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Witness Brian Blaise urges equalizing Medicaid match, calls provider taxes 'legalized money laundering'
Summary
Paragon Health Institute president Brian Blaise told a congressional committee the Medicaid financing structure favors expansion enrollees and that provider taxes and state-directed payments divert federal dollars to large hospital systems, urging Congress to equalize reimbursement to protect the most vulnerable.
Brian Blaise, president of Paragon Health Institute, told a congressional committee that the federal‑state Medicaid partnership is "broken" and that federal matching formulas encourage states to prioritize able‑bodied expansion enrollees over the program's traditional populations. "On average, when a state spends $1 of its own money on a traditional Medicaid enrollee, the federal government contributes a dollar 33," he said, contrasting that with "for $1 of state spending on an expansion enrollee, the federal government contributes $9."
Blaise described provider taxes and state‑directed payments as a form of "legalized money laundering" that can generate "windfalls for politically powerful providers." He cited former officials’ criticisms and urged that Congress "end the discrimination against the most vulnerable and equalize federal reimbursement rates for all enrollees within each state." Blaise recommended reforms including changing the match formula to set a baseline amount that states receive and removing incentives that reward maximizing federal matches rather than serving high‑need patients.
