Minnesota bill kicks dead people off Medicaid

Rep. Jeff Backer, Chairman of the Health Finance and Policy Committee in the Minnesota House, moved House File 2604, which would stop payments to managed care organizations (MCOs) that pay for Medicaid recipients who live in another state, or aren’t living at all. The bill was heard and held over last week for possible inclusion in his committee omnibus bill. Senator Steve Drazkowski has introduced a similar bill in the Senate. The bills have attracted particular attention as the savings from them could help whittle down an anticipated multi-billion-dollar deficit in the upcoming biennium.

The DOGE-inspired bills aim to cut wasteful spending by forcing MCOs to reach out to Medicaid recipients to verify that they still live in the state and want to remain on the taxpayer-supported medical program for people with low income and disabilities. If the state doesn’t hear back from the enrollee, the checks stop coming, and MCO loses a withhold charge of 2%.

Minnesota spends more on Medicaid than 47 other states, and twice the national average on the part of the program covering patients with disabilities. Last month, the General Accounting Office released its annual report on federal spending. It estimated that $31 billion in improper payments were sent out in fiscal year 2024 (down from $50 billion in 2023). Minnesota represents 1.8% of all Medicaid enrollees, so that translates into about $560 million, or about $1.2 billion per biennium in improper payments for Medicaid in Minnesota. This does not include Medicare.

States need to eliminate waste, fraud and abuse from public health care programs in order to keep them from collapsing the entire health marketplace. Next biennium, total spend in HHS in Minnesota will exceed education spending for the first time, as the rapid growth continues to crowd out every other area of spending.

As the state faces a $6 billion deficit in the out-biennium, Medicaid eligibility determination integrity is the first place to look. If you care about reducing the deficit, look at MA eligibility determination integrity. If you care about preserving services for people with disabilities, look at MA eligibility determination integrity. Minnesota cannot save these programs and continue to spend billions on improper payments to public health programs.

Did you say Billions?

In 2016, the Legislative Auditor estimated that 80,000 Minnesotans were enrolled in programs they didn’t qualify for, costing taxpayers $200 million in just five months. In 2019, A Star Tribune investigation outlined $225 million in flagged federal violations for improper payments for medical services. That same year, another federal audit sample found 23,000 ineligible enrollees including 198 dead people.

These bills are a good idea because Minnesotans should no longer be asked to pay for the healthcare of people who live in another state, are already on another program, or are dead. 

This verification process makes sense to people whose family coverage depends on applications, premiums, deductibles, co-pays and ongoing verification and sacrifices. They pay more and more money for health care and get less and less care for it, while the state pays for free healthcare for Iowans and dead people.

These bills simply ask that Medicaid enrollees attest that they are a Minnesota resident and want coverage to continue. Any removal would be subject to appeal and renewed coverage would be essentially automatic with Minnesota’s presumptive eligibility, and no waiting policy. Any inconvenience caused to the enrollee (by requiring them to communicate with their provider) is outweighed by the fact that the country is going broke.