Last month, Austin was rocked by the latest in a slew of scandals suggesting widespread corruption in state government. Health and Human Services Commission Chief Counsel Jack Stick resigned after newspaper investigators revealed that he had been funneling no-bid contracts to a company called 21CT from his agency, as well as from the Department of Family and Protective Services.

This controversy comes on the heels of corruption scandals at the State’s Cancer Prevention and Research Institute, as well as reports raising serious questions regarding the operation of the Texas Enterprise Fund and the Chapter 313 Property Tax Rebate Program.

The 21CT contracts were, ironically, for proprietary software aimed at identifying and rooting out fraud in the state’s administration of the federal Medicaid program.

It would seem the lesson to be taken from the controversy is that, with a program as poorly designed and administered as Medicaid, lawmakers can either tolerate massive fraud and abuse in the program, or enable corruption in administrative programs aimed at addressing the fraud and abuse.

Medicaid does not provide health care directly. Instead, it pays hospitals, physicians, nursing homes, managed care plans, and other health care providers for covered services that they deliver to eligible patients. What this means is that Medicaid is a fatally flawed piece of public policy lacking a self-rationing mechanism. Healthcare providers are expected to provide care to entitlement recipients and then petition the state for reimbursement later. This no-accountability, no-buy-in system has led some experts to estimate that up to a quarter of all claims for reimbursement are fraudulent.

It is worth remembering which Republican members of the Texas House supported expanding the Medicaid program under Obamacare. Those legislators supported injecting more money into a program that is plagued by fraud, abuse, and corruption.

Tony McDonald

Tony McDonald serves as General Counsel to Texas Scorecard. A licensed and practicing attorney, Tony specializes in the areas of civil litigation, legislative lawyering, and non-profit regulatory compliance. Tony resides in Austin with his wife and daughter and attends St. Paul Lutheran Church.


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