Medicaid Blows $109 Billion on Promotional “Demonstrations”

In a classic example of government waste, the taxpayer-funded program (Medicaid) that provides health insurance for the poor spends over $100 billion on “demonstrations” to promote the benefit that already covers millions of people nationwide. That’s an astounding 33% of Medicaid’s total federal budget for experiments and projects that supposedly help states test and evaluate new approaches to deliver the welfare benefit, which is already spread thin.

Medicaid is administered by states and is jointly funded by the federal government and states. Millions of low-income adults, children, pregnant women and people with disabilities are covered under the program, which cost American taxpayers an eye-popping $545.1 billion in 2015, according to government figures. A little-known section of the Social Security Act gives the Secretary of Health and Human Services (HHS) authority to approve experimental, pilot or demonstration projects that promote the objectives of Medicaid and its counterpart, the Children’s Health Insurance Program (CHIP), as if they really need to be further publicized. The purpose of the demonstrations, according to the Social Security Act, is to expand eligibility to individuals who are not otherwise Medicaid or CHIP eligible, provide services not typically covered by Medicaid and use innovative service delivery systems that improve care, increase efficiency and reduce costs.

Ultimately, the goal is to increase and strengthen states’ overall coverage of low-income individuals, enhance access to provider networks that serve low-income populations and boost the efficiency and quality of medical care through “initiatives” that “transform service delivery networks.” This could mean anything. The only restriction is that the demonstrations must be “budget neutral,” which means that the money comes out of the federal portion Medicaid’s budget. In fiscal year 2015 Uncle Sam blew $109 billion to promote Medicaid, according to a scathing federal audit, that blasts the program for wasting 33% of its budget on such nonsense. Medicaid’s demonstration spending ballooned from $29 billion in 2005 to the $109 billion in 2015, the audit reveals. In ten states demonstration expenditures comprised 75% or more of total Medicaid expenditures, the probe reveals. Six other states spent between 50% and 75% of their Medicaid budget on demonstrations.

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