Medicaid expansion is wrong for Virginia

Published 11:55 am Saturday, January 11, 2014

by Ken Cuccinelli

On Jan. 1, Obamacare expanded the Medicaid program to include individuals making incomes up to 138 percent of the federal poverty level. Virginia is in the process of considering whether to implement this expansion in the commonwealth, which would allow onto Medicaid about 420,000 additional residents who earn too much money to be eligible under the existing system.

One fact that has been missing from the public discussion about whether or not to expand Medicaid is that there will be an explosion of fraud with any such expansion, and unfortunately, as a practical matter, there will be no one to investigate or prosecute that fraud within Virginia state government, and only nine people in the federal government. Those nine are already tasked with pursuing Medicare fraud in Virginia, thus they have no meaningful ability to police the new wave of fraud that would come with the proposed expansion of Medicaid.

Virginia’s attorney general’s office houses the Medicaid Fraud Control Unit, the state’s Medicaid fraud fighter. Despite Virginia having one of the best records in the nation of combating Medicaid fraud and securing national record-breaking recoveries from criminals, the federal government estimates that 10 percent to 20 percent of Medicaid dollars are stolen through fraud each year. At our current level of Medicaid spending, that’s more than 700 million taxpayer dollars annually.

If Medicaid is expanded in Virginia, there is no incentive for Virginia to use its limited resources to go after new fraud that would occur as a result of the expansion. That’s because, as a percentage, the state will recover less money for investigating and prosecuting fraud under the expansion than it will recover for fighting fraud under the current system, and as already noted, the federal government does not have any personnel to attack this potential new pool of fraud.

Under the current cost-sharing arrangement for Medicaid, the federal government pays approximately 50 percent of Virginia’s Medicaid costs, and the state pays the other 50 percent. When fraud is found and dollars are recovered, the federal government and the state split the recovered dollars approximately 50-50.

However, under the expansion, the federal government would pay 100 percent of the cost of the expansion through 2016, with its share reducing to 90 percent thereafter. As a result, Virginia’s portion of any fraud recoveries would be zero through 2016 and only 10 percent thereafter. When our Medicaid fraud team looks at where to focus its limited resources, it always makes more sense to go after fraud where Virginia could recover 50 percent rather than 10 percent of the money stolen from taxpayers.

In other words, we not only don’t have enough resources to stop all the fraud that currently happens, but under an expansion, the new fraud that occurs as a result of the expansion will always be a lower priority to pursue. In fact, there’s no reasonable situation where it would make sense to pursue fraud in the expanded portion of Medicaid, as it will always be more cost-effective to go after fraud in the currently existing Medicaid program.

So, what will be the result if Medicaid is expanded? An explosion of un-policed fraud.

Whatever the solution is for affordable health care, the Medicaid expansion is simply not right for Virginia. More fraud, more waste and higher taxes (for Virginia’s share of the cost) on citizens already struggling through a tough economy is no solution at all. Instead, it’s a prescription for disaster.

KEN CUCCINELLI is the attorney general of the Commonwealth of Virginia.