An article from Reuters calls attention once again to one of the many problems resulting from the current Medicaid program – fraud. The headline was “Actavis Group has reached an $84 million settlement with Texas to resolve civil claims that it defrauded the states Medicaid program by artificially inflating prices for its generic drugs.”

The case is more than 10 years old and originated with a whistleblower lawsuit and was on appeal from a trial court. To be clear, this was a settlement, and Actavis admitted no wrongdoing. But, the price tag of the settlement for Actavis was half the original verdict. Attorney General Abbott is to be commended for his work in prosecuting Medicaid fraud that, according to his press release, has recouped $450 million in drug pricing lawsuits. But as successful as he has been, the underlying flaw in Medicaid’s structure still has millions of dollars going out for fraud that the state then spends huge sums detecting, investigating, and prosecuting.

Contrast that effort with the results of Robert Wood Johnson studies conducted by Mathematica and others of a Medicaid pilot program in Florida. The program was called Cash and Counseling and provided a fixed amount of “cash” made available to a disabled person to purchase their own services rather than the one-size-fits-all Medicaid services. Counseling was available for those who needed it. Not only was the program a cost saver for the state, but also the studies found that the clients were highly satisfied with the service and that there was zero fraud.

The by-product of a free market again proves superior to that of central planning. When people make their own value decisions and make the payment themselves, the only ones who lose are the bad guys.

– Arlene Wohlgemuth