The ACA’s Medicaid Expansion: A Review of Ineligible Enrollees and Improper Payments

Abstract

Enrollment in state-optional Medicaid expansions has significantly exceeded even the most optimistic forecasts. The open-ended federal financing of new adult Medicaid enrollees at elevated match rates — in excess of 90 percent — creates incentives for states and healthcare providers to improperly enroll new beneficiaries and inadequately monitor costs and eligibility. Several sources find that many states have done a poor job ensuring Medicaid enrollment only of those who meet eligibility requirements. First, several federal audits find massive problems with both incomplete and incompetent reviews and large-scale improper eligibility determinations. We summarize recent work that estimates causal effects of Medicaid expansions on enrollment. Using the publicly available American Community Survey, we demonstrate large increases in potentially improper enrollment from 2012 to 2017 in many expansion states across the United States. The evidence points to egregious eligibility errors in many states, including Arkansas, California, Colorado, Kentucky, Louisiana, Montana, New Mexico, New York, Oregon, Rhode Island, Washington, and West Virginia. Other expansion states have had much lower rates of improper enrollment. We offer recommendations to Congress, the Centers for Medicare and Medicaid Services, and the Congressional Budget Office on ways to confront improper enrollment in Medicaid, including both fundamental reform of program financing and meaningful federal oversight.