End Medicaid’s Mission Creep

Instead of focusing on critical medical care, Medicaid has become a vehicle for funding nonmedical services such as housing, food, and transportation — areas traditionally managed by other public welfare programs. This mission creep not only dilutes Medicaid’s effectiveness but also deepens state dependency on federal dollars, threatening both fiscal responsibility and state sovereignty.

The growing reliance on federal Medicaid-expansion dollars creates a dangerous cycle in which states become increasingly beholden to federal mandates, sacrificing innovation and fiscal discipline in the process. Medicaid was never meant to address every societal challenge, and restoring its original purpose is essential to preserving its sustainability and integrity.

According to the Centers for Medicare and Medicaid Services, Medicaid spending is projected to grow on average 5.2 percent annually and will reach $1.25 trillion by 2032. This underscores the urgency of addressing these inefficiencies. Federal funding formulas exacerbate these inefficiencies, disproportionately benefiting able-bodied recipients, who receive 90 percent federal funding through Medicaid expansion, while disabled individuals and poorer populations, or the most vulnerable, receive much less. This inequity harms the very populations Medicaid was designed to protect.

Fraud and waste further compound these issues, with improper payments accounting for over $100 billion annually, a glaring indicator of the program’s weakened oversight and accountability.

The expansion of nonmedical spending under Section 1115 waivers exemplifies this mission drift. Initiatives such as California’s CalAIM and Massachusetts’s Medicaid-funded nutrition programs stretch Medicaid beyond its statutory mission. These programs not only divert resources from medical care but also lack clear metrics to assess their cost-effectiveness and impact on health outcomes.

Moreover, tying Medicaid rates to average commercial levels encourages states to inflate provider payments, driving up costs system-wide. Federal approval of such policies has incentivized inefficiencies that are ultimately unsustainable for taxpayers.

Simplified enrollment policies and fast-track eligibility reviews, finalized under the Biden administration, have allowed ineligible individuals to remain on the rolls, increasing improper payments and diverting funds from those who truly need them. These improper payments often result from self-attestation rules and relaxed verification processes, which make it easier for individuals to manipulate the system. Combined with new nursing-home staffing mandates that impose rigid requirements on already strained long-term-care facilities, these policies create additional financial pressures and operational challenges. Many facilities, particularly in rural areas, face closure as they struggle to meet the required staffing ratios, leaving residents and communities without critical care options.

A comprehensive reform strategy is urgently needed to refocus Medicaid on its core mission. Medicaid must prioritize medically necessary services and outcomes tied to its statutory purpose of promoting independence and self-care. Nonmedical spending under Section 1115 waivers should be curtailed or eliminated, and federal guidance must clarify that Medicaid dollars are not a substitute for other social service programs. State-directed payments should be restructured to prevent states from exploiting commercial rate ceilings, ensuring that reimbursement levels reflect actual health-care needs rather than political power. Strengthened eligibility reviews and frequent income and residency checks are critical to reducing fraud and ensuring that benefits reach the truly vulnerable. Further, flexibility in nursing home staffing mandates must be introduced to balance care quality with operational sustainability, avoiding the unintended consequence of facility closures.

Unchecked growth and mission creep have created a system that fosters dependency, rewards inefficiency, and places unsustainable burdens on taxpayers and state budgets. Bold steps are necessary to realign Medicaid with its original purpose. This requires rolling back policies that expand the program’s scope, while empowering states to innovate and regain control over their health-care systems.

Medicaid is meant to serve as a safety net, not a catch-all program. By returning it to its statutory mission, policymakers can ensure that Medicaid remains effective, sustainable, and focused on helping individuals achieve independence and self-care. This is not just a fiscal imperative; it is a moral one. Congress and President-elect Trump should be on notice that the time to act is now, to preserve Medicaid for the vulnerable populations it was designed to serve, while safeguarding the taxpayers who pay the bill