At a Senate Budget Committee hearing about the Medicaid program, Sen. John Kennedy (R-La.) asked Andy Schneider, of Georgetown University's Center for Children and Families, whether states should be punished for cheating the Medicaid program out of money by letting non-eligible people stay enrolled, because more enrollees bring more Medicaid funds to the state.
"Senator, I do not believe states are cheating," Schneider said.
"I'm glad you have some water in front of you, because your pants are on fire," Kennedy replied. "What planet did you just parachute in from?" he asked. "Do you believe in the tooth fairy, sir? Do you believe in the Easter Bunny? Do you believe that Jimmy Hoffa died of natural causes?"
"I don't mean to be rude, but if you really believe there's no cheating, you need to put down the bong," he said to Schneider. "That's one of the most extraordinary statements I've ever heard a witness make."
Other witnesses at the hearing on Tuesday disagreed with Schneider. Brian Blase, PhD, founder and president of the Paragon Health Institute, said a report issued Monday by his organization found that improper enrollment of certain Medicaid beneficiaries cost the federal government about $33 billion in 2024.
Blase also said that states get far less money -- $1.33 -- from the federal government for every dollar they spend on a traditional enrollee compared to the $9 they get back for enrollees who came in as part of the Affordable Care Act's (ACA) Medicaid expansion program. Noting that the addition of expansion enrollees has made it harder for those with traditional Medicaid to get appointments with Medicaid providers, he added, "Medicaid should prioritize the most vulnerable. Instead, its financing formula discriminates against them."
While Republican senators focused on Medicaid's flaws and potential fraud, Democrats discussed the damage being done to the Medicaid program under H.R. 1, the bill passed last summer that cut $1 trillion from the program over the next 10 years.
"Since the bill passed, 12 hospitals or clinics in Virginia have closed, citing H.R. 1 as the reason," said Sen. Tim Kaine (D-Va.), explaining that even though the actual funding cuts won't take place until 2027 or later, institutions are always looking at their budgets for the coming year, "so even in advance of these cuts being made, we already have 12 closures."
The closures include three primary care clinics, six school-based clinics, and three hospital units, Kaine said.
Hospital and clinic closures will have a bigger effect in rural areas, noted Sen. Ben Ray Luján (D-N.M.). "Four years ago, I had a stroke," he said. "What I learned is time is not on your side if you have a stroke. You need to get to the doctor immediately. [That won't be] what happens with the trillion-dollar cuts, when Medicaid facilities start closing and rural clinics start closing."
Sen. Sheldon Whitehouse (D-R.I.) zeroed in on the upcoming Medicaid work requirements, which will require Medicaid enrollees ages 19 to 64 who are part of the ACA Medicaid expansion population to prove that they are working, volunteering, or going to school -- or some combination of the three -- for at least 80 hours per month in order to stay in the Medicaid program. Government estimates suggest that more than 11 million people will end up being kicked off of Medicaid due to the work requirement, either because they can't prove they meet the requirement or they are unable to complete the required paperwork.
Whitehouse called the requirement a "red-tape grenade." In Rhode Island, those on Medicaid include "people with really significant learning disabilities," said Whitehouse. "It's people with mental health issues. It's people in addiction recovery. It's people with really severe [in]ability to earn a living. It's people with multiple health conditions ... And all of those people with all those conditions are now supposed to be experts at red tape."
Because many of those people have non-physical disabilities, like mental health issues or learning disabilities, they will be classified as "able-bodied" and are "going to get clobbered by the red tape bomb that Republicans will set off after the election," he added.
Sen. Rick Scott (R-Fla.) asked about New York State's Medicaid Fraud Control Unit, which has one of the poorest records in the country, despite having an annual budget of $16 million and a roster of 270 employees. "This office was only able to secure 85 fraud convictions from 2020 to 2025, when the next-lowest-scoring state had 237 convictions, almost three times more," he said.
"It's not that fraud isn't there," Scott continued. "Indiana and Arizona were able to secure five and seven times as many indictments in 2025 alone compared to New York's seven." He asked Jonathan Ingram, vice president of policy and research at the Foundation for Government Accountability, about the importance of the fraud control program.
New York's poor performance "has been ongoing for years," Ingram said, noting that the fraud units in Indiana and Arizona -- the states Scott mentioned -- "are one-fifth the size of New York. They have about one-tenth the staff, one-tenth the budget, and they're delivering five-to-seven times more criminal indictments. They're delivering more convictions and more civil recoveries."
Sen. Patty Murray (D-Wash.) said she hoped her Republican colleagues "will use some part of this hearing to condemn President Trump for pardoning criminals who were convicted of major Medicaid fraud. Trump pardoned five former executives from Florida who committed serious Medicaid fraud to the tune of tens of millions of dollars," she noted. "I'm all for a major crackdown on fraud. I think we all are, but it looks like we've got some pretty good leads starting in the White House."
Facts Only
* Sen. John Kennedy asked Andy Schneider if states should be punished for letting non-eligible people stay enrolled in Medicaid because more enrollees bring more funds to the state.
* Brian Blase reported that improper enrollment of certain Medicaid beneficiaries cost the federal government about $33 billion in 2024.
* Blase noted that states receive $1.33 for every dollar spent on a traditional enrollee compared to $9 for ACA expansion enrollees.
* The addition of expansion enrollees has made it harder for those with traditional Medicaid to get appointments with Medicaid providers.
* H.R. 1 caused 12 hospitals or clinics in Virginia to close due to budget considerations, even before official funding cuts took effect.
* Sen. Ben Ray Luján noted that facility closures will affect rural areas where timely medical access is critical.
* Work requirements for ACA Medicaid expansion enrollees aged 19 to 64 require proving 80 hours of work, volunteering, or schooling monthly to remain enrolled.
* Government estimates suggest more than 11 million people may be kicked off Medicaid due to work requirements.
* Sen. Sheldon Whitehouse described the work requirement as a "red-tape grenade," citing individuals with learning disabilities, mental health issues, and severe inability to earn a living being burdened by administrative requirements.
* New York's Medicaid Fraud Control Unit had only 85 fraud convictions from 2020 to 2025.
* Indiana and Arizona secured five and seven times more indictments in 2025 compared to New York.
Executive Summary
Senator Kennedy’s question to Andy Schneider about punishing states for allowing non-eligible people to remain enrolled in Medicaid was met with a sharp, dismissive response from the Senator. Other witnesses provided data regarding the financial implications of Medicaid enrollment and program changes. Brian Blase noted that improper enrollment of certain Medicaid beneficiaries cost the federal government approximately $33 billion in 2024. He also highlighted a disparity where states receive significantly less federal funding per traditional enrollee compared to those from the ACA expansion, suggesting the financing formula discriminates against vulnerable populations by impeding access to care.
The discussion shifted to cuts imposed by H.R. 1, which resulted in closures of 12 hospitals and clinics in Virginia, impacting rural areas where access to timely medical care is critical. Concerns were raised regarding upcoming work requirements for ACA expansion enrollees, which could result in over 11 million people losing Medicaid eligibility, particularly those with disabilities or mental health conditions, who face significant administrative burdens. Furthermore, concerns were voiced about the performance of state-level fraud control units, with New York exhibiting a poor record compared to states like Indiana and Arizona, prompting discussion about the need for broader accountability regarding Medicaid fraud.
Full Take
The discourse reveals a sharp tension between fiscal responsibility, administrative compliance, and the equity of access within the Medicaid system. The initial exchange regarding cheating and funding immediately foregrounds a conflict: whether system integrity should supersede enrollment metrics. The pivot to financial data introduces an asymmetry where expansion enrollees appear to yield greater federal returns, creating an implicit tension about the value placed on different types of beneficiaries.
The narrative surrounding H.R. 1 closures emphasizes that policy shifts have tangible, immediate human costs, especially in vulnerable rural communities, suggesting that legislative actions—even those framed around fiscal necessity—have cascading effects beyond budgetary line items. The discussion on work requirements further exposes how bureaucratic mechanisms, when applied without regard for complex health realities (such as disabilities or mental health struggles), can become instruments of exclusion rather than support.
The contrast between the focus on fraud detection (where state capabilities vary widely) and the implications of administrative burden suggests a systemic divergence in governance: some areas are focused on punitive enforcement, while others are grappling with systemic structural design that inherently disadvantages specific populations. The suggestion regarding pardoned executives introduces an element of political accountability layered over systemic failures, indicating that issues of fraud and fairness intersect deeply with executive power structures. The challenge for effective policy analysis lies in synthesizing these disparate threads—financial mechanics, physical access, administrative hurdles, and legal enforcement—into a unified view of what constitutes equitable care delivery under the program.
BRIDGE QUESTIONS:
What metrics should policymakers prioritize when balancing fiscal solvency against the right to access care for vulnerable populations?
How can administrative requirements like work mandates be redesigned to support vulnerable enrollees rather than functioning as exclusionary barriers?
What role should accountability mechanisms play in addressing systemic disparities revealed by the financing formulas and fraud enforcement records?
Sentinel — Human
The text appears to be a transcript or closely paraphrased report from a legislative hearing, characterized by a mixture of high-level policy debate and specific, often inflammatory, exchanges between participants.