Sometimes, a temporary crisis can justify both haste and waste. But no temporary crisis can ever justify a response that creates a second, permanent crisis.
Unfortunately, the federal government’s response to the fading COVID-19 pandemic is doing just that. As a result of federal restrictions on the removal of ineligible Medicaid enrollees, we are witnessing the subversion and implosion of our safety net in slow motion.
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var _bp = _bp||[]; _bp.push({ "div": "Brid_44428151", "obj": {"id":"27789","width":"16","height":"9","video":"953341"} }); ","_id":"0000017e-fbcc-d524-a77f-fbfeb1d00000","_type":"2f5a8339-a89a-3738-9cd2-3ddf0c8da574"}”>Video EmbedThis is the story of a government-manufactured crisis. Ninety million people are currently on Medicaid during a worker shortage. More than 1 out of every 5 dollars are being spent improperly; $86 billion was being diverted from the truly needy in 2020 alone.
How did this happen? As part of the Families First Coronavirus Response Act, Congress offered states more money for their Medicaid programs. But there was a catch: States essentially had to put their programs on autopilot. They were prohibited from removing anyone from the rolls, including those who later became ineligible or committed fraud.
And this deal between the federal government and states was tied to the national public health emergency, the end of which is entirely arbitrary and up to the federal government.
In March 2020, the deal seemed bearable. In February 2022, it’s just a bear.
Because this and other safety net distortions are so intimately connected with the worker shortage, this is about more than dollars — it’s about a sustainable economy that works for America because it’s built on working Americans. This is what makes it a true crisis.
As Medicaid enrollment has increased, the labor force participation rate has decreased. This is as true of the last 20 years as it is of the last 20 months.
For state legislators, there’s only so much they can do about Medicaid with these handcuffs on. They see the same “help wanted” signs we all do. So far, the deal has mostly cost states indirectly through lost tax revenues and a stagnant recovery. But once state lawmakers absorb the true scale of the problem, it’s only a matter of time before they see the real costs.
Take Ohio as an example. The state has an improper payment rate of 44.3%. At the same time, enrollment has gone up by more than 150% in the last 20 years, and the state’s labor force participation rate has plummeted by a shocking 7% over the same time period.
We were promised an agenda to use wealth to “build back better.” Instead, we’ve gotten an agenda to use waste to build a bigger welfare state.
This is a national scandal. And neither these restrictions nor the recently renewed public health emergency to which they’re tied has any end in sight. Instead, the Biden administration has plans to expand Medicaid further to even more able-bodied adults who are currently ineligible, such as inmates and illegal immigrants.
Policymakers and the public have a choice to make: Do we want welfare programs to serve everyone, or to focus on the truly needy? If it’s the former, we will join other Western nations that have marched down the road to serfdom. Somewhere along the way, we’ll learn the lesson astute observers have cautioned about for years: A welfare state that serves everybody is a welfare state that serves nobody well.
On the other hand, if we want welfare programs to get able-bodied people back to work and get those who can’t work the support they need, we’ve got a lot of work to do.
Taking these handcuffs off states is the most important step the federal government can take to provide true relief. And allowing states to implement work requirements for able-bodied adults so that Medicaid can better serve the truly needy needs to be next on the agenda.
Scott Centorino is a senior fellow at the Foundation for Government Accountability.
