Fraud in Federal Health Care Spotlight as House Pushes Sweeping Medicaid Overhaul
House Speaker Mike Johnson is drawing attention to fraud in federally funded health insurance programs as he leads the charge on major Medicaid reforms. His remarks on May 25 came just days after the House approved the One Big Beautiful Bill Act (OBBBA), which proposes significant changes to Medicaid, particularly regarding eligibility and enrollment. The bill aims to cut federal spending by over $863 billion in the next decade.
In a tweet that resonated across the nation, Johnson declared, “Obamacare is RIDDLED with fraud, being approved for illegals, duplicate Social Security numbers, deceased people, and people who don’t even EXIST.” He criticized the Democratic system, stating, “That’s the system Democrats created—that’s the one they want US to SUBSIDIZE!” Johnson’s comments reflect an emerging Republican narrative of the need for more rigorous oversight in Medicaid and Obamacare, alleging that current frameworks invite abuse.
The OBBBA officially claims to limit “waste, fraud, and abuse.” However, data from the nonpartisan Congressional Budget Office (CBO) suggests that much of the bill’s expected impact will instead emerge from strict benefit limitations, potentially stripping coverage from millions. According to the CBO, about 7.8 million low-income Americans could lose their Medicaid coverage over the next decade due to the legislation.
Red Tape, Not Just Crackdowns
The OBBBA features 24 provisions targeting Medicaid. While some aim to combat fraud through stricter provider verification and regular checks against government databases, the bulk of savings—roughly 94%—will come from sweeping reductions in coverage fueled by stringent eligibility checks and new work-reporting requirements.
Nearly half of the projected cuts will stem from mandating that adults in Medicaid expansion states comply with work reporting standards. This single provision could lead to a staggering $344 billion reduction in federal Medicaid spending, as stated by the CBO. An additional $64 billion in cuts could follow from re-verifying eligibility every six months instead of annually. Such bureaucratic requirements risk causing eligible individuals to lose coverage due to missed deadlines or documentation errors.
Johnson insists that the legislation does not equate to benefit cuts. “We have not cut Medicaid, and we have not cut SNAP,” he asserted. “What we’re doing… is working on fraud, waste, and abuse.”
Fraud Measures Fall Short of Fiscal Fangs
Though the bill includes some provisions aimed at combating fraud, they are limited in scope. For instance, Section 44105 requires states to conduct monthly checks of Medicaid provider lists against databases containing banned individuals. Other minor provisions suggest better coordination among federal and state agencies and stricter penalties for states with high error rates in eligibility determinations.
Nevertheless, the CBO found these anti-fraud strategies are unlikely to yield significant federal savings. The agency’s assessment raises valid concerns about how central these efforts are to the bill’s overall goals. While fraud does exist, the CBO and the Department of Health and Human Services’ Office of Inspector General stress that most of it is committed by providers rather than beneficiaries. “Most fraud against Medicaid is committed by bad actor providers; beneficiaries are almost always the victims, not the perpetrators,” the CBO summarized.
Underfunded Anti-Fraud Tools
Independent reports highlight that some of the most effective tools for detecting and dealing with Medicaid fraud are not getting the financial backing they require under the new bill. The Health Care Fraud and Abuse Control (HCFAC) program has shown a remarkable return of $2.80 for every dollar invested. State Medicaid Fraud Control Units report an even more impressive return of $3.46 per dollar.
Despite the rhetoric surrounding fraud and abuse, the OBBBA does not allocate new funds to these crucial anti-fraud programs. Instead, it seeks to save money through stricter eligibility rules and verification processes, raising questions about the legislation’s real priorities.
Staggering Impacts Across States
The CBO warns that millions of individuals may find themselves facing greater obstacles in accessing care. In states that have expanded Medicaid, new work-reporting requirements could lead to coverage loss among working-age adults, even those who are employed but fail to file necessary reports. In states that have not expanded Medicaid, eligibility changes could push vulnerable groups—like children, elderly individuals, and disabled adults—off Medicaid rolls, primarily due to increased administrative burdens.
The experience of Georgia serves as a cautionary tale. That state spent $7.4 million to verify reported employment but axed about 17,000 individuals from Medicaid rolls—not just those who didn’t comply with work standards but many who were trapped by paperwork problems and a lack of internet access.
Democrats Push Back, but Face Headwinds
Democrats contend that the bill ultimately hinders healthcare access for low-income families, masking its true intent behind a façade of tackling fraud. Expanded verification and stricter eligibility assessments often do more to kick eligible individuals off Medicaid than to crack down on genuine fraudsters. Health policy experts are questioning the rationale behind underfunding effective fraud investigations if fraud is the main concern.
Edwin Park, a noted policy analyst, observed that the bill’s framework “does not primarily target fraud, waste, and abuse.” Instead, he asserted, “it’s largely about cutting federal Medicaid spending by terminating coverage for low-income Americans and their families through red tape.”
As the bill moves to the Senate, it faces uncertain prospects. However, the message from Republican leaders is unmistakable: they are pivoting the conversation around health policy toward a focus on taxpayer protection and the quest to eliminate fraud, looking to redefine the long-held political debates surrounding Medicaid and public health coverage programs.
"*" indicates required fields
