Opinion: Washington state paid $8.6 million a year in unnecessary Medicaid premiums

Washington state’s Medicaid program wastes $8.6M annually on duplicate premiums; reforms are needed.

Elizabeth New (Hovde) shares how Medicaid is an example of a safety net that is far too wide and that has been found to have gaping holes that leave taxpayers exposed and unprotected

Elizabeth New (Hovde)
Washington Policy Center

“Just as a leaking faucet results in the loss of water for no gain to the homeowner, concurrent enrollment results in additional costs to taxpayers without a benefit to the people served by Medicaid,” writes Democrat Pat McCarthy, Washington state’s auditor. She wrote it in a summary statement for an October report about wasteful spending in Medicaid that hurts both state and federal taxpayers.

In an October report, “Examining Washington’s Concurrent Medicaid Enrollments,” the auditor’s office found millions of dollars of waste each year — about $8.6 million — caused by paying a premium for a Medicaid client who is also a Medicaid client in another state. Worse, that $8.6-million-a-year finding was only the money wasted for doubling up premiums with just seven other states reviewed. Even more money was wasted on unnecessary premiums for clients in the remaining 42 states.

When someone moves from one state without discontinuing their Medicaid coverage and then signs up for Medicaid in a new state of residence, two states pay for two policies when only one policy is needed. There is no benefit to the Medicaid client.

One in four, or more than 2 million, people in Washington state are on Medicaid, a federal-state program supplying taxpayer-financed health care coverage to Washington residents. It is the single largest program in the state budget. We need it running well, saving taxpayers money where it can. And paying premiums that aren’t affording clients any benefit is one of the first places for savings that should have enthusiastic bipartisan support.

This problem with the doubling of premium payments is not necessarily the state’s fault, but preventing them and protecting Washington taxpayers could be helped by the state agencies in charge of giving out taxpayer-financed coverage. The auditor’s report suggests ways, including greater data sharing. Another suggestion that should be pursued is requiring future state contracts with managed care organizations to look for clients with two premiums before enrollment. In Washington state, most Medicaid clients received insurance through a managed care organization (MCO) at a cost of $9.9 billion a year.

The experience of Medicaid during COVID-19 times strongly suggests that auto-renewing Medicaid plans is also a huge problem. In a presentation to the Joint Legislative Audit and Review Committee meeting Nov. 6, James Geluso, a state performance auditor, said that the Covid-19 public health emergency drove up the cost of concurrent enrollment across the nation.

Remember how states were encouraged with extra federal dollars not to remove anyone from Medicaid and not to seek proof of continued eligibility? The cost of unneeded premiums in concurrent payments alone nearly quadrupled over four years and totaled more than $300 million for those years, Geluso showed. (We know that more taxpayer dollars were wasted insuring people who regained insurance through an employer or who had a restoration of income and were no longer eligible for Medicaid.)

I have no faith in people reporting their moves in a timely manner, which for the purposes of the Washington state audit was within six months. People in economic hardship are often too busy surviving to perform additional tasks that don’t benefit their situation. When receiving taxpayer-financed health care rather than paying for it yourself, there is no outside incentive not to throw away health insurance premiums.

This Seattle Times story also shows a lack of engagement among Medicaid clients. A Kaiser Family Foundation survey found that half of the people who were enrolled in Medicaid prior to the Medicaid unwinding process said they heard little or nothing at all about the need for re-enrollment. There’s low investment in being responsible for the free care being afforded by other taxpayers. (To be fair, third-party payment is a problem for our health care system across the board.)

In addition to ending premium payments to managed care organizations when a premium is coming in from another state for a client, and recovering past unused dollars to MCOs when possible, states need more consumers with a vested interest in our health care system, not fewer, if we have any hope of containing health care costs. Unfortunately, Washington state lawmakers have made taxpayer-financed care a state goal, despite access, quality and affordability issues in other government systems around the country and in our own state.

The Washington State Auditor’s Office conducted this performance audit in collaboration with the U.S. Department of Health and Human Services, Office of Inspector General (HHS-OIG). It shows government agencies at both the state and federal level have serious work to do.

In fiscal year 2023, federal and Washington state funds for Medicaid spending totaled more than $19.6 billion. Washingtonians do and should provide safety nets for people in need, but Medicaid is an example of a safety net that is far too wide and that has been found to have gaping holes that leave taxpayers exposed and unprotected.

Elizabeth New (Hovde) is a policy analyst and the director of the Centers for Health Care and Worker Rights at the Washington Policy Center. She is a Clark County resident.

Elizabeth New (Hovde) shares how Medicaid is an example of a safety net that is far too wide and that has been found to have gaping holes that leave taxpayers exposed and unprotected

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