Joint Economic Committee Examined Medicaid Fraud Incentives

The committee brief analyzes how current federal payment structures affect state oversight of program spending.

Updated on Oct. 1, 2026 in Economic Policy

Isometric editorial illustration of tiered, colorful plinths representing Medicaid financial distribution, illustrating federal oversight and fiscal policy. — The Joint Economic Committee’s latest brief analyzes how the current federal-state Medicaid financing model may reduce state-level incentives for detecting waste and fraud. AI Illustration. Upload story photo >

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Should states bear more financial risk for Medicaid to help reduce fraud and waste?

The Joint Economic Committee released an issue brief titled Who Pays, Who Saves? regarding the effectiveness of Medicaid fraud enforcement. The document explores how the federal-state financing structure potentially diminishes state incentives to identify waste, fraud, and abuse.

Why it matters

Federal funding models for Medicaid mean that states often bear only a fraction of the total program costs, which may reduce the incentive for local oversight. The committee suggests that transitioning to block grants could encourage states to more aggressively pursue fraud detection.

Medicaid and CHIP spending on applied behavior analysis has surpassed $10 billion, marking an increase of more than 400% compared to spending levels in 2021.

The players

Joint Economic Committee

This is a standing committee of the United States Congress that monitors the economic situation and compiles reports for both the House and Senate.

The details

The report examines the oversight of rapidly growing services, such as applied behavior analysis, and how current payment mechanisms impact the detection of improper billing. By analyzing these structures, the committee aims to identify vulnerabilities that arise when federal contributions dominate the financing of these medical services.

Medicaid and CHIP spending on ABA increased 400% from 2021 to 2025.
The Working Families Tax Cuts were enacted in July 2025.
The Joint Economic Committee released the issue brief on October 1, 2026.

Macro View

The report highlights limitations in the current Medicaid federal-state financing structure that have persisted despite historical shifts in healthcare spending. This analysis mirrors previous debates regarding the efficiency of entitlement programs when financial responsibility is split between state and federal authorities.

Changes to how Medicaid is funded could influence future state-level eligibility requirements and the availability of specific services for covered families. Proposed shifts toward block grants may alter the speed and manner in which states investigate claims, directly impacting program access and long-term costs.

The takeaway

The committee's report underscores a tension between federal funding and state-led fraud prevention efforts. Shifting toward block grants remains a primary, though debated, strategy for incentivizing states to prioritize the reduction of waste in public healthcare spending.