A new report from the Hern Policy Institute notes that Medicaid fraud and improper payments are more than a financial problem for government bookkeepers. When taxpayer funds are spent on ineligible patients, that means the truly needy are also being displaced, at least temporarily.

The Hern institute report finds that Medicaid fraud and improper payments mean the truly need essentially have their treatment delayed hundreds of millions of times each year across the nation. And that can ultimately increase health-care costs for all Americans.

“In practical terms, Medicaid fraud and certain categories of improper payments could increase utilization pressures when unnecessary services are provided or authorized for ineligible individuals,” wrote Robert Aery, executive director of the Hern Policy Institute and author of the report. “In capacity-strained systems, this excess utilization could lead to congestion, such as longer wait times or misplaced resources. Depending on the dynamics of supply and demand within a market, these pressures may contribute to increased costs for consumers.”

In “Medicaid Fraud & Improper Payments in Context: A Capacity-Based Framework for Understanding Health System Utilization Pressure,” Aery reviewed federal data on Medicaid fraud and estimates of improper Medicaid payments and translated those figures into doctor visits and prescriptions.

In the 2024 budget year, more than $1.3 billion in Medicaid fraud recoveries were made nationwide.

Had those funds been used properly, Aery found they would have paid for legitimate beneficiaries to obtain 13.68 million physician visits or 21.05 million prescription fills.

The report notes the actual numbers may be significantly higher since it is believed a significant amount of Medicaid fraud escapes detection and prosecution each year.

The Hern report also noted that federal officials estimate $31.1 billion in improper Medicaid payments were made in 2024.

Those funds would have paid the cost of 311 million physician visits or 479 million prescriptions had they been used properly for eligible beneficiaries.

The problem of fraud and improper payments, and the effective displacement of eligible beneficiaries and creation of higher pass-along costs for all consumers, may be especially significant in Oklahoma, the report noted.

A 2020 state audit of the Oklahoma Health Care Authority, which administers the state’s Medicaid program, found that income eligibility was not verified for about 37 percent of the state’s Medicaid recipients, meaning the likelihood of fraud and improper payments was significant.

The Hern report noted that the state audit “demonstrated that Oklahoma paid more than $1.6 billion to Medicaid recipients whose income had never been verified.”

The Hern report suggests that state lawmakers devote more funding to anti-fraud enforcement in the Medicaid program. The report notes that, nationally, anti-fraud programs recovered $3.46 for every $1 spent.

“Given the amount of fraud and errors present, as indicated by research and those audits that have been conducted independently by states, increased funding for auditing and increased investment in innovative approaches to maintaining system integrity would not only be a worthwhile investment that benefits taxpayers but also a potential avenue for relieving rising health costs and utilization pressures,” the report stated.