on their behalf to insurance companies called Medical Care Organizations (MCOs). Of course, dead people do not get sick or need any health care at all, which is why taxpayers (who pay a great deal for their own insurance) have little interest in also paying for maternity care, hospitalization or physical therapy for their neighbors who have passed on.
Minnesota House Republicans passed a bill in 2025 called “I’m not a Robot” which is aimed at stopping Medicaid payments for people who are dead. MCOs would have payments withheld until they showed that they contacted an enrollee and found them alive, living in the state and wanting to maintain enrollment in Medicaid. Governor Walz rejected this proposal in the final budget deal. This provision could have saved $300 million and should be dusted off again in March when the state will likely be in deficit.
Insurance companies receive all kinds of improper payments from the taxpayer. In 2023, the GAO found more than $100 billion in payments on behalf of Medicaid and Medicare (see chart below) that were wasted because of a variety of reasons, the largest one being eligibility. This boils down to around $2 billion/year for Minnesota in only these two programs.
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https://www.gao.gov/products/gao-24-106927
As much controversy as there is in Minnesota right now regarding waste, fraud and abuse, there should be agreement to stop paying the health insurance costs for the deceased. But we should not stop there.
In 2019, Minnesota was fined $150 million for enrolling people from tribal nations improperly in Medicaid. Minnesota spends more than all but two other states and twice as much as the average state spends on Medicaid. A 2024 analysis by American Experiment’s Peter Nelson found that up to one-in-five Medicaid enrollees were improperly enrolled because they were on another program and enrolled in Medicaid without knowing it.
The One Big Beautiful Bill (O3B) passed this fall contains provisions aimed at curbing improper payments by matching the Social Security’s Death Master File (DMF) with individual identifiers to preclude payments made for deceased enrollees. This could save $138,645,710 in federal dollars per year. Billions more could be saved by stopping improper payments (as defined in O3B) starting with those made on behalf of dead people. But those savings will only happen if states do the work, and there seems to be a lack of cooperation between Minnesota and the feds. That needs to change.
Minnesota can lead the way by passing “I’m Not a Robot” and immediately save $300 million without spending one cent.
