Paragon Health Institute Intensifies Efforts on Medicaid Reform

Dedicated to preserving Medicaid’s purpose, Paragon unveils a new online resource to support responsible healthcare policy and funding.

The Paragon Health Institute, an independent and non-partisan organization known for its research and market-based healthcare proposals, is strengthening its advocacy for Medicaid reform. In response to increasing evidence of fraud and financial inefficiencies in the Medicaid program, the Institute has launched a new section on its website titled the Issue Library, aimed at equipping policymakers, researchers, and the public with essential insights and solutions to safeguard and enhance Medicaid.

The Issue Library consolidates key findings and thought leadership into three main areas of concern:

• Eliminating systemic discrimination in Medicaid against the most vulnerable populations—pregnant women, the elderly, children, and those living with disabilities.
• Stopping Medicaid-related money laundering schemes that redirect funds under the guise of care delivery.
• Promoting commonsense reforms that reflect the values and concerns of everyday Americans.

This dedicated section features prominent Paragon research papers such as Medicaid Financing Reform and Addressing Medicaid Money Laundering, along with detailed polling that captures public sentiment regarding Medicaid priorities.

Medicaid, originally structured as a shared responsibility between state and federal governments, has undergone significant shifts since the Affordable Care Act (ACA). Historically, the federal government funded roughly 60% of the costs for traditional Medicaid beneficiaries. However, the ACA increased federal contributions to 90% for able-bodied, working-age adults, creating a discrepancy that diverts attention and resources from the most vulnerable. This policy shift has led to unintended consequences, encouraging states to prioritize less needy populations due to favorable reimbursement rates.

Even more troubling is the exploitation of Medicaid funding through complex financial arrangements. States, in collaboration with healthcare providers, have engaged in legal yet ethically questionable practices—such as provider taxes and intergovernmental transfers—that enable them to offload their Medicaid costs onto federal taxpayers. These schemes have disproportionately enriched large healthcare entities while undermining the intent of the program.

California has been highlighted by Paragon as a prime example of such practices. Through mechanisms dubbed “money laundering schemes,” the state has reportedly redirected federal Medicaid funds to cover healthcare for undocumented immigrants—using resources funded by taxpayers across the nation. Paragon’s policy brief, California’s Insurance-Tax Shuffle, developed in partnership with the Economic Policy Innovation Center, has sparked national debate and gained attention through major media platforms like Fox News.

Public support for Medicaid reform is evident in recent polling conducted by Paragon:

• Over 80% of voters support work requirements for able-bodied adults receiving Medicaid.
• Two-thirds believe funding should prioritize pregnant women, children, seniors, and individuals with disabilities over able-bodied adults.
• More than 80% agree that Medicaid should not pay providers more than Medicare does.

Paragon’s president, Brian Blase, emphasized the moral and economic urgency of change: “We must end federal discrimination against the truly vulnerable. It’s both unjust and fiscally irresponsible for Washington to reward states for serving able-bodied adults over those most in need.”

Founded in 2021, Paragon Health Institute is a 501(c)(3) nonprofit dedicated to evidence-based health policy. It does not accept funding from the healthcare industry nor engages in lobbying. The Institute’s mission is to realign Medicaid with its original goals—serving the most vulnerable, ensuring fiscal responsibility, and enabling innovation in care delivery.

For more research and insights, visit: paragoninstitute.org/research.