Medicaid Myth Busting: How Pennsylvania Can Reform and Protect the Program

Gov. Josh Shapiro wants Pennsylvanians to fear Medicaid reform, claiming “hundreds of thousands” will lose coverage. “There are no dollars available at the state level to make up for these cuts at the federal level,” said the governor. “So, if they cut someone off Medicaid, they’re off. We will not be able to fix that for them.”

But the governor’s fearmongering exaggerates the effect of the proposed reforms. Moreover, states aren’t powerless to reform Medicaid—quite the opposite, actually.

Medicaid is undoubtedly a contentious issue in Washington, D.C. Yet, regardless of what happens at the federal level, Pennsylvania lawmakers must also address the ever-growing entitlement program. And with the state budget deadline past, they must act quickly.

Medicaid plays an outsized role in the commonwealth’s budget. The program is one of the largest line items, accounting for about one-third of Pennsylvania’s state spending. Today, Pennsylvania spends more than twice as much on Medicaid as it did six years ago. About 3 million Pennsylvanians receive Medicaid benefits. 

Yet, the program is riddled with waste, fraud, and abuse. Over the last decade, the federal government paid as high as $1.1 trillion in improper Medicaid payments. In Pennsylvania, improper payments totaled $2.3 billion. The Pennsylvania Auditor General found incorrect payments in 12 percent of the audited cases.

Medicaid also covers nonessential services. Pennsylvania is on track to spend about $1.3 billion in Medicaid reimbursements for Ozempic and other expensive weight-loss medications.

Such excesses throttle Medicaid’s ability to serve those in need. About 10,000 Pennsylvanians—mostly seniors, low-income kids, people with disabilities, and pregnant mothers—are on a waiting list for community-based treatment.

To protect Medicaid benefits for Pennsylvania’s most vulnerable, lawmakers must reform Medicaid eligibility.

 Such reforms include requiring able-bodied, working-age recipients to work or seek employment. Pennsylvania enrolls more than 830,000 individuals in this demographic—more than half of whom don’t work.

Adding employment requirements is a bipartisan solution. Recent polling finds that more than four-fifths of Pennsylvanians support requiring able-bodied Medicaid recipients to work or actively seek employment.

Employment requirements will not only protect benefits but also encourage recipients to seek private insurance. In Arkansas, similar employment requirements resulted in higher statewide incomes and more workers gaining employer-provided insurance.

More frequent eligibility reviews will also safeguard Medicaid. Currently, eligibility checks occur once a year. Conducting reviews every six months will ensure that recipients continue to meet the eligibility requirements and save taxpayers months of subsidizing those who don’t.

These eligibility reforms shouldn’t be limited to just Medicaid. More than 2 million Pennsylvanians qualify for the Supplemental Nutrition Assistance Program (SNAP). The Keystone State has long ignored the federal employment requirements for SNAP, providing hundreds of thousands of employment waivers to able-bodied adults. As a result, SNAP enrollment increased 12 percent since 2019 in Pennsylvania—a disproportionate increase considering that the commonwealth’s population only grew 5 percent at the same time.

National concerns about Medicaid are often misguided. Despite claims of “draconian cuts,” Medicaid will still grow by $250 billion over the next decade.

Meanwhile, reforming eligibility will be a win-win situation. Contrary to Shapiro’s exaggerated claims, reform will protect Medicaid for those who need it most and protect taxpayers from future tax hikes to sustain the program. 

Click here and here to learn more about Medicaid and SNAP reform.