ALEC Letter to Congress on Need for Medicaid Reform
Common-sense reforms are necessary to ensure Medicaid’s long-term sustainability and coverage to those who need it most.
Dear Members of the 119th United States Congress,
As the federal budget debate continues, Congress has an important opportunity to re-examine Medicaid, one of the largest and most mismanaged welfare programs in the country. Common-sense reforms are necessary to ensure Medicaid’s long-term success, sustainability, and coverage to those who need it most.
Originally created in the 1960s, Medicaid was intended to provide social safety net healthcare to the truly needed, low-income families with children and individuals with disabilities. But like most government programs, it didn’t stay limited. Today, it serves more than 70 million Americans, including a growing number of healthy, working-age adults with no children, who were never the intended recipients.
The Affordable Care Act’s expansion of state Medicaid programs has caused spending and enrollment to soar, reaching almost $1 trillion in 2024. To get states on board, the federal government sold this as an irresistible deal: it would cover 100% of the cost for the newly eligible population, at least initially. Today, that rate sits at 90%—still far more generous than it pays for traditional enrollees like children and the disabled.
To put this plainly: Washington is giving states more money to cover people who are able to work than it gives them to cover people who can’t. That’s not just bad policy—it’s upside-down logic.
Worse still is the rampant fraud and abuse that characterizes programs of this size and complexity. A recent investigation by the Wall Street Journal found that Medicaid paid out more than $4.3 billion over just three years to individuals who were enrolled in multiple states. Overall, according to the non-partisan Paragon Institute, federal improper payments in Medicaid totaled $1.1 trillion over the past decade. Unbelievably, the Biden Administration put rules in place to make it more difficult for states to determine proper eligibility of those enrolled in Medicaid.
The integrity of Medicaid must be restored going forward. Thankfully, a growing number of states have passed critical reforms this year. For example, Indiana’s Senate Bill 2 requires regular eligibility verifications matched against federal databases. This is a great example of how states can identify misuse, clean up, and restore the integrity of their programs. Work requirements can provide people with the healthcare they need while helping them get into a position where they can obtain their own coverage.
Granting states more flexibility empowers states to innovate, eliminate inefficiencies, and implement market-based solutions that improve care and reduce costs. Whether it is Rhode Island’s Ticket-to-Work or Idaho’s new managed care model, innovation at the state level is helping more Americans get the care they need.
Good stewardship of taxpayer dollars is the responsibility of government at all levels. As a federal/state partnership, Medicaid is designed to be a safety net, not a permanent entitlement. Amid ongoing budget negotiations, leaders in Congress should aim to ensure the program is affordable and has long-term financial sustainability, while partnering with states to restore program integrity and provide for the most vulnerable among us.