Public benefits have been in the news in a big way, including here in Indiana. A priority bill before the Indiana General Assembly this session is framed as an effort to crack down on fraud across state-administered programs. Nationally, these debates have often taken on a toxic, zero-sum tone, shaped by social media and oversimplified narratives about cheaters and outsiders and who deserves help and who does not.
Here are three true statements that, taken together, help explain why this issue is far more complicated than the dominant narrative suggests.
First, fraud in public benefits is real, and it is a bad thing. It undermines public trust and makes it harder to sustain political support for programs that matter. Anyone who cares about the people who rely on public benefits should also care deeply about fraud.
Second, most “fraud” only becomes apparent well after the fact.
Third, every public benefits system will make mistakes, and the only real question is which side we want to err on. Public administration scholars have long understood a concept that sounds provocative but is actually common sense, which is that the optimal amount of fraud in a system is not zero. Not because fraud is acceptable, but because eliminating every improper payment would require levels of scrutiny and enforcement that would also deny benefits to many people who qualify for and need help.
The problem gets personal
That tension shows up immediately in how eligibility is determined. At the most basic level, eligibility requires verifying income, assets, address, household composition, and demographics. This is a multifaceted but ultimately bounded inquiry into whether someone is categorically eligible for benefits. Even this “simpler” dimension creates real problems, from incentives to hide assets to benefits cliffs that discourage people from earning more to overly burdensome reporting requirements that prevent people who need help from getting it.
It gets even more complicated when eligibility turns not just on who someone is or what they earn, but on how sick or disabled they are and how much care they need. These determinations involve dozens, sometimes hundreds, of subjective variables, not just per person, but often per service delivered.
By now, most people familiar with Indiana politics know about the billion-dollar Medicaid shortfall that emerged late in the Holcomb administration. The Family and Social Services Administration was slammed for it, and legislators routinely reference it as evidence of runaway spending and the need to curb Medicaid costs.
What gets far less attention — and is a perfect illustration of the broader dynamics — is what actually drove a large part of that increase: dramatically higher spending on paying parents or family members as caregivers for children with significant disabilities.
When parents become caregivers
This was a good, compassionate and common-sense policy choice. We do not have enough direct-care workers, and in many cases it simply makes more sense for parents to take on much of this care.
But this also creates an obvious and unavoidable problem, which is that it is extraordinarily difficult to distinguish between when someone is acting as a parent, which is not compensated, and when they are acting as a caregiver, which is.
How do you draw that line on an application, in a phone call, or by reviewing a claim months later, when there may not even be a clean distinction in real life? What rules or guardrails could possibly capture the complexity of arrangements like this without either denying needed care or creating entirely new problems?
There are no good answers to these questions, which is probably why the state’s solution of moving toward a daily rate left everyone unsatisfied.
The cost of cracking down
Here is one more example to make this trade-off even more concrete.
Recent research suggests neonatal intensive care units, or NICUs, are significantly overutilized in American health care. In part, this is because NICUs function as reliable profit centers for hospitals, creating incentives to refer infants even when the clinical indication is questionable. From a cost-control perspective, the solution is straightforward: tighten reimbursement rules, require more documentation and raise acuity thresholds for admission and continued stays.
But doing that carries an obvious risk. If you make NICU access harder, some infants who truly need that level of care will be delayed or denied admission. And when that happens, there will be rare but devastating stories of babies who suffer serious harm or die as a result. Any system strict enough to eliminate unnecessary NICU stays will also, inevitably, exclude some necessary ones.
The silver lining is that the public appears far more capable of grappling with trade-offs between access, burdens, and fraud than our discourse gives them credit for, so maybe there’s some hope for a more nuanced conversation.
The unsatisfying conclusion is that public benefits are unavoidably complicated, and we will never get them exactly right. We are always making a choice. We can err on the side of generosity and risk some abuse or err on the side of scrutiny and deny help to people who need it. Both choices carry real and significant consequences, and our leaders should weigh them accordingly.
Jay Chaudhary is a former director of the Indiana Division of Mental Health and Addiction and chair of the Indiana Behavioral Health Commission. He writes the Substack, Favorable Thriving Conditions.
This article originally appeared on Indianapolis Star: Medicaid fraud is bad. So is denying help to those in need. | Opinion
Reporting by Jay Chaudhary, Contributing Columnist / Indianapolis Star
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