States Can Better Remove Ineligible Enrollees From Medicaid With More Frequent Redeterminations

Overview

Medicaid was originally designed as a safety net for truly needy individuals like low-income children, individuals with disabilities, and the elderly.^1-2 But ObamaCare changed this, extending eligibility and the focus of the program to millions of able-bodied adults.³

As a result of adding this new class of people, Medicaid spending and enrollment have skyrocketed.⁴ Much of this spending is the result of waste, fraud, and abuse, driven by eligibility errors that allow ineligible individuals to enroll or stay enrolled in the program.⁵

Presidents Obama and Biden compounded the mistake of expanding Medicaid by limiting how often states can ensure that those enrolled in the program are actually eligible for Medicaid, encouraging fraud by design.^6-10

To address waste, fraud, and abuse and keep up with changes in life circumstances, more frequent redeterminations of Medicaid eligibility are needed. This will help ensure that those enrolled in the program remain eligible, and those who are not eligible are quickly removed.

The One, Big, Beautiful Bill addressed many of the underlying issues, and CMS should now allow states to perform more frequent eligibility redeterminations for all able-bodied adults on Medicaid.

Waste, fraud, and abuse has led to a bloated Medicaid program

Medicaid spending has skyrocketed from $206 billion in 2000 to $964 billion in 2024.¹¹ Enrollment spiked to 100 million, climbing from 35 million in 2000.¹² This growth was fueled not by more truly needy individuals enrolling in the program, but by able-bodied adults.

In fact, nearly 85 percent of Medicaid’s enrollment growth over the last 10 years is attributed to able-bodied adults.¹³ The number of able-bodied adults grew from roughly seven million in 2000 to 34 million in 2024.¹⁴ Federal taxpayers now spend more Medicaid dollars on able-bodied adults than on the elderly, individuals with disabilities, or low-income children—the populations the program was designed to serve.¹⁵ Most of these able-bodied adults do not work, despite their ability to do so.¹⁶

All of this growth has led to increasing federal deficits and debt and has crowded out spending on other state programs.^17-18 Medicaid spending is even higher when accounting for interest payments made on the deficit spending.¹⁹

Much of the spending is fraudulent and has been allowed to occur because of poor program integrity measures.²⁰ More than one in five dollars spent on Medicaid is improper.²¹ Taxpayers are on the hook for an estimated $2 trillion in improper payments over the next decade.²² Roughly four in every five improper payments are the result of an eligibility error.²³

A federal audit in California revealed that the state made Medicaid payments on behalf of roughly four million ineligible or potentially ineligible enrollees.²⁴ Fewer than half of the payments went to actual eligible enrollees.²⁵

Another audit of Ohio’s Medicaid program found that more than three in five of the state’s expansion population was ineligible or potentially ineligible.²⁶ A more recent audit of Ohio’s Medicaid program projected up to $4.4 billion in improper payments in 2025.²⁷ Other audits have found millions of additional Medicaid enrollees who are ineligible or potentially ineligible.²⁸

Two previous administrations supercharged this problem by limiting how often states can make eligibility redeterminations for existing enrollees.

Presidents Obama and Biden tied states’ hands, fueling the growth

Before 2012, states were required to check Medicaid enrollees’ eligibility at least once every 12 months, but states were free to review eligibility more frequently.^29-30 This gave them the freedom to improve their program integrity and remove waste, fraud, and abuse by performing redeterminations more often throughout the year.

But then the Obama administration finalized a rule, without a statutory basis, preventing states from performing redeterminations more often than once per year for individuals whose eligibility is based on their modified adjusted gross income.^31-32 The bare minimum now became the absolute maximum for these individuals. This rule also ensured more prevalent waste, fraud, and abuse in Medicaid by requiring states to provide prepopulated forms, adopt passive eligibility redetermination procedures, and accept enrollee information without verification.^33-34

The Obama administration’s rule led to startling increases in waste, fraud, and abuse. Between 2013 and 2021, improper payment rates caused by eligibility errors increased roughly tenfold.³⁵ Tellingly, eligibility error rates were 75 percent higher for individuals subject to the once-per-year redetermination limit than for those not subject to the restriction.³⁶ Limiting the frequency of redeterminations allowed ineligible enrollees to stay on the program longer, taking resources from taxpayers and the truly needy.

Instead of correcting this bad policy, the Biden administration doubled down on the approach, choosing higher enrollment over program integrity.^37-38 It applied the once-per-year redetermination restriction to the remaining Medicaid eligibility groups.^39-40 This essentially allows an individual deemed eligible for Medicaid to remain on the program for a year, even if they become ineligible in the meantime.

Unfortunately, the country just witnessed what happens when redeterminations are not made promptly. At the beginning of the COVID-19 pandemic, states were given a boost in federal Medicaid funding in return for giving up control over administration of the program, including the ability to remove enrollees.^41-42 The Biden administration then recklessly extended the public health emergency for more than two years, keeping ineligible individuals locked into Medicaid.⁴³

These ineligible, but enrolled, individuals swelled Medicaid enrollment to more than 100 million.⁴⁴ After redeterminations were allowed to continue as normal, about 27 million individuals were removed from the program in just the first year and a half.⁴⁵ This alarming figure shows that a significant number of ineligible individuals were allowed to stay on the program while redeterminations were paused.

More frequent redeterminations can prevent fraud and put people on the path to self-sufficiency

Personal circumstances that affect Medicaid eligibility happen more often than annual redeterminations can catch. Restricting states’ ability to perform standard redeterminations more often results in ineligible individuals remaining on the program. This siphons resources away from the truly needy and costs taxpayers their hard-earned dollars.

More frequent redeterminations are necessary to root out waste, fraud, and abuse in the program, determine that those who were once eligible for the program remain so, and be good stewards of taxpayers’ money.

Performing redeterminations also creates natural off-ramps to self-sufficiency, moving people toward independence rather than locking them in a dependency trap.^47-48 In this way, more frequent redeterminations would put able-bodied adults on a better path, a worthwhile objective of any welfare program.

CMS should allow states to redetermine eligibility for all able-bodied adults throughout the year

The One, Big, Beautiful Bill took major steps to improve Medicaid program integrity, and CMS should take this as an invitation to go further.

The law revoked bad Biden administration rules, including one that prohibited states from conducting redeterminations more than once per year for all eligibility groups.⁴⁹ The law also now requires states to perform redeterminations at least once every six months for expansion enrollees.⁵⁰

Congress and President Trump worked to include many program integrity measures into the One, Big, Beautiful Bill to improve the Medicaid program.^51-59 One of the most impactful is that states will now be on the hook for improper payments exceeding three percent.⁶⁰ Since four in five improper payments are eligibility errors, states should be given every opportunity to reduce these errors to limit their penalties.

To support this positive momentum in the Medicaid program, CMS should allow states to perform more frequent redeterminations for all able-bodied adults, not just the expansion population. States would then be able to remove ineligible enrollees more quickly, reducing the amount of waste, fraud, and abuse in the program. This would help reduce improper payment rates and save taxpayers an estimated $43 billion.⁶¹

The Bottom Line:

To prevent waste, fraud, and abuse, the Centers for Medicare & Medicaid Services should allow states to conduct more frequent redeterminations for all able-bodied adults on Medicaid.

Medicaid has been on an unsustainable growth path, driven by able-bodied adults swelling enrollment. The Obama and Biden administrations made this problem worse by limiting how often states can redetermine eligibility, turning the minimum action states must take into the new maximum.

Without the ability to redetermine enrollee eligibility throughout the year, it is no surprise that Medicaid is rife with waste, fraud, and abuse, as one in five taxpayer dollars are being misspent and millions of ineligible individuals are enrolled in the program.⁶²

The One, Big, Beautiful Bill addressed many of the underlying issues, and CMS should continue the work by allowing states to conduct more frequent redeterminations, at least semiannually, for all able-bodied adults on Medicaid.

This would allow them to catch ineligible enrollees before the problem compounds, as it did during President Biden’s continuation of the COVID-19 public health emergency. This would save federal and state taxpayers money while preserving resources for the truly needy.

Ineligible Medicaid enrollment is not an anomaly. It is a predictable consequence of limiting redeterminations to once per year when life changes, and outright fraud, occur throughout the year.

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