The Case for Medicaid Reform: Jonathan Williams on American Radio Journal

Supporters of big government are on a mission to attack the One Big Beautiful Bill Act (OBBB), which was signed into law by President Donald Trump after heroic efforts by Speaker Mike Johnson and Senate Majority Leader John Thune to pass the law through their respective chambers in time for the Independence Day bill signing. In addition to the easily disproven claim that it is simply tax cuts for the rich, another major line of attack has been to scare Americans about the supposed cuts the OBBB made to government programs, such as Medicaid.

As the old adage goes, they are entitled to their own opinions, just not their own facts. The first challenge should be to the premise of the attacks. Medicaid will not shrink but instead continue to grow after the important OBBB reforms, just not at the extreme rate of growth that some in the big government camp desire.

As it turns out, a majority of Americans support the commonsense core of the reforms to Medicaid in the OBBB. These cuts aim to get able-bodied, working-age adults back into the workforce, ensure program integrity by addressing waste, fraud, and abuse, and most importantly, protect the truly needy in our society. As former President Bill Clinton reminded us during the welfare reform debates in the 1990s, welfare should be a “second chance, not a way of life.”

In an age where government effectiveness is often measured by additional spending levels and accountability in excuses, few programs illustrate the dysfunction of modern, politically driven bureaucracy as clearly as Medicaid. Originally established in the 1960s with many of the best intentions in mind, Medicaid was supposed to be a modest social safety net for those who could not help themselves: low-income children, pregnant mothers, and the disabled. That was the theory. But as with many government programs, theory quickly yielded to politically driven outcomes.

Then came the so-called Affordable Care Act, or Obamacare, and its Medicaid Expansion, adopted now by 40 states. This raised the Medicaid eligibility threshold to those earning up to 138% of the federal poverty level.

That expansion was incentivized by a special 90% federal reimbursement rate to states for expansion population, namely, able‑bodied adults, compared to a 50–77% federal match for traditional beneficiaries. This disparity encouraged states to prioritize expansion enrollees, not based on need, but on financial benefit for state governments. From the time former President Obama took office until today, Medicaid spending has tripled. But what results are we as taxpayers getting for that?

Perhaps the most disturbing evidence of Medicaid’s mismanagement is the estimated $1.1 trillion in improper payments over the past decade. This figure comes from Paragon Institute’s March 2025 report, which points out that the official Centers for Medicare & Medicaid Services reported only 5.1% improper payment rate in recent audits, because in many years eligibility checks were suspended. When audits resumed, error rates can exceed 25% in Medicaid spending.

These improper payments arise not only from fraud but also from lack of documentation, duplicate claims, eligibility errors, and misbilling. Much of this is not deliberate wrongdoing, but it still represents staggering amounts of waste.

If there is a central economic principle guiding Medicaid reforms, it is this: when you subsidize something, you get more of it; when you tax something, you get less. So, when we currently tax people who want to work and pay able-bodied adults who don’t want to work, we really shouldn’t be surprised that the labor force participation lags while welfare rolls swell. As Arthur Brooks’ academic work has highlighted over many years, this is toxic, since earned success can be key for wellbeing and upward mobility for individuals stuck in cycles of dependency.

Ballooning the Medicaid bureaucracy is not a testament to compassion, but a monument to government dependency and fiscal disrepair. However, those who benefit from keeping Americans dependent on government are a powerful special interest group. Therefore, we shouldn’t be surprised to see relentless attacks against President Trump and reformers in Congress who had the foresight and courage to utilize the One Big Beautiful Bill Act (OBBB) to begin to fix some of the major problems in the Medicaid program. In our era of nearly $40 trillion in national debt, kudos to the brave leaders in Congress who continue to stand up to the special interests by making Medicaid stronger through these commonsense reforms.