Why Democrats don't care about most health care fraud

The Hill

08-07-2025

One thing has become clear in the debate over President Trump's 'One Big Beautiful Bill': Democrats don't really care about waste, fraud and abuse in Medicaid or Affordable Care Act coverage (i.e., ObamaCare). That's obvious from their opposition to Republican efforts to audit those programs to ensure only eligible people are enrolled.
To be fair, Democrats do care about health care fraud if a private health insurer or drug company is accused of defrauding a government health care program, regardless of how tenuous or unsubstantiated the accusations. But the real fraud arises from millions of ineligible people being enrolled in Medicaid and Obamacare.
That's why it's important to regularly audit means-tested health care programs, just as it's important to regularly audit voter rolls — which Democrats and liberal groups also oppose — because populations change.
Some Medicaid or Obamacare beneficiaries or their spouses may take jobs that provide health coverage. Or their incomes may rise above the limit. Or they may turn 65 and enroll in Medicare, or they move out of state without notifying officials. And, of course, some die.
There can be honest mistakes, but fraud appears to be widespread.
For example, the U.S. Department of Health and Human Services' Office of Inspector General published a report in 2022 covering four states — New York, California, Colorado and Kentucky — estimating the number of ineligible Medicaid beneficiaries in 2014 and 2015. The Office of Inspector General discovered federal Medicaid payments for new beneficiaries 'totaling almost $1.4 billion for more than 700,000 ineligible or potentially ineligible beneficiaries.' For those who weren't newly enrolled, the Office of Inspector General found Medicaid spent '$5 billion for almost 5 million ineligible or potentially ineligible beneficiaries.'
Note the study covered only four states, and it was five years before the pandemic-related Medicaid expansion. We can assume from the report that there're likely millions of ineligible Medicaid beneficiaries across the country.
As for ObamaCare, the Paragon Health Institute recently released its 2025 update of a 2024 report looking at ineligible people enrolled in the program. 'We estimate, conservatively, that improper [ACA] enrollment — defined as enrollees who claimed but did not actually have income between 100 and 150 percent of [the federal poverty level] — increased from 5.0 million enrollees in 2024 to 6.4 million enrollees in 2025. We estimate that the taxpayer cost of improper enrollment will exceed $27 billion this year.'
Elected leaders who care about program integrity and fiscal responsibility should want regular checks to ensure people aren't gaming the system and abusing taxpayer dollars.
So, why do Democrats generally oppose efforts to identify ineligible beneficiaries in government health insurance programs? First, Democrats increasingly embrace government-run health care. According to a December Gallup poll, '90% of Democrats who now say the government should ensure health coverage for all is the highest Gallup has measured for the group to date.' Republicans polled at 32 percent.
Most Democrats don't care if millions of ineligible people are in ObamaCare or Medicaid because they think everyone should be in a government-run health plan. What's a little fraud, if the end goal is being achieved? So, they respond to Republican eligibility checks by claiming 'people will die' and changes will hurt rural hospitals that depend on Medicaid.
The real problem facing rural hospitals is government-imposed Medicaid price controls. The Texas Hospital Association explains that Medicaid hospital reimbursement, on average, 'covers 72 percent of inpatient care costs and 75 percent of outpatient care costs for Medicaid clients. This underpayment leaves Texas hospitals with a multibillion-dollar Medicaid shortfall.'
Second, there are significant economic benefits in ignoring health care fraud. Both Medicaid and Obamacare come with substantial taxpayer-funded subsidies. Nearly every state games the Medicaid system to increase its share of federal subsidies. The more Medicaid recipients a state has, the more money it can siphon from Washington.
As for Obamacare, there are economic incentives to ignore, and even promote, fraud. Paragon writes that there are 'powerful incentives for individuals, brokers, and insurers to misestimate applicant income to qualify for larger subsidies. Insurers benefit from larger enrollment and government subsidies, and brokers benefit from higher commissions.' States have little incentive to check Obamacare fraud, since it costs them nothing.
Speaking of which, there are political incentives to ignore health care fraud. Many Democratic-led blue states brag about their larger enrollment numbers in Medicaid and Obamacare, and therefore lower uninsured rates. It gives Democrats virtue-signaling opportunities to claim they are doing a better job providing health coverage. And their friendly media megaphone reinforces the virtue-signaling by their critical reporting on states, like Texas, with higher uninsured rates.
Republicans' 'One Big Beautiful Bill' includes changes to improve Medicaid and ObamaCare program integrity and reduce fraud. But the fight isn't over, because a large portion of the country benefits both economically and politically from health care fraud.
Merrill Matthews is a public policy and political analyst and the co-author of 'On the Edge: America Faces the Entitlements Cliff.'