The incoming Trump administration and Republican-controlled Congress are looking to rein in Medicaid, the health insurance entitlement that consumed a record 10% of the federal budget in 2023 despite delivering substandard care to its 79.4 million enrollees.

Democrats are lining up to denounce the GOP’s plans, which they claim will harm vulnerable Americans. But they’re wrong. Trimming Medicaid won’t merely ease the burden on taxpayers — it could result in many of the program’s beneficiaries receiving better care.

Congress created Medicaid in 1965 as a safety-net insurer of last resort. Eligibility was restricted to children without parental support, their caretakers, the disabled, the blind, and low-income elderly Americans. Two decades later, lawmakers mandated Medicaid coverage for low-income pregnant women and children.

Medicaid’s structure encourages profligate spending. It was designed as a state-administered but federally regulated and subsidized program. The federal government shoulders between 50% and roughly 77% of the cost of the program for states, depending on how wealthy they are.

In other words, for every $1 state Medicaid agencies spend, the federal government may send over $4 in “matching” funds.

That’s just for the program’s original beneficiaries. Obamacare allowed states to enroll able-bodied, working-age, childless adults if they earned less than 138% of the federal poverty line. To encourage them to do so, the federal government initially offered to cover 100% of the cost of that expansion population. That match later dipped to 90%, where it stands today.

So for every $1 that states spent on these new enrollees, they receive $9 from the federal government.

Unsurprisingly, Medicaid spending has exploded — to $824 billion in fiscal 2022. That’s nearly double the $456 billion spent in fiscal 2013, the last year before Obamacare’s expansion of the program.

Much of this spending is wasteful or even fraudulent. About 16% of all Medicaid payments are improper, meaning they’re for the wrong amount of money or are paid to the wrong entity.

States also spend enormous sums on individuals who already have insurance. About 15% of Medicaid’s working enrollees — roughly 2 million people — had employer-sponsored health insurance in 2021. Last year, the Congressional Budget Office estimated that 21 million individuals have multiple sources of coverage. And in numerous states, Medicaid costs more per enrollee than employer-sponsored insurance does.

Obamacare’s Medicaid expansion — which has already cost the country over $1 trillion — has prioritized able-bodied, working-age adults over more at-risk populations. Only about two in three able-bodied, non-elderly Medicaid recipients work, as most states don’t require them to do so.

The misallocation of Medicaid funds inflicts harm on the genuinely vulnerable. Studies have found that Medicaid expansion dramatically increased patients’ wait times for ambulances and appointments.

It’s long past time to rein in wasteful Medicaid spending. Simply verifying eligibility more than once per year could save taxpayers $160 billion.

Implementing reasonable work requirements for able-bodied, non-elderly individuals — like the requirements that already exist for food assistance benefits — could save another $100 billion. States could save even more by investigating improper payments and removing individuals with private coverage from Medicaid rolls.

These reforms should not be considered logistically difficult or politically toxic. After all, 80% of Republicans, 66% of Independents, and even 49% of Democrat voters favored Medicaid work requirements in a 2023 poll.

But states currently have no reason to implement them. As long as the federal government continues to give states at least one dollar for every dollar they spend, the program will continue to grow.

That’s why Congress should ditch the matching formula system and instead provide states lump-sum “block grants.” That would force them to spend wisely — since they’d be on the hook for wasteful overspending.

States would still receive the money they need to provide for Medicaid recipients. Block grants would effectively mandate efficiency and accountability — and ensure that Medicaid fulfills its mission as a safety net for those who need it most. At the same time, they’d force many ineligible beneficiaries to seek gainful employment that provides higher-quality insurance.

It’s time to restore integrity to Medicaid and deliver better outcomes for beneficiaries and taxpayers. Nobody, least of all Americans in need, benefits when public dollars are thrown away.

Sally C. Pipes is President, CEO, and Thomas W. Smith Fellow in Health Care Policy at the Pacific Research Institute. Her latest book is “False Premise, False Promise: The Disastrous Reality of Medicare for All” (Encounter 2020). Follow her on X @sallypipes.